Abstract
The recent increased migration of workers has posed a brain drain problem on countries, which lose their citizens to more developed countries offering better working and living conditions. Lowering the tax burden on highly skilled individuals has been one of the most commonly used incentives by both developed and developing countries. The Government of the Republic of Serbia has proposed several tax incentives for providing a more beneficial tax treatment for highly skilled employees with the aim of keeping and attracting them back. The first part of this paper illustrates the problem of emigration, the effects of emigration of highly skilled workers, and the effects of taxation on migration decisions. In the second part, the problem of brain drain and its breadth in the Republic of Serbia is addressed, and a detailed elaboration of newly proposed tax incentives is provided. Furthermore, the author proposes an additional tax incentive.
Highlights
Migration of people is not a phenomenon inherent to the 21st century
After the 2008 financial crisis, at the level of the European Union (EU), it was recognised that providing better conditions for growth requires promoting a forward-looking and comprehensive labour migration policy that would respond to the needs of labour markets (European Commission 2010, 17)
It does not seem that remittances compensate for the loss that the source a country incurs after the emigration of highly skilled workers, so that the net effect for the source country might be, at least, neutral
Summary
Migration of people is not a phenomenon inherent to the 21st century. People were emigrating from their home countries in pursuit of a better life from the ancient times. Prone to migration are highly skilled workers: workers with a tertiary education or a specialised skill set They are more likely to migrate to a country that offers better living and working conditions than settling in the country in which they were born (OECD 2019, 1; Fink, Miguelez 2017, 10). As suggested by Hawthorne (2018, 7–8), they provide a productivity premium to destination countries as they are far younger and with professional carriers likely to span decades, providing fiscal benefits for destination countries for a significant period It does not come as a surprise that the number of countries are offering better conditions for finding a job upon the completion of studies, as well as getting a work permit.. Understanding the importance of highly skilled individuals, developing countries have started pushing back and providing incentives for keeping their highly skilled workers and students, and even attracting foreign highly skilled workers
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