11 May, 2020
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The new Government Decree postponed the most important deadlines for business entities

The legal framework of economic support measures established on April 10, 2020 through a series of decrees, was followed less than a week later by another decree.  Namely, the Government of the Republic of Serbia adopted the Decree moving the deadlines for holding the regular session of the general meeting and submitting annual and consolidated financial statements for companies, cooperatives, other legal entities and entrepreneurs, as well as deadlines for submitting corporate income tax returns and self-employment income tax returns, validity of authorized auditor licenses and real estate appraiser licenses which expire during the state of emergency declared because of the COVID-19 disease caused by SARS-CoV-2 virus, on April 16, 2020, as a pandan to the decree that defers the deadline for submitting public company reports  (“Decree“).

 

Postponement of deadlines

 The Decree provides for the postponement of deadlines during the state of emergency declared because of the COVID-19 disease caused by the SARS-CoV-2 virus.  These are the deadlines for:

  • holding of a regular session of the general meeting of the company;
  • delivering annual and consolidated financial statements of the companies, cooperatives, other legal entities and entrepreneurs for 2019;
  • submitting corporate income tax returns and self-employment income tax returns;
  • the validity of authorized auditor licenses and real estate appraiser licenses;

 

Holding the regular session of the general meeting

 According to the Companies Act an ordinary session of the general meeting is held once a year, no later than six months from the end of a business year.  The Decree postpones the deadline for holding the regular session of the General Meeting of shareholders by 90 days from the date the state of emergency is lifted.  Our previous articles recommended that all multimember corporate bodies of Serbian companies should look at the alternatives available under the Companies Act, which allow sessions to be held using modern communication equipment and devices (see here).  Despite these unprecedented times, sessions of multimember corporate bodies cannot stop and decision-making processes must go on.  In the event of a regular session of the General Meeting of shareholders, the Decree has postponed the deadline.

  

Deadlines for annual financial statements

 The deadline for the submission of annual statements, i.e. annual financial statements with the auditor’s report for those whose reporting is regulated by the Capital Markets Act, i.e. the Investment Funds Act or the Open Investment Funds with a Public Offer Act, such as banks, insurance companies, and investment funds is postponed by 60 days from the date the state of emergency is lifted.

Under the Capital Markets Act public companies are required to prepare an annual statement, make it public and deliver it to the Securities Commission (“Commission“), and to the regulated market, i.e. the MTP delivers this statement if the securities of that company are traded, within four months after the completion of each business year.  The annual financial statement must be available to the public for at least five years from the date of publication.

According to the Open Investment Funds with a Public Offer Act which began to apply from April 20, 2020, investment fund management companies are required to publish and deliver to the Commission: i) annual financial statements for the company and the investment funds it manages, with an external auditor’s report by April 30 of the current for the previous year; ii) semi-annual statements for each investment fund by August 31 of the current year for the previous six-months.  This Act repealed the Investment Funds Act which envisaged special reporting for the company and each investment fund.

 

 Deadlines under the Accounting Act

Deadlines referred to in the Accounting Act shall be moved as follows:

  • the deadline for legal entities, i.e. entrepreneurs to submit to the Business Registers Agency (“Agency”) annual financial statements for the reporting year shall be postponed by 90 days from the date the state of emergency is lifted.  This deadline mutatis mutandis applies to legal entities that have a business year different to the calendar year, if the deadline for submitting financial statements for these legal entities expires during the state of emergency;
  • the deadline for legal entities required to prepare consolidated annual financial statements (parent legal entity) for submission of these statements to the Agency for the reporting year is postponed by 120 days from the date the state of emergency is lifted;
  • the deadline for legal entities, i.e. entrepreneurs required to prepare extraordinary financial statements for submission of these statements to the Agency is postponed by 30 days from the date the state of emergency is lifted, provided that the deadline for submission of extraordinary financial statements expires during the state of emergency.

 

Deadlines for tax returns

 The deadlines for submitting corporate income tax returns and self-employment income tax returns shall be postponed as follows:

  • corporate income taxpayers shall file a corporate income tax return within 90 days from the date the state of emergency is lifted for those corporate income taxpayers whose tax period mirrors the calendar year, or within 120 days from the date the state of emergency is lifted for corporate income taxpayer’s whose tax period is different to the calendar year;
  • self-employment income taxpayers who keep business books in accordance with the Personal Income Tax Act (entrepreneur paying tax on taxable profit, lump-sum entrepreneur, entrepreneur farmer, and the entrepreneur other person) shall submit a tax return and tax balances within 90 days from the date the state of emergency is lifted.

 We would like to point out here that self-employment income taxpayers, except for lump sum entrepreneurs, were required to submit their tax return and tax balance to the competent tax authority no later than April 15 of this year for the last year i.e. for which tax is assessed.  It can be said that the Government drags its feet in adopted the Decree because the deadline for submitting an entrepreneur tax return expired on April 15, the day before the Decree was adopted.  If the intention was to move this deadline, the Decree should have been adopted at least a few days earlier.

 

Deadlines and licenses for auditors

The deadlines referred to in Article 7 of the Audit Act which expires during the state of emergency shall be deemed to have expired 30 days after the date the state of emergency is lifted i.e. all audit licenses shall continue to be valid during that period.

 

Deadlines and licenses for appraisers

The deadlines referred to in Article 11of the Real Estate Value Appraisers Act which expires during the state of emergency and 30 days from the date state of emergency is lifted shall be deemed to have expired 60 days after the date the state of emergency is lifted.

For more information you can contact us via covid19@geciclaw.com.