Taxes in B&H

Taxes in B&H

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Taxes in B&H
The basic taxation categories are:
•    Value Added Tax
•    Corporate income tax
•    Personal income tax
•    Property tax
•    Social security contributions paid by employers and employees
•    Excises, a special type of sales tax paid on some commodities like oil products, tobacco products, soft drinks, alcohol drinks, beer, wine and coffee.
CATEGORIES                           TAX RATE

Value Added Tax 17% (FB&H,RS, BD)
Corporate Income Tax 10% (FB&H,RS, BD)
Personal Income Tax 10% (FB&H, BD) and 8% (RS)

Value added tax (VAT)
Unique VAT rate is 17%. Indirect Taxation Authority is in charge of collecting value added tax and coordinating fiscal policy issues in general. This body is also responsible for collecting customs and excises on the entire territory of BiH.
Value added tax is a comprehensive tax on consumption, assessed based on the value added to goods and services. This is a general tax applied to all commercial activities, including manufacturing and distribution of goods and providing services. It is a consumer tax because it is not paid by the company, but by the end user. It is assessed as a percentage of the cost of goods or services. The tax amount is visible in all stages, from manufacturing to distribution chain. When paying tax liability, the taxpayer will reduce the value added tax by the tax amount he/she has already paid to other taxpayers at purchase. This ensures neutrality of taxation, regardless of the number of transactions involved.
Corporate income tax rate in B&H
•    Federation B&H – 10%
•    Republic of Srpska – 10%
•    Brko District – 10%
Profits transferred from abroad are not taxed in BiH
Profits transferred from abroad are not taxed if they were previously subject to taxation abroad.
Corporate taxable basis
Profits are calculated in accordance with applicable laws, by deducting (real) expenses from revenues. The tax base includes profit gained through revenues and capital gains, according to the accounting regulations. The expenditures must conform to the accounting standards.
Personal income tax rates
In FBiH - Personal income tax is 10 % on net salary (in accordance with gross model).
In RS - Personal income tax is 8% on net salary (in accordance with gross model).
Tax on income from self-employment is paid at the rate of 10%.
Tax on income from copyright, capital, capital income and other income is paid at a rate of 13%.
Foreigners and taxes in BiH
All foreigners with permanent residence in the Federation BiH and RS pay personal income tax on revenues earned during a calendar year in BiH territory. Equally, all foreigners who do not reside permanently in BiH but who earn income in the Federation BiH and RS are considered as taxpayers.
In Brcko District, foreigners are treated as taxpayers if they stay in the District territory during an uninterrupted period of 183 days at least.

For more information on taxes in B&H please click here
Testimonials & Success Stories
 

Global Investment Promotion Best Practices 2012 of the World Bank has cited one example of support that FIPA provides to foreign investors who are running business in Bosnia and Herzegovina in order to contribute to increase the flow of foreign capital in the country.

The article said:  

„The Foreign Investment Promotion Agency (FIPA) of Bosnia and Herzegovina was an early convert to the idea of providing facilitation services to agribusiness investors as a way to maximize the positive impact of agriculture on the economy.

In 2007, for example, FIPA assisted a Dutch food processing company establish a US$1.6 million production facility to process unused milk ingredients into value-added products in Sarajevo to sell to markets in Eastern Europe and the Middle East