The Serbian Government approved at today’s session the Origin of Property and Special Tax Bill.
Cross-checking of property lies at the heart of the Bill. It is going to be a special tax procedure conducted by a special unit of the Tax Administration. The unit will be tasked with determining what a natural person owns and how their property increases, including a special tax on property increase for which the natural person cannot prove to have acquired legally.
If in the process of determining property, its value and origin the established facts indicate that there is a reason to believe that a crime has been committed, the Tax Administration unit notifies thereof the police, the public prosecutor’s office and other competent authorities.
The Tax Administration unit determines the origin of property by inspecting the data presented in tax returns, tax balance sheets, accounting reports, other records and databases, and cross-matching these with the data from tax accounting books and other official records.
The Tax Administration unit operates ex officio in accordance with the Annual Guidelines issued by the Director of the Tax Administration based on the risk analysis. The procedure can also be initiated based on reports from citizens or other institutions.
The entire property of an individual is taken into account when determining its value. The burden of proof that the property was acquired legally rests with the individual concerned.
It should be noted that the Tax Procedure and Tax Administration Act stipulates data cross-checking to establish the cases where the annual tax on legal income has not been paid, whereas the Origin of Property Act will make use of the same method to determine illegally acquired property and to tax it at a high rate.
The Origin of Property Act will impose the 75% tax rate on illegally acquired property, which is defined as the difference of property increase and reported income over a period of time, the origin of which cannot be proved by an individual.
Retroactivity:
The working group tasked with drafting this Act decided, following the public hearing, that there would be no time limits whatsoever for its application.
The Origin of Property Act is, by its very nature, a piece of legislation aimed at preventing corruption. The Act will provide the state with an effective mechanism for determining, at any time, whether an individual has made a fortune in violation of the law. This is where the preventive aspect of the Act comes into focus, as everyone should be aware that it will be very easy to determine whether their property is legal or results from corruption or abuse. On the other hand, this Act provieds for a mechanism for collecting the tax on illegally acquired assets.