As of 5 October 2026, the Ministry of Finance, in coordination with the Serbian Accounting Standards Board, issued application guidance for micro and small enterprises (MSP) transitioning to IFRS for SMEs (MSFI za MSP) effective for financial years beginning on or after 1 January 2026. The guidance focuses on two pervasive implementation challenges: (1) population of the “previous year” comparative column in the first IFRS for SMEs financial statements, and (2) the treatment of lease contracts under Section 20 of the standard. For the comparative column, entities must restate the prior period (2025) opening balances as if IFRS for SMEs had always been applied, using the full retrospective approach without the optional exemptions available to first-time adopters of full IFRS. This requires reconstruction of lease liabilities, right-of-use assets, and deferred tax positions for 2025. Regarding leases, the guidance mandates that all contracts meeting the definition of a lease under Section 20.3 must be capitalized, including those previously classified as operating leases under local GAAP. The incremental borrowing rate at the transition date (1 January 2026) must be used for discounting, and the resulting right-of-use asset is measured at the lease liability amount adjusted for any prepaid or accrued lease payments. Entities must disclose the transition impact in the notes, quantifying the effect on equity, debt ratios, and EBITDA.
Key Takeaways
- Full Retrospective Restatement Required: No first-time adoption exemptions; 2025 comparatives must reflect IFRS for SMEs principles, necessitating lease capitalization and deferred tax recalculation.
- Lease Capitalization Universal: All leases (except short-term and low-value exemptions) go on-balance-sheet from 1 January 2026, significantly impacting leverage metrics and loan covenants.
- Transition Disclosure Mandatory: Financial statements must include a detailed reconciliation of equity, profit/loss, and key ratios between local GAAP and IFRS for SMEs at the transition date.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement