Be Wary Of The Following Things When Considering Tobacco Business in Serbia

 

Before entering the tobacco business you must know…

 

If you were thinking of starting a tobacco production, distribution, and trade business, but you are troubled by questions related to the necessary permits, processes, requirements, and expenses, then you are in the right place.

In the following text, we will take you through the world of the tobacco business and the legal regulations that regulate it. Pay close attention to the next few pages because they can save you from losing time, nerves, and money.

First of all, it is important that you understand that tobacco-related business is strictly regulated by the Tobacco Act (“TA“)[1], so it is important to comply with all the conditions and procedures stipulated by the TA if you want to start an activity related to production, trade and tobacco trade. Otherwise, you could find yourself in the unpleasant situation of being fined for a misdemeanor.

The TA recognizes the following activities related to tobacco:

  • tobacco production;
  • tobacco processing;
  • tobacco processing;
  • production of tobacco products;
  • wholesale trade in tobacco products;
  • retail trade in tobacco products;
  • import of tobacco and tobacco products;
  • export of tobacco and tobacco products;
  • trading of tobacco products according to a special procedure.

 

The TA provides the conditions and procedure for obtaining a license to engage in each of the above-mentioned activities. For each of the mentioned activities, it is necessary to obtain a permit and register in the appropriate register. In the following text, we will provide you with a short guide through all the mentioned activities and how to start them.

 

Tobacco production

According to the TA, tobacco production is the production of tobacco seedlings, cultivation of tobacco in the field, harvesting, drying, sorting, and packaging of tobacco at tobacco producers.

In order to be able to start producing tobacco, it is necessary to conduct your business in one of the forms of business entities (legal entity or entrepreneur) and to submit an application for obtaining a license to the Tobacco Administration (“Administration“), at the Ministry of Finance. Along with the request, you must also attach:

  • that you have at least 5ha of arable land owned, leased, or in cooperation with a natural person-tobacco producer;
  • the act of the competent state (Ministry of Agriculture) authority on the fulfillment of the condition that you have the technical capabilities for agricultural processing and land preparation for sowing, harvesting, drying, sorting, packing, and other necessary operations until the preparation of tobacco for processing;
  • all contracts concluded with tobacco processors, that is, exporters, unless you are simultaneously registered in the Register of Tobacco Processors, that is, the Register of Exporters;
  • Declaration of no criminal record of the responsible person in the business entity;
  • the act of the competent state body on the fulfillment of the conditions regarding the provision of a suitable space for the accommodation of tobacco;
  • an act on the appointment, that is, the engagement of the person who manages the tobacco production process.

The Administration will issue a decision by which it can reject, refuse the request or issue a permit for the activity of tobacco production.

The permit is issued for a period of 5 years.

After you have received the permit, it is necessary to submit a request to the Administration for entry into the appropriate register within 30 days from the date of delivery of the permit. Attach with the request:

  • all contracts concluded with tobacco processors, that is, exporters, unless you are simultaneously registered in the Register of Tobacco Processors, that is, the Register of Exporters;
  • proof of payment of the Republic administrative fee (currently RSD 2,880.00).

After registering in the register of tobacco producers, you can start doing this activity.

 

Tobacco processing

According to the TA, tobacco processing is sorting, fermentation, as well as other actions in the technological process of tobacco processing and packaging.

In order to engage in tobacco processing as a business entity, it is necessary to submit a request for a permit to the Administration. You should attach the following to the request:

  • act of the competent state body (Ministry of Health and Ministry of Agriculture) that you have your own premises for buying tobacco, storing bought tobacco, arranging, processing, and classifying tobacco;
  • act of the competent state authority that you have your own tobacco processing equipment;
  • act of the competent state authority that you have your own laboratory or concluded a contract with an accredited domestic or foreign laboratory for the analysis and determination of tobacco quality;
  • all contracts concluded with tobacco processors, i.e. manufacturers of tobacco products, i.e. exporters unless you are simultaneously registered in the Register of tobacco processors, i.e. manufacturers of tobacco products, i.e. the Register of exporters;
  • statement on the non-conviction of the responsible person in the business entity.

If you plan to transport tobacco in your own means of transport, that means of transport must be visibly marked as tobacco transport and must meet the prescribed sanitary and hygienic conditions, as well as other prescribed conditions. The Act on the fulfillment of the mentioned conditions is issued by the Ministry of Health.

The administration will pass a decision by which it can reject, refuse the request or grant you a permit to carry out the activity of tobacco processing.

The permit is issued for a period of 5 years.

After the permit has been issued to you, it is necessary to submit a request to the Administration for registration in the register of tobacco processors within 30 days from the date of delivery of the permit. With the request, you must also attach:

  • contracts concluded with tobacco processors, i.e. manufacturers of tobacco products, i.e. exporters.

After you are registered in the register of tobacco processors, you can start performing the mentioned activity.

 

Tobacco processing

According to the TA, tobacco processing is the industrial process of manufacturing and packaging processed tobacco.

In order to start processing tobacco, it is necessary to submit a request for a permit to the Administration. With the request, you must also attach:

  • the act of the competent state body (Ministry of Health and Ministry of Agriculture) on the fulfillment of the condition that you have your own tobacco processing equipment;
  • the act of the competent state authority on the fulfillment of the condition that you have your own appropriate laboratory for the analysis and determination of the quality of processed tobacco, i.e. concluded a contract with an accredited domestic or foreign laboratory for the analysis and determination of the quality of processed tobacco;
  • the act of the competent state authority on the fulfillment of the condition that you have your own appropriate premises for tobacco processing and accommodation of processed tobacco;
  • all contracts concluded with tobacco processors, i.e. tobacco manufacturers, who are registered in the Register of Tobacco Manufacturers, in the case when the tobacco manufacturer provides tobacco for service processing at a tobacco processor, who is registered in the Register of Tobacco Processors, i.e. importers unless you are also registered at the same time in the mentioned registers.
  • statement on the non-conviction of the responsible person in the business entity.

The administration will pass a decision by which it can reject, refuse the request or issue you a license to carry out the activity of tobacco processing.

The permit is issued for a period of 5 years.

After you have received the permit, it is necessary to submit a request to the Administration for registration in the register of tobacco processors within 30 days from the date of delivery of the permit.

For registration in the register of tobacco processors, it is necessary to pay a fee that is adjusted every year (currently it is RSD 10,818,840.00).

After you are registered in the register of tobacco processors, you can start performing the mentioned activity.

 

Production of tobacco products

According to the TA, the production of tobacco products is an industrial process in the preparation, production, and packaging of tobacco products.

In order to be able to start producing tobacco products, it is necessary to obtain a permit and register in the appropriate register.

A license for the production of tobacco products is obtained following a public tender.

It is necessary to submit an application for participation in the public tender and submit:

  • Contracts concluded with tobacco processors, i.e. tobacco manufacturers who provide tobacco for service processing at the tobacco processor, which is entered in the Register of Tobacco Processors, i.e. tobacco processors, i.e. importers, entered in the respective registers. The document is not submitted if you are simultaneously registered in the Register of Tobacco Producers, who provide tobacco for service processing at tobacco processors, i.e. the Register of Tobacco Processors, i.e. the Register of Tobacco Processors, i.e. the Register of Importers.
  • act of the competent state body (Ministry of Health and Ministry of Agriculture) that the conditions have been met in terms of owning its own equipment in the country, which enables it to carry out production in all stages from tobacco preparation (moistening, leafing, cutting, flavoring) to the manufacture of cigarettes and other tobacco products and their hygienic packaging;
  • the act of the competent state authority on the fulfillment of the condition that you have installed capacities for the production of cigarettes and other tobacco products from your range of at least 2,500,000,000 cigarettes in one year;
  • the act of the competent state authority on the fulfillment of the condition that you have your own appropriate laboratory for the analysis and determination of the quality of tobacco products, i.e. concluded a contract with an accredited domestic or foreign laboratory for the analysis and determination of the quality of tobacco products;
  • the act of the competent state authority on the fulfillment of the condition that you own appropriate premises that meet the prescribed conditions for the production and storage of tobacco products;
  • the act of the competent state authority that you employ the appropriate professional workforce in production and quality control;
  • you need to offer a realistic assessment of the realization of the annual production of cigarettes and other tobacco products according to the appropriate quality and quantity in accordance with market conditions and
  • proof from the competent authority of not having been convicted of an economic offense or a criminal offense in connection with the illegal production, i.e. illegal trade in cigarettes and other tobacco products in the period of three years preceding the day of submission of the bid for participation in the public tender, namely: for the owner whose share exceeds 10% of the company’s capital, a person authorized to represent the company, for an entrepreneur, for a person related to the company submitting a bid for participation in a public tender, as well as for a legal entity whose legal successor is the legal entity submitting the bid, who cannot be older than 30 days from the date of submission of the application for participation in the public tender.

