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ECONOMY
February 15, 2000
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LEGAL PROCEDURE FOR GRANTING CONCESSION
Recommendation for initiating a concession granting procedure A recommendation is submitted to the Government of the Republic of Serbia through the Agency. The recommendation may be presented by:
The Agency notifies the applicant of the position taken by the Government on the presented recommendation.
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Recommendation of the Enactment of a Concession Decree and a draft Concession Decree Pursuant to the Government¢s intention to grant a concession, the Agency prepares, in cooperation with the ministries in charge of the sectors involved, a recommendation for the enactment of a concession granting decree and a draft concession decree. The recommendation for the enactment of a concession decree and a draft concession decree relating to the construction of a public utility facility or the performance of activities relating to public utilities is prepared by a competent local government unit and presented to the Agency together with the opinion to the ministry competent for the area in question. The Agency submits to the Government the recommendation for the enactment of the concession decree and the draft concession decree.
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Concession Decree The Government of the Republic of Serbia adopts a Concession Decree. The Concession Decree is published in the "Official Gazette of the Republic of Serbia"
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Tender Documentation The tender documentation is prepared by the Agency. If the subject matter of the concession is construction of a public utility or performance of such an activity, the competent authority in the local government unit will prepare the tender documentation
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Public Bidding The Agency, pursuant to the Decision on the Public Bidding for granting a concession to foreign persons ("Official Gazette FRY" No.57/96) conducts a public bidding. The Agency publishes an announcement on public bidding in the "Official Gazette of the Republic of Serbia" and other media. The Agency and the competent authority in the local government unit shall nominate a Commission to conduct the public bidding. After the bidding the Commission will inspect all the bids, draft the minutes and a report on the results of the bidding and submits these to the Agency within 30 days from the day when bidding procedure was completed. The Agency then will submit this documentation to the Government. When the competent authority in a local government unit conducts the bidding procedure, the protocol and report on bidding results shall be submitted to the Agency within 30 days, and the Agency shall proceed the documentation to the Government within 15 days from the date of receipt. The Government shall adopt the Decision on Award of the Concession. The Decision shall be published in "Official Gazette of the Republic of Serbia". After the concession granting procedure, the Agency shall inform all participants on the results and selection of the Concessionaire.
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Concession Agreement The Government and the Concessionaire shall conclude a concession agreement within 60 days from the date when the Concessionaire was selected. When the subject matter of a concession is the construction of public utilities for the purpose of performing such an activity, the Concessionaire and the competent body of the unit of local government shall make the agreement with the consent of the Government. The Concession Agreement shall be reported and registered under the conditions and in the way specified in the federal law on foreign investment. The Concession Agreement shall be reported to the Agency for record-keeping purposes.
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Concessionary Enterprises The Concessionaire shall found an enterprise within 60 days after the date when the Concession agreement was signed with a seat in the Republic to perform a concessionary activity.
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Privileges to Foreign Concessionaires
In the period forwhich the concession is granted i.e. the performance of concessionary activity, tax and other reliefs and exemptions shall be enjoyed by any Concessionaire in the way and under the same conditions as those applicable to foreign investment in domestic legal entities. Possible reduction or abolition of tax reliefs and exemptions shall not apply to a concessionary enterprise if these are more unfavourable than the reliefs and exemptions valid on the date of the concession agreement.
In the period of the concessionary activity the Concessionaire will have the right to the restitution of its share, transfer of profit and funds. According to the Law on Foreign Exchange Operations, profit, investment funds and the remainder of funds from any such investment may be freely transfered provided all commitments in Yugoslavia are settled (tax and other). It should be mentioned that, according to the Yugoslav regulations, profit (or net income) is the amount obtained when all expenditures have been attended to, as well as and all other liabilities (statutory and other) of the concession enterprise. When the profit tax is paid, the unallotted profit, net profit remains. Therefore, free transfer of profit materialized by the Concessionare from investment in Yugoslavia means free transfer of dividends and possible other contractual compensation to the foreign investor.
The Concessionaire has the right to a free transfer of the compensation in convertible currency as indemnification due to the occurrence of one of political risks (nationalization, expropriation, war, and other measures that are equal to nationalization and expropriation). Freedom to transfer such means regulated in the Foreign Investment Law and the interstate agreement on foreign investment protection and incentives.
A concessionary enteprise founded by a foreign person may avail of the privileges stipulated in the Law on Profit Tax. In case of the concession investment, a concession enterprise shall be exempt from tax on profit made on account of the revenues from the Concession subject, within five years from the date of the contracted completion of the concession investment as whole. If a concession enterprise earns profit prior to the concession investment completion, it shall be exempt from tax on profit. The duration of the period shall be set forth by the concession act of the Government of the Republic of Serbia and/or a concession contract. The profit tax rate for enterprises is 20% in Serbia. If Yugoslavia signs an agreement on avoidance of double taxing with the country from which a foreign investor comes, then a privilege in form of a tax credit can be acquired in case of dividend transfer. In some agreements, tax rates are limited to lower amounts.
The Concessionaire, pursuant to the Foreign Investment Law may use reliefs in connection with free import of equipment, other fixed assets and materials for the construction of facilities which represent the Concessionaire's investment, and he is exempted from import duty on new equipment.
Areas In Which Concessions Can Be Given
In order to overcome the present (unfavourable) situation in which only restricted financial funds are available, the Government of Serbia puts an emphasis in its economic policy for the future period on encouraging theinflow of foreign capital through concession granting.
Priority projects to be completed through granting of concessions have been defined and they are briefly described in the text below. Besides these priorities, there are also other areas in which our country has comparative advantages and which can be the subject matter of a concession.
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