Recently, the Government of the Republic of Serbia passed two regulations on amendments to the Regulation on Determining Criteria for Granting Incentives to Encourage Direct Investments (“the Regulation”), which entered into force on May 20, i.e., June 3, 2023.
The most significant novelties brought by the Regulation refer to:
Necessary minimum investments and maximum amounts of incentives by region
According to the Regulation, the funds can be allocated for:
Relation with state aid
The amount and intensity of funds calculated and approved under the Regulation cannot diverge from the maximum amount and intensity calculated pursuant to the conditions established by the regulations on regional state aid.
Additionally, when determining the amount of funds that can be allocated, cumulation with previously approved state aid is considered, in accordance with the regulations governing the state aid control.
Other novelties
The Regulation further stipulates that the justified investment costs of a large business entity in the market, for the purpose of a significant change in the production process, must be higher than the depreciation costs in the previous three fiscal years for the assets that are related to the activity being modernized. Additionally, the justified investment costs aimed to diversify the production program must be at least 200% higher than the book value of the assets that are being reused, registered in the fiscal year preceding the commencement of works.
As regards the sources and purpose of funds for attracting direct investments, the Regulation stipulates that funds cannot be allocated for the implementation of investment projects in certain sectors (transport, hospitality industry, games of chance, trade, production of synthetic fibres, coal and steel, mining, tobacco and tobacco products, weapons and ammunition, shipbuilding of self-propelled maritime commercial vessels over 100 gross registered tons, airports, utilities, energy sector, broadband networks, fisheries and aquaculture, and software development, unless they are in the function of product improvement, production process or provision of service centre services).
The Regulation also includes an amended list of documents to be submitted with the application for awarding funds, and it stipulates that, for investments over 5 million euros, the deadline for implementation of investment project is up to 10 years from the date of submission of the application.