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Optimizing effective tax rate

Effective tax rate (ETR) represents the actual percentage of tax levied on a company’s profits. ETR can be higher or lower than the statutory (nominal) corporate income tax (CIT) rate due to various adjustments to accounting profits prescribed by the CIT Law in order to arrive at taxable profits (depreciation, impairment, non-deductible expenses etc).
ETR is also an indicator of how well the company manages its CIT cost.
Lack of alignment between business strategies and tax planning can result in missed opportunities and create unnecessary significant tax risks and costs.
In order to optimize the ETR the company needs a tax strategy that would be fully aligned with business objectives and plans and legislation requirements.

Your situation:

  • You want to ensure confirmation of compliance with CIT legislation, identifying any non-compliance and tax risks;
  • You wish for a better understanding of key drivers of ETR and how it can be further decreased;
  • You need to decrease CIT costs and increase after-tax profit;
  • You wish for a better understanding of the impact of planned business activities and new projects on ETR;
  • You want early warnings and guidance on dealing with emerging risks or increased tax costs in the future;
  • You wish to exploit tax savings opportunities.

Our services:

  • Achieving and maintaining an optimal level of ETR by ensuring that there are no errors and that all available tax deductions and tax incentives are properly utilized;
  • Identification and management of key factors driving the current ETR (e.g. limited deductibility of marketing expenditure, non-documented expenses etc) and creating strategies to reduce ETR in medium and long term;
  • Analysis and planning of utilization of tax losses and tax credits to achieve maximum effect;
  • Analysis of business plans and calculation of expected ETR.

Contact us

Branka Rajicic

Partner, Tax and Legal services

Tel: +381 11 3302 100

Dragan Draca

Partner, Tax Services

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