Innovative solutions in fuel control have contributed to increased budget revenues
Although it shows a downward trend, the size of the shadow economy in Serbia remains relatively high—according to the latest estimates, it ranges from 21% to 23.6%. Combating this issue should continue to be a priority for the new government. There are two key approaches to this fight: on one hand, incentive measures and support for entrepreneurs and companies to operate legally; on the other, more effective control and sanctioning of illegal business practices to ensure compliance with regulations and fair market conditions for all.
Despite efforts to improve the state of inspection oversight, there has been no significant progress in the past two years. As a result, among the 10 priority recommendations in NALED's new Gray Book, strengthening the capacity of inspections and mandating the use of eInspector at all levels of government have been highlighted.
Serbia faces a shortage of personnel in all types of inspections, with staffing levels at 30-40% of the required numbers according to existing regulations, and the average age of inspectors being 60 years. Most inspection services, in addition to the insufficient number of inspectors, lack the necessary administrative, legal, and IT support.
Further digitalization and the implementation of innovative solutions in inspection work, especially through cooperation between the government and the private sector, could greatly contribute to reducing the shadow economy, thereby improving public revenue collection and financing public services. A good example of this practice is the collaboration between the market inspection and the company Nanoinspekt, which provides devices for controlling the concentration of markers in fuel based on nanotechnology.
According to Filip Mitrović, the director of the company, the fuel marking program in Serbia started over a decade ago, in February 2014. This has contributed to channeling money spent by citizens on fuel into legal flows and enabling financing for better living conditions through collected excises and taxes.
- According to the Serbian government's conclusion, from 2014 until January 1, 2022, budget revenues increased by approximately 1.38 billion euros from the collection of excise taxes on petroleum derivatives, cumulatively compared to the period before the introduction of fuel marking. In 2023, 1,498 inspections were conducted in 78 wholesale establishments and 1,346 retail locations, with 74 inspections carried out in cooperation with the Ministry of Interior. All samples taken from storage facilities contained the required amount of markers, indicating that the fuel reaching retail outlets came from legal sources and in unchanged condition compared to its production at the refinery. In retail locations, deviations were found in only nine samples, or just 0.7% of the fuel tested – Mitrović noted.
He emphasizes that this clearly indicates why drivers in Serbia now trust that they are purchasing high-quality and legal fuel, something that was never recorded before the introduction of the marking and control system.
- This is the result of the tireless efforts of market inspectors in implementing the marking service provided by Nanoinspekt together with its American partners in Serbia. We are also continuously improving the knowledge and skills of inspectors through regular annual training on marking. I would like to point out that the marking service for petroleum derivatives is paid for by the oil companies, and the service costs the state nothing – our interlocutor noted.
In addition to marking petroleum derivatives with nano-particle markers, Nanoinspekt also offers protection solutions for other commercial products such as cigarettes, household chemicals, alcoholic beverages, coffee, and medicines through various marking methods. By using QR codes and unique serial numbers, product tracking through the entire supply chain from production to end consumer is enabled. Complex labels with multiple levels of protection—ranging from images to holograms, and even nano and UV-visible elements—ensure the authenticity of each protected product.
As a reminder, the reform of inspection oversight began in 2015 with the adoption of the Inspection Supervision Law. The state of this area has been improved through the introduction of coordinated inspection oversight, providing advisory support for legal business practices instead of punishment, establishing the eInspector software solution which has contributed to coordinated and uniform work of inspection bodies, planning, and reporting. Just in 2023, the market inspection conducted 18,912 inspections through the eInspector system, which represents 44% of all recorded inspection controls.
There is still room for improvement. By mid-2019, 36 national inspections had signed a statement confirming that the eInspector software was functional. However, recent statistics indicate that inspections are not fully utilizing this system. The next steps include strengthening the capacity of inspections (new hiring, training, equipment) and improving the position of inspectors, as well as enhancing the software according to inspectors’ recommendations, involving the remaining national inspections not yet part of the eInspector system, and linking this system to necessary registries to make inspection work more efficient. After that, expansion to provincial and local inspection bodies will be needed.
