New Incentives for Attraction of Foreign Investments

Within its actions for attracting foreign investments in Serbia, the Government of the Republic of Serbia adopted on 11 March 2016 new Decree on Conditions and Manner for Attraction of Investments (“Official Gazette of RS” no. 27/2016; “Decree”).

Decree relaxed, in its mayor part, criteria for receiving incentives from RS.

The lowest amount of investments wherein investors may expect support from Serbia is decreased from the amount of EUR 250,000 to EUR 150,000 with obligation of opening of at least 20 new working places.

Serbia kept its obligation, depending on the area where investment is made, to pay to an investor, fulfilling respective conditions, for each newly opened working place, a monetary consideration in a range between EUR 3,000 – 7,000.

As an additional incentive, the Decree introduces a possibility of payment of consideration ranging between 10% up to 30% of the amount of justified costs, for “labor-intensive investment projects”, i.e. projects by which at least 200 new working places are opened within the period for execution of the respective investment project.

Decree provides that incentives are payable in several instalments in a certain percentage from the total amount of granted incentives.

Another important novelty introduced by the Decree is a possibility of releasing of foreign investor from the obligation of payment of customs and other duties for import of equipment. In order to qualify for this incentive foreign investor must not sell or dispose of respective equipment during the 3 years’ period.

Decree also introduces stricter conditions for control of spending of incentives given as state aid. During this control cooperation of the Ministry of Economy, PIO Fund and BRA is provided.

Finally, it remains to be seen whether the measures established by the Decree will give the desired results.

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