Republic of Serbia: Interest rates in accordance with the “arm’s length principle” for fiscal year 2018

According to Article 61, Paragraph 3 of the Corporate Income Tax Law, the Ministry of Finance is entitled to specify the interest rates considered to be in accordance with the “arm’s length” principle and determine interest rates on the basis of data provided by the National Bank of Serbia. The interest rates in accordance with the “arm’s length” principle are determined individually for each fiscal year. Interest rates in accordance with the “arm’s length” principle for commercial banks and financial leasing companies for fiscal year 2018 as determined by the Ministry of Finance using the “Rulebook on interest rates in accordance with the ‘arm’s length principle’ for 2018” (Official Gazette No.18/18) are presented in the following table:

Interest rates in accordance with the “arm’s length” principle for companies other than commercial banks and financial leasing companies for fiscal year 2018 as determined by the Ministry of Finance are presented in the following table:

We would like to note that the application of these interest rates in preparing local transfer pricing files in Serbia is not mandatory: Taxpayers can determine interest rates in accordance with the “arm’s length” principle by following Serbian transfer pricing regulations and the OECD guidelines, i.e. by performing a full functional analysis and identifying comparable transactions.