Amendments to the Serbian VAT Law

4 August 2005

On July 25, 2005, amendments to the Serbia Value Added Tax (VAT) Law came into force. Most significantly, the amendments exempt foreign donors from paying value added tax (VAT) on the import of humanitarian goods to Serbia. The VAT Law previously required foreign donors to pay VAT on the import of humanitarian goods and allowed for a rebate. This had an adverse impact on the flow of foreign humanitarian aid to Serbia.

On behalf of the Federation of NGOs - an umbrella group composed on local NGOs - ICNL provided specific recommendations on this and other issues in the VAT Law relating to the status of foreign humanitarian aid. While the amendments fell short of embracing ICNL's recommendation that the purchase of internal goods and services rendered to foreign donors be also exempt, they nevertheless represent a significant step toward creating a more enabling fiscal environment for foreign donors operating in Serbia.