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 |