You can also exercise the right to participate in the public tender if, along with the application for participation in the public tender, you submit, as proof of the fulfillment of the aforementioned conditions, a detailed project that foresees the method and deadlines for fulfilling those conditions, with the explanation of the project, the determined amount of financial resources required for the realization of the project, a bank guarantee for that amount, or proof of other means of security from a bank or other financial organization.

When submitting an application for participation in the public tender, you must also attach a certified written statement in which you commit to fulfilling the obligation to offer a realistic estimate of the annual production of cigarettes and other tobacco products according to the appropriate quality and quantity in accordance with market conditions.

Following the completion of the public tender, the Government of the Republic of Serbia, on the proposal of the Administration, issues a decision to issue a license for the production of tobacco products.

The permit is issued for a period of 5 years.

After receiving the permit, it is necessary to submit a request to the Administration for registration in the register of tobacco product manufacturers within 30 days from the date of delivery of the permit.

To register in the Register of Tobacco Products Manufacturers, you will have to allocate significant funds for the fee, which is adjusted every year (currently it is 21,567,147.74 RSD).

With the request, you should also attach:

  • license for the production of tobacco products,
  • proof of payment of the fee from paragraph and
  • contracts concluded with tobacco processors, i.e. tobacco manufacturers who provide tobacco for service processing at tobacco processors, who are registered in the Register of Tobacco Processors, i.e. tobacco processors, i.e. importers, entered in the respective registers. The document is not submitted if you are simultaneously registered in the Register of Tobacco Producers, who provide tobacco for service processing at tobacco processors, i.e. the Register of Tobacco Processors, i.e. the Register of Tobacco Processors, i.e. the Register of Importers.

After you are registered in the register of producers of tobacco products, you can start performing the mentioned activity.

 

Wholesale of tobacco products

In order to be able to start trading in wholesale tobacco products, it is necessary to submit an application for obtaining a permit to the Administration. With the request, you must attach:

  • proof that you use a suitable space that allows you to properly store at least 30 tons of cigarettes and other tobacco products within the total warehouse space on the territory of the Republic of Serbia, as well as an act of the competent state body (Ministry of Trade) on the fulfillment of the conditions regarding the space;
  • an act of the competent state body (Ministry of Health) on the fulfillment of the conditions to dispose of means of transport for the unhindered and regular supply of tobacco products to retailers based in the territory of the Republic, which are visibly marked as transporting tobacco products and which meet the prescribed sanitary and hygienic requirements conditions, as well as other prescribed conditions;
  • all contracts concluded with manufacturers, i.e. importers of tobacco products, i.e. wholesalers of tobacco products unless you are simultaneously registered in the Register of producers of tobacco products, i.e. in the Register of importers of tobacco products;
  • statement on the non-conviction of the responsible person in the business entity.

By decision, the administration can reject, reject the request or issue a license for the activity of wholesale trade in tobacco products.

The permit is issued for a period of 5 years.

After obtaining the permit, it is necessary to submit a request to the Administration for registration in the register of wholesalers of tobacco products, within 30 days from the date of delivery of the permit.

To register in the register of wholesalers of tobacco products, you must set aside funds for the fee, the amount of which is adjusted every year (currently it is RSD 10,818,840.00).

With the request, you should also attach:

  • proof of payment of the said fee;
  • a commercial bank guarantee with a “no objection” clause issued until the expiration date of the license for wholesale trade in tobacco products, in the amount of 400,000 euros in dinar equivalent at the middle exchange rate of the National Bank of Serbia.

After you are registered in the register of wholesalers of tobacco products, you can start carrying out this activity.

 

Retail of tobacco products

In order to be able to start a retail trade in tobacco products, it is necessary to submit a request for a permit to the Administration. With the request, you must also attach:

  • all concluded pre-contracts, i.e. contracts with wholesalers of tobacco products unless you are simultaneously registered in the Register of Wholesalers of Tobacco Products;
  • a statement on the non-conviction of the responsible person in the business entity;
  • proof of payment of the fee, which currently amounts to RSD 15,525.61 for each retail outlet that will be used for the trade in tobacco products.

