The year holds special significance as it marks the tenth anniversary of Serbia’s intensified efforts against tax fraud. Minister Mali emphasized that a comprehensive review of the fiscalization measures and methodologies implemented over the past decade is underway. The results illustrate the growing effectiveness of eFiscalization in streamlining tax compliance and ensuring fairer business practices across the country. As Serbia continues to tighten its fiscal policies, the long-term impact of these efforts may serve as a model for other nations seeking to modernize their tax systems and reduce informal economic activities.  

eFiscalization: A Key Weapon in Serbia’s Fight Against the Grey Economy

During the press conference, Minister Mali underscored the importance of eFiscalization, ranking it among the ten most effective government measures to combat the grey economy. The system allows fiscal cash registers to report fiscal invoices in real time, notifying both citizens and the Tax Administration of any discrepancies. This real-time reporting empowers the Tax Administration to conduct more targeted audits, increasing efficiency and transparency in tax collection.

Mali also highlighted broader reforms, including the overhaul of inspection supervision and the adoption of an EU-compliant Law on Public Procurement. These initiatives are designed to modernize tax and financial systems, with a significant milestone on the horizon—the development of a unified tax application. Within two to three years, Serbian citizens will have a centralized platform to manage all their taxes, allowing them to track their obligations and ensure compliance more easily.

eFiscalization Powering Tech-Driven Audits

The annual report from the Serbian Tax Administration (STA) showcases how technology, through eFiscalization, is revolutionizing audits. The STA leverages machine learning and artificial intelligence to identify non-compliant taxpayers, vastly improving its effectiveness in curbing tax evasion. Every day, the system processes over 10 million fiscal invoices, providing invaluable data such as taxpayer identification, transaction type, and QR codes for verification. This wealth of information allows tax inspectors to approach field audits with detailed insights, making their efforts more precise and efficient.

In 2023, Serbian tax inspectors conducted 8,640 field audits. The results were striking: non-compliant taxpayers faced stiff penalties, including temporary bans on operations for failing to issue electronic fiscal invoices. A total of 4,466 businesses, accounting for 43.44% of retail shops, 39.23% of hospitality businesses, and 10.23% of bakeries, faced penalties. For more serious violations, 488 businesses were temporarily shut down for up to 90 days, with 19 facilities closed for an entire year.

Successes and Challenges: Compliance and Risk Mitigation

While eFiscalization has brought significant successes in curbing tax evasion, there remains a pressing challenge in how the tax administration applies penalties. Recent data from the Serbian Tax Administration (STA) indicates that over 60% of inspected businesses were found non-compliant. The response has been swift and strict, with severe penalties including temporary closures of business operations. However, such measures can create a barrier to fostering a more supportive relationship between the STA and businesses that may simply need additional guidance on compliance.

In our opinion, the STA should consider revisiting its penalty statutes to create a more balanced approach. Rather than relying heavily on punitive actions like temporary business closures for misdemeanors, there should be room for tax inspectors to engage in dialogue and provide sensitization around tax obligations. This would encourage greater understanding and voluntary compliance among businesses, particularly those that may struggle with complex regulations.

By shifting focus from strict penalties to a more educational, supportive approach, the STA could foster a climate of cooperation, helping businesses comply without the risk of severe disruptions. Such a strategy would not only benefit taxpayers but also improve the long-term efficiency and fairness of Serbia’s tax system.

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Overall, the TA executed 19 meticulous inspections at major events like the Assembly of Trumpet Players in Guča, Nisville Jazz Festival in Niš, Tešnjarske večeri in Valjevo, Beer Day in Zrenjanin and The Grill Festival in Leskovac. For this reason, their dedication led to the identification of irregularities in 16 instances, leading to swift bans.

Remarkably, the Tax Administration’s inspectors consistently uphold stringent standards. They undertake comprehensive evaluations of field records through electronic fiscal devices, aligning with regulations related to the new e-fiscalization model implemented in Serbia in 2021, called System for Fiscalization Management, powered by TaxCore® to ensure a proper strategy against tax evasion. 

Noteworthy is the fact that the Tax Administration of Serbia is armed with powerful tools in the form of the new fiscalization model. This model equips them with real-time data on traffic across all retail locations in Serbia. This ingenious approach enables the application of risk analysis and precise targeted checks, empowering them to promptly address any non-compliance among taxpayers.

Video archive (April, 2022), opening ceremony of S.U.F. monitoring centre at Tax Authority Serbia, source: https://www.alo.rs/

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Everything is ready for the official kick off as Data Tech International, along with consortium partners, deployed TaxCore into production on a brand new equipment that will host eFiscalization expecting to receive, validate and store about 15.000.000 transactions on a daily basis.

The list of accredited POS and ESDC solutions has been growing continuously to satisfy demands of all taxpayers who have to transition to the new system by April 30th 2022, thus beginning the fiscalization journey in Serbia.

In a record-breaking implementation period of just five months since the contract signing, we managed to accomplish all expected deliverables and we will continue to support Serbian Tax Administration for continuous operations until the end of 2022.

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