At the sitting held on 26 February, the members of the Finance Committee discussed in principle the Bill amending and modifying the Corporate Income Tax Law and the Bill amending and modifying the Personal Income Tax Law, submitted by the Government of the Republic of Serbia. The Committee also considered the Bills on the indebtedness of the Republic of Serbia at Erste GCIB Finance I.B.V. Amsterdam, with Erste Bank a.d. Novi Sad as agent, Marfin Bank a.d. Belgrade and Vojvodjanska Banka a.d. Novi Sad; granting guarantee by the Republic of Serbia in favour of Banca Intesa a.d. Belgrade under the debt of Public Enterprise Srbijagas Novi Sad and on the Confirmation of the Loan and Financing Agreement between KFW, Frankfurt am Main and the Republic of Serbia – Water supply and sewerage programme in medium-sized municipalities in Serbia I – Phase 2, submitted by the Government of the Republic of Serbia.

The sitting was attended by representatives of the Ministry of Finance, Ministry for National Investment Plan and a representative of PE Srbijagas, who outlined the proposed legal solutions for the Committee members.

The Bill amending and modifying the Corporate Income Tax Law harmonised the law with other laws functionally connected to it. The Bill specifies certain provisions, and the most significant modifications deal with distinguishing a tax period from a calendar period for those companies which have previously obtained the consent of the Ministry of Finance or NBS Governor, as well as the abolition of tax stimulus, recognition of marketing and propaganda expenses of up to 5% of total corporate income and limiting representation to 0.5% of total income.

The Committee members accepted the Bill in principle by a majority of votes.

The Bill amending and modifying the Personal Income Tax Law deals with tax rate reduction for several kinds of personal income and the Committee members accepted it in principle by a majority of votes.

By the Bill on the indebtedness of the Republic of Serbia at Erste GCIB Finance I.B.V. Amsterdam, with Erste Bank a.d. Novi Sad as agent, Marfin Bank a.d. Belgrade and Vojvodjanska Banka a.d. Novi Sad the state will take up a 160 million EUR loan to finance the budget deficit. The repayment period is five years, with monthly euribor +4.25% fixed interest rate at Erste Bank, and monthly euribor +4.35% fixed interest rate at Marfin Bank a.d. Belgrade and Vojvodjanska Banka a.d. Novi Sad. The Committee members accepted this Bill as well, by a majority of votes.

The Bill granting guarantee by the Republic of Serbia in favour of Banca Intesa a.d. Belgrade under the debt of Public Enterprise Srbijagas Novi Sad grants guarantee to 170 million EUR i.e. 120 million EUR for refinancing short-term obligations and 50 million EUR for additional investment and procurement of gas. The repayment period is 8 years, with a 3-year grace period. The Committee members accepted the Bill by a majority of votes, with the reserved opinion of deputy Slobodan Maras.

The Bill on the Confirmation of the Loan and Financing Agreement between KFW, Frankfurt am Main and the Republic of Serbia – Water supply and sewerage programme in medium-sized municipalities in Serbia I – Phase 2 represents the continued realisation of the 2007 contract. The funds for the realisation of the contract amount to 42,482,500 EUR, 25 million EUR of which are a loan, 14,850,000 EUR non-refundable funds as a financial contribution and 2,632,500 EUR are non-refundable funds as EU contribution. The interest rate is 5.95%. The Committee members accepted the Bill by a majority of votes.

For the remainder of the sitting the Committee members discussed forwarding the Bill amending and modifying the Law on the State Audit Institution into assembly procedure.

The sitting was chaired by Branka Ljiljak, Committee Deputy Chairperson.