The Administration can reject, reject the request or issue a permit for retail trade in tobacco products.

The permit is issued for a period of 2 years.

 

Import of tobacco products

In order to be able to import tobacco products, it is necessary to submit a request for a permit to the Administration. With the request you must attach:

  • all concluded contracts with a foreign manufacturer or an authorized distributor of a foreign manufacturer, i.e. an authorization by a foreign manufacturer or an authorized distributor of a foreign manufacturer for the distribution of those tobacco products on the market of the Republic of Serbia and
  • a statement on the non-conviction of the responsible person in the business entity.

The administration can reject, reject the request or issue you a permit for the import of tobacco products.

The permit is issued for a period of 5 years.

After you have received the permit, it is necessary to submit a request for entry in the appropriate register to the Administration within 30 days from the date of delivery of the import permit. To enter the register, you will have to allocate a certain amount of money, which is adjusted every year (currently it is RSD 10,818,840.00).

After registering in the register of importers, you can start performing this activity.

 

Export of tobacco products

In order to be able to start exporting tobacco products, it is necessary to submit a request for a permit to the Administration. With the request, you must attach a statement about the criminal record of the responsible person in the business entity.

The administration can reject, reject the request or issue you a permit for the export of tobacco products.

The permit is issued for a period of 5 years.

After you have received a permit for the export of tobacco products, you must submit a request for entry in the appropriate register to the Administration within 30 days from the date of delivery of the permit for export.

After you are registered in the register of exporters of tobacco products, you can start performing this activity.

 

Carrying out the sale of tobacco products according to a special procedure

The TA defines the circulation of tobacco products under a special procedure as shipping, i.e. placing tobacco products in a specialized customs warehouse for sale on planes and ships, i.e. for the purpose of supplying planes and ships, which operate on international lines, or for the purpose of shipping tobacco products to free customs stores, as and sales to diplomatic and consular missions and diplomatic and consular personnel.

In order to be able to sell tobacco products according to a special procedure, it is necessary to submit a request for registration in the appropriate register with the Administration. Along with the request, you must also attach:

  • a contract on the procurement of tobacco products with a foreign supplier, unless you are registered in the Register of Tobacco Products Producers;
  • a contract concluded with the holder of a specialized customs warehouse unless you are also the holder of a specialized customs warehouse;
  • statement on the non-conviction of the responsible person in the business entity and
  • proof of payment of the fee, which is adjusted every year (currently amounts to RSD 2,580,617.50)

The administration can reject, reject the request or make an entry in the register.

Registration is done for a period of 5 years.

 

In the end, we would like to point out another rule contained in the TA, which is of great importance for everyone who wants to start a business in the sphere of production and trade of tobacco and tobacco products.

Namely, the TA allows you to register in several registers if you meet the requirements for registration in each of the registers.

The TA further stipulates that if you paid a fee for registration in one of the registers, you do not pay a registration fee when registering in another register, if the amount of the fee paid is the same or higher. So, in simpler terms, only if the registration in the next (second, third, etc.) registry requires a higher fee than the one you paid for the previous one, then you will be obliged to pay the fee, otherwise you are exempt from payment.

 

 

For more info on this or any other legal, tax or business topic, please feel free to write to us at office@statt.rs at any time OR contact us via telephone number +381113281914 during working days from 08:30 to 16:30

 

[1] Tobacco Act (“Official Gazette of RS”, no. 101/2005, 90/2007, 95/2010, 36/2011, 6/2012 – harmonized ed., 69/2012 – harmonized ed., 93/2012, 8 /2013 – harmonized ref., 64/2013 – harmonized ref., 108/2013, 4/2014 – harmonized ref., 79/2014 – harmonized ref., 5/2015 – harmonized ref., 67/2015 – harmonized ref. , 5/2016 – harmonized translation, 65/2016 – harmonized translation, 8/2017 – harmonized translation, 76/2017 – harmonized translation, 18/2018 – harmonized translation, 62/2018 – harmonized translation, 95 /2018, 4/2019 – harmonized ex., 91/2019, 91/2020 – harmonized ex. and 11/2021 – harmonized ex.).