Illicit trade, i.e. the grey economy, is still among the more significant problems in Serbia. That is precisely why combatting this problem has been marked as one of the state’s strategic priorities and why the Serbian Government declared this year the Year of Combatting the Grey Economy.
A series of measures has been taken to date, with the new Law on Inspection Oversight adopted and amendments adopted to the Law on Tax Procedure and Tax Administration, and a coordinating body has been formed to direct activities aimed at combatting the grey economy, led by Finance Minister Dušan Vujović. Of course, results are not lacking.
Specifically, total tax revenues paid to the state in 2016 increased by 6.5% compared to 2015, and that trend is continuing this year. Budget revenues increased by 73 million euros in the first quarter of 2017 alone. There are several reasons for these kinds of results. First and foremost, the efficiency of VAT collection and excise has increased, which is the best indicator of reduced trade volumes in illicit flows. This increase stems from the fact that the growth of economic activity was still lower in relation to increased collection. On the other hand, there has been an increase in the tax base, which is in line with the fact that 2016 saw 3,656 unregistered entities discovered that were mostly subsequently registered. Contributing to this in particular was the implementation of the new Law on Inspection Oversight, which introduced the measure of controlling the operations of unregistered entities.
We hope that coordinating inspections under the leadership of the Tax Administration will be even more efficient
Thus, this is a systematic approach to the fight against illicit trade, which is part of the National Programme for Combatting the Grey Economy. In this process it is crucial to insist on applying the programme and all measures that it envisages. Conditions exist for this, particularly given that we have good initial indicators, but also a concrete action plan that envisages activities until year’s end 2018. We also have the support of the Government in implementing activities.
When it comes to future regulatory measures, the full implementation of the Law on Inspection Oversight should follow, i.e., the harmonisation of sectoral laws with the umbrella law. Given that this activity implies inter-sectoral cooperation, the importance of the role of the Coordination Body in this process is clear. A similar situation exists in the field of combatting the illegal tobacco trade, where there is a proposal of the Working Group to amend the law and, given that this initiative has been waiting since October, the possibilities of the competent authorities on the ground in fighting this illegal trade are limited, as they cannot use all necessary legal authority.
When it comes to operational measures, we hope that coordinating inspections under the leadership of the Tax Administration will be even more efficient.
Why is the fight against the grey economy important? In addition to protecting budget revenues, reducing this phenomenon makes the market more stable and contributes to creating even more favourable conditions for doing business. That is a basic precondition for maintaining the existing level, but also for the growth of investments in the economy and attracting new foreign investors.