Nov. 2014—The Serbian business environment got a boost recently with the removal of fees and charges that were burdening businesses and citizens and discouraging potential investors.

It is no easy task to motivate governments to tackle important reforms, but USAID’s Business Enabling Project did just that. In April 2012, the project released a study identifying 370 fees and charges that provide businesses and citizens with little or nothing in return. Following an intensive communications campaign, the Government of Serbia eliminated 138 of these para-fiscal charges, or non-tax fees, imposed on businesses.

The study, conducted with the National Alliance for Local Economic Development (NALED), identified $910.4 million (730 million euros) in charges that passed through the Treasury Department in 2011. In addition, there were many other fees from other state agencies and institutions that bypassed the Treasury and, as a result, were not quantifiable. Fees were continuing to grow, so it was virtually impossible to perform a complete inventory.

This study was presented to the Government of Serbia and the business community and attracted considerable media attention. USAID kept the issue in the spotlight with media appearances, roundtables and meetings. “Para-fiscal” became one of the most used phrases in election campaigns, with virtually all major political party leaders pledging to remove and reduce these charges.

“The unpredictable business environment is the main reason for the low level of investment in Serbia,” said Duško Vasiljević, a World Bank Serbia expert. “The identified para-fiscal levies heavily affect the unpredictability of the business environment, as they increase the uncertainty of business operations and costs.” The issue of para-fiscal levies, according to Vasiljević, should be addressed as part of a broader tax reform.

Meanwhile, USAID and NALED partnered with the National Broadcasting Service of Serbia to launch a national marketing campaign called Ask When that drew attention to one of the biggest problems affecting Serbia’s business environment. The Government of Serbia and USAID then worked together to draft legislation to eliminate the para-fiscal charges and to require Ministry of Finance and Economy approval for any new charges. The order was enacted on Sept. 25, 2012.

USAID’s five-year Business Enabling Project, which began in January 2011, is designed to help the Government of Serbia improve the competitiveness of the Serbian economy and its private sector businesses.

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