Draft Law on Profit Tax for taxpayers support in managing COVID-19


The Government determined the Draft Law on amendment and addendum of the Law on profit tax, which aims to regulate the legal solutions in order to support taxpayers in managing the consequences of the coronavirus COVID-19 and increase their liquidity.

The Draft Law contains the following solutions:

Exemption from payment of monthly advance payments of profit tax with a deduction in income of at least 30% as a result of the corona crisis for the months of November and December 2020 as well as January and February 2021.

The taxpayers must meet the following conditions:

– the taxpayer-employer not to reduce the number of employees for the duration of the use of the exemption in relation to the number of employees as of November 30, 2020, except in cases of death, retirement or dismissal by the employees;

– the total income from the regular operation of the taxpayer to be reduced by at least 30% in the period April – September 2020 in relation to the income from regular operation in the period April – September 2019, or

– the taxpayer to close at least 50% of the points of sale through which he realizes the turnover (branches, sales facilities).

  • Increase of the period for covering losses on the burden of future gains from 3 to 5 years for losses incurred in 2020 and 2021.
  • Legal entities that in 2020 will not generate total income greater than 5 million denars to be exempt from paying total income tax.
  • Legal entities – taxpayers for total income tax to be determined to calculate and pay annual total income tax instead of profit tax for 2020, under a condition that they perform an economic activity, except banking, financial, insurance and gambling activity and entertainment games and the total income realized in the year for which the tax from any source is determined to be from 5.000.001 to 10.000.000 denars per year.
  • The costs for premiums for additional health insurance above the amount of one average monthly gross wage per employee are an unrecognized expense for profit tax purposes. Additionally, the costs for lab tests for COVID-19 for employees are recognized expense for tax purposes in the amount of not more than 9.000 denars per year per employee.