Serbia’s technology sector is facing potential upheaval following the government's decision to scrap a key incentive programme aimed at attracting foreign professionals, with several companies now considering scaling back or leaving the market entirely, the Serbian IT Association (SITA) said on July 14.

The repealed regulation on the criteria for awarding incentives to employers who hire newly settled persons had played a “key role” in positioning Serbia as a hub for IT talent, particularly amid the global relocation of skilled workers due to geopolitical instability, including Russia’s ongoing conflict in Ukraine.

“Four weeks after the abolition of incentives for newly settled persons, despite several official letters that we have sent to the competent institutions, the dialogue with the IT sector has not yet been started,” SITA said in a statement.

SITA, which represents more than 20 tech firms with a combined annual turnover exceeding €375mn—of which €290mn come from IT exports—expressed “deep concern over the complete lack of institutional reaction.”

The group warned that without government engagement, the sector could see an exodus of foreign investors and professionals. “More IT companies are already considering changing their strategic focus and partially or completely withdrawing from the Serbian market,” SITA said.

The incentive scheme, according to the association, had made Serbia competitive with other countries vying to attract global IT talent, including Portugal, Turkey, the UAE and Romania. SITA said the programme was not a fiscal burden but a mechanism to grow the tax base and bolster market competitiveness.

“About two-thirds of all tax payments remained in the Serbian budget, while one-third constituted incentives for companies. The mechanism was not a fiscal expense, but an instrument for expanding the tax base and strengthening the competitiveness of the market,” the association stated.

In addition to tax revenues, SITA said the incentives drove growth in IT service exports, knowledge transfer and the hiring of highly educated professionals, boosting the capabilities of domestic teams.

The group also stressed the broader implications of tax policy for the sector, urging a comprehensive review of the regulatory environment to support both local and international IT companies.

SITA called for immediate talks with the government to craft a transitional solution. “There is a risk that multi-year efforts in attracting investments and developing the technological ecosystem will be permanently damaged,” the statement concluded.

The Serbian government has yet to respond publicly to the IT sector’s concerns.