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Dragan Penezić, Co-President of the FIC Anti-Illicit Trade & Food Committee (British American Tobacco)

Work in the Field Requires Improvement

The efficiency of controls and penalties for illicit trade must be improved continuously to ensure compliance with regulations, fair market competition and equal conditions for all

The adoption of the new Programme for Combating the Grey Economy 2023-2025 and its accompanying Action Plan confirmed the continuation of a systematic approach in the fight against the grey economy, with three priority goals: strengthening the capacities of inspections and misdemeanour courts; improving tax oversight processes; and reducing fiscal and administrative burdens for businesses operating legally.

Testifying to the success achieved in combating the grey economy and illicit trade is the continued increase of tax revenue collection in 2023, which was up by 16.3% compared to 2022. Total tax revenue in 2023 amounted to 2,593 billion dinars, while the total amount of newly identified revenue in 2023 was nearly 35 billion dinars, which is almost a quarter more than in 2022.

Despite increased awareness of the importance of reducing the grey economy in recent years, we must recognise that its scale in Serbia remains relatively high, albeit with a noticeable downward trend. This improvement is due to the government’s understanding of the need to cooperate with the private sector and expert bodies, leading to the definition and establishment of activities aimed at institutionally improving business conditions and systems for controlling illicit trade.

There is still room for improvement, particularly in terms of work in the field and further reforms of inspection oversight to enhance the quality and efficiency of inspection services. The efficiency of controls and penalties for illicit trade must be improved continuously to ensure compliance with regulations, fair market competition and equal conditions for all.

We advocate judicial specialisation

The continuation of a systematic approach by the state in combating the grey economy is a prerequisite for strengthening public finances

Inspection services remain in an alarming state, given the shortage of personnel, poor material status and technical equipment, as well as the exceptionally high average age of inspectors. Additionally, inspection services must be provided with the necessary administrative and legal support, alongside the continuous adoption of innovative solutions.

One of the most significant preventative measures that we, as FIC members, emphasise constantly is an adequate system of penalties for illicit trade. It is essential to have specialised judges in the area of combating the grey economy and to monitor the performance of misdemeanour courts in such proceedings. When it comes to excisable goods, the most sensitive areas remain those related to tobacco, oil, and coffee, which must receive particular attention in inspection oversight.

The contact centre of the Republic Inspection Service has proven its effectiveness, having received more than 50,000 reports over the previous three years. The narrative on the importance of combating the grey economy has become increasingly prominent and crucial, and citizens are increasingly aware of their role in the tax system and the importance of compliance with the law.

To further strengthen public awareness and the economy, and improve public finances as a consequence, it is essential to have state services working in coordination, continuous cooperation with responsible businesses and citizen education.

The companies gathered within the FIC are, as always, ready to engage on this front, primarily through expert bodies that analyse regulations and market practices to identify areas in need of improvement.