A boycott of the value added tax (VAT) must not happen, because it would have no positive effect, while it would threaten the economy, Vice-President of the Association of Small and Medium Companies of Serbia Milan Knezevic said Saturday.

"We must not do it now. It is dangerous to insist on boycotting the tax at this point in the economic crisis, thereby threatening the economic system of the nation," he told Tanjug. It is completely irrational and reflects the need to establish some kind of credibility for the Association of Employers (UPS) rather than get results, Knezevic added.

The UPS announced earlier this week they would call on companies to boycott the VAT unless the government deals with the issues regarding the collection of the tax.

According to UPS research, VAT had an influence in the termination of over 13,000 Serbian companies since 2008.

A VAT boycott occurred in Ireland, where companies agreed to deposit the payments onto a special account until the government met their demands, Knezevic noted.

That solution was chosen because a complete boycott would constitute a criminal act, he added, stressing that "companies are pressuring the government more and more because it is not responding in an expected way."

The small and medium companies in Serbia are surviving thanks to subsidized liquidity loans, Knezevic explained.