ПОРЕСКЕ ОЛАКШИЦЕ КОД ПОРЕЗА НА ДОБИТ ПРАВНИХ ЛИЦА
Tax Reliefs in Legal Entities’ Capital Gains Tax

Summary/Abstract: Reducing a national corporate tax rate and introducing numerous/ ample tax reliefs may have adverse effects on a country’s reputation as it is perceived as being susceptible to unfair tax competition practices and prone to allowing the subsidiaries of foreign companies to enter the national market at any cost (even at the expense of preserving its natural assets). For this reason, it is essential to find the right balance between the need to attract foreign capital (on the one hand) and the protection of domestic businessmen/ entrepreneurs and the living environment (on the other hand). The analysis of tax reliefs on legal entities’ capital gains tax shows that tax reliefs are considerably more substantial for foreign companies (temporarily residing in Serbia) than for domestic economic entities; such circumstances yield “a discriminatory effect” and give rise to inequality in terms of their position on the market and market competition. Moreover, the tax reliefs which are given as a privilege to the domestic manufacturers have a limited effect, primarily because they are not really effective in terms of economic efficiency; their effects are almost inconsequential for small and medium-sized businesses whereas large companies largely regard the obtained incentives as lost resources, which should rather be used for production revival and development of production facilities. Such tax incentives are actually aimed at subsidizing companies which cannot stand the market competition test. In effect, a more rational solution would be to have them liquidated.

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