Tax incentives

In order to support and encourage the development of old age saving , the government has introduced certain tax and other incentives for both employers and individuals.

TAX INCENTIVES FOR EMPLOYERS:

Employer's payments of pension contributions for its employees up to RSD 8,101 per employee are personal income tax and mandatory social insurance contributions exempt.

In the following table a comperative view of employer's expenses if RSD 8,101 are paid to VPF as pension contribution or the salary of the employee is increased for the same amount:

  EXPENSE SALARY (RSD) PENSION CONTRIBUTION (RSD)
1 Net amount 8,101 8,101
2 Gross I  amount: (1)/0.701 11,556.35 -
3 Contributions paid by employee 19,9%: (2)x19,9% 2,299.71  
4 Personal income tax 10%: (2)x10% 1,155.64  
5 Contributions paid by employer 15,15%: (2)x15,15% 1,750.79  
6 Gross II amount: (2+5) 13,307.14 8,101
7 Additional expense in % 64.27% 0%

 

Financial advantages and benefits of the VPF contribution payments for the employer are clear (no additional expenses), whereas in case of the salary increase additional expenses are 64.27%. 

TAX INCENTIVES FOR INDIVIDUALS:

Citizens are also encouraged to save, since the pension contributions up to RSD 8,101 paid via administrative ban are personal income tax (10%) exempt.

The table below shows an example of savings if a member makes contributions through administrative ban:

PENSION CONTRIBUTION (RSD) TAX (%) TAX INCENTIVE (RSD) ANNUAL SAVING (RSD)
8,101.00 10% 810.10 9,721.20

 

 

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