Tax Year Book za BiH

1.       GENERAL INFORMATION

1.1 Country

Bosnia and Herzegovina

1.2 Currency

Bosnia-Herzegovina Convertible Mark (BAM)

1.3 Principal business entities

Limited Liability Company

1.4 Foreign exchange control

In accordance with the BiH Law on the Central Bank, neither the Central Bank nor any other relevant institution may impose payment restrictions on international transactions, except when the Central Bank deems it indispensable to meet BiH’s obligations under international treaties or law.

1.5 Current economy climate  (Industry overview/

encouraged business development)

In Bosnia and Herzegovina, real GDP grow is 4 percent in 2021 after contracting 3.2 percent in 2020. As BiH’s economy rebounds in 2021.

The economy is forecast to grow at a slower pace this year due to a tougher base of comparison and the fallout from Russia’s invasion of Ukraine. The war has spiked energy prices, denting purchasing power. Moreover, pandemic-related uncertainty and heated political tensions in the build-up to and aftermath of October’s general election cloud the outlook further. Focus Economics panellists project GDP to expand 2.7% in 2022, which is down 0.3 percentage points from last month’s forecast, and 2.7% in 2023.

1.6 National tax authority

Name :

Indirect Taxation Authority, Tax administration FBIH, Tax administration RS

Website:

http://www.uino.gov.ba/

http://www.pufbih.ba/v1/

https://poreskaupravars.org/

2.       CORPORATE INCOME TAX

2.1 Basis of taxation

Corporate income tax law FBiH, Corporate income tax law RS

2.2 Rates of tax

10%

2.3 Year of assessment

2022

2.4 Profits deemed to be taxable

Based on corporate income tax law

2.5 Taxation of dividends

no taxation

2.6 Taxation of capital gains

10%

2.7 Taxation of interest income

10%

2.8 Utilization of tax losses

Tax losses can be carried forward for period of 5 years.

2.9 Key Tax incentives

•  To a taxpayer who invests from his own resources in production equipment in

      value of more than 50% of the realized profit of the current tax period, the liability is             reduced calculated income tax for 30% of the amount in the year of investment.

• To a taxpayer who in the period of five consecutive years makes an investment from his own funds in the total amount of 20 million KM, with 4 million KM invested in the first year, the liability of accrued income tax is reduced by 50% of the amount in the years of investment.
•  The taxpayer is entitled to a tax-deductible expense in the amount of twice the amount of gross salary paid to newly hired employees if he meets the following conditions:

a) the duration of the employment contract must be at least 12 months full-time and

b) the newly hired employee was not employed by a taxpayer or a related party in

the previous five years.

2.10 Withholding tax

2.11 Transfer Pricing

There is a liability to prepare transfer pricing documentation in accordance with OECD instructions, in case of transaction with affiliated parties.

2.12 Filing requirements of tax return

Filing due dates

31^st March for prior year

Penalties

 A fine of 3,000.00 KM to 100,000.00 KM will be imposed on

taxpayer if:

a) fails to file a tax return and tax balance in accordance with Article 49 of the Law;

Payment of profit tax and application of holdover

Federation of Bosnia and Herzegovina: 20 working days upon submission of tax return;

Republika Srpska and Brčko District: no later than 90 days following the end of the tax year.

3.       PERSONAL TAX

3.1 Basis of taxation (Residence, Personal assessment)

Income tax law FBIH, Income tax law RS

The tax for permanent residents in Bosnia and Herzegovina is paid within municipally of residents.

Resident taxpayers are generally taxed on worldwide income, with a tax offset for foreign tax paid on foreign income, up to the amount of Bosnia and Herzegovina tax payable on that income. Foreign residents are taxable only on Bosnia and Herzegovina source income.

3.2 Rates of tax

10% FBIH

3.3 Year of assessment

2022

3.4 Allowances and Deductions

(a)     3.600 KM on annual basis is tax-exempt

3.5 Taxation of dividends

Not taxed

3.6 Taxation of capital gain

10%

3.7 Taxation of interest income

10%

3.8 Personal assessment and utilization of losses

Not applicable

3.9 Withholding tax

10%

3.10 Statutory obligation of employers

Obligations in accordance with Labor law

3.11 Filing requirement of tax return

Filing due dates

31^st March for prior year

Penalties

A fine of 300 KM to 3.000 KM will be imposed to

taxpayer if:

a) fails to file a personal tax return

Application of holdover

Not applicable

4.       STATUTORY REQUIREMENT ON SOCIAL SECURITY AND RETIREMENT CONTRIBUTIONS

4.1 Regulatory organization

Tax Administration office FBiH, Tax Administration office RS

4.2 Basis of contribution

Law Social Security Contributions

4.3 Contribution rate

4.4 Exemption from tax

No exemption

5.       GST/VAT

5.1 Basis of tax

Value added tax law Bosnia and Herzegovina

5.2 Rates of tax

17%

5.3 Registration

After reaching mark up point at 50.000 KM in revenue there is a liability to register as VAT obligor.

5.4 Filing requirements

Every 10^th in the month for previous month

6.       DOUBLE TAX RELIEF

6.1 Foreign tax credit

In the Federation of Bosnia and Herzegovina, Republika Srpska, and Brčko District, tax credit is granted for tax paid outside of the territory of the Federation of Bosnia and Herzegovina, Republika Srpska, and Brčko District, respectively. The amount of tax credit cannot exceed the amount of tax that would be calculated in the event when the same income would be earned in the Federation of Bosnia and Herzegovina, Republika Srpska, and Brčko District, respectively.

In the event when Bosnia and Herzegovina has signed a double tax treaty (DTT) with another state, then provisions of the tax treaty apply.

6.2 List of double tax treaties signed

7.       OTHER SIGNIFICANT TAXES

7.1 Stamp duty

Not applicable

7.2 Real property tax

In the FBiH, the real estate tax (RET) applies to, inter alia, vacation real estate and rented real estate. RET is regulated at the cantonal level in the FBiH (i.e. there are currently 10 different laws applicable in the FBiH) and further regulated by municipal decisions.

In the RS, the RET rate is set at a maximum of 0.20 percent and applies on an annual basis to all real estate situated in the RS, except for real estate that is used for production where the RET rate is set at a maximum of 0.10 percent. The RET base is the market value of real estate, whose market value is determined in accordance with municipal decisions.

7.3 Estate duty

Municipal tax

7.4 Net wealth/net worth tax

Not applicable

7.5 Others

Business tax

Consumption tax, etc.

POINT OF CONTACT

Name of contact

Elvir Gojak

Telephone with country code

+387 61 106 210

Email address

elvir.gojak@bizplus.ba