Tax Balance Sheet in Serbia: Tax Credit and Tax Loss of a Company

When a company records a loss, that can have significant implications for corporate income tax.

A tax credit is an amount that may be deducted from the tax otherwise payable. In the context of a tax loss, this generally means that the loss may be carried forward to future periods and used to reduce the tax base.

If your company incurred a loss in the current year, it will not pay corporate income tax for that year. However, the loss is carried forward and may be used in future years to offset taxable profit.

Accounting loss vs. tax loss

Accounting loss is the difference between total income and total expenses shown in the financial statements submitted to the APR.

Tax loss is the loss shown in the tax balance sheet (PB-1) and used for calculating corporate income tax at the 15% rate. It may differ from the accounting loss because of differences between accounting and tax rules.

Corrections in the tax balance sheet

The tax balance sheet starts from the accounting profit and loss statement and then introduces tax adjustments.

In practice, most corrections are made on the expense side. Typical non-deductible expenses include:

• interest for late payment of taxes and public duties,
• undocumented expenses,
• costs of enforced collection and certain misdemeanor proceedings,
• fines, contractual penalties and similar charges.

Some expenses are only partially deductible, for example:

• representation expenses – generally up to 0.5% of total revenue,
• certain donations – generally up to 5% of total revenue,
• membership fees – generally up to 0.1% of total revenue unless otherwise prescribed,
• investments in culture – generally up to 5% of total revenue.

Advertising costs are generally recognized in full. There are also other corrections relating to revenue, transfer pricing, interest on loans and many other items appearing in the tax balance sheet.

After all corrections are made, the taxpayer files the PP-PDP through the ePorezi portal.

The final deadline for paying annual corporate income tax is 30 June of the following year.

Loss carryforward period

The unused portion of a tax loss may generally be carried forward for up to five years.

Example: If a company recorded a loss of RSD 1,000,000 in 2024, it may use that loss through 2029 to offset future taxable profit. After 2029, that right expires.