The incentive for double recognition of research and development costs in the tax balance serves to encourage economic entities to invest in innovative activities and increase their competitiveness in the market. This incentive reduces the tax base and thus the amount of income tax that the taxpayer is obliged to pay. Taxpayers are given the opportunity to recognize all costs incurred in connection with research and development activities in their tax balance in a double amount, which means that they are recognized twice, namely:
- As an expense recognized in the Income Statement in accordance with accounting regulations
- As a tax incentive, which is reported as a separate item in the tax balance sheet, it will have the character of a deductible item from the income tax base.
Therefore, to receive the incentive for double recognition of research and development expenses in the tax balance, you must meet the following conditions:
- That you are liable for income tax in the Republic of Serbia
- You carry out research and development projects in the Republic of Serbia, which means that at least 90% of all employees working on a research and development project perform their activities on the territory of the Republic of Serbia.
- Your research and development projects are aimed at acquiring new knowledge or applying existing knowledge in new products, processes, or services.
- Your research and development projects are implemented in accordance with internationally recognized standards and methodologies, such as the Frascati manual or the Oslo manual.
- To keep a special record of research and development costs, which contains all relevant data about the research and development project, such as name, objective, description, duration, amount of costs, number and qualification of employees, results, and effects of the IR project.
- Together with the tax balance, you submit a special form for reporting incentives for research and development projects, which contains information about the research and development project, the amount of research and development project costs, the number of incentives for IR and sources of funding for the IR project.
This incentive is in line with the Strategy of Scientific and Technological Development of the Republic of Serbia for the period from 2016 to 2020, which foresees an increase in investment in IR to 1.5% of GDP by 2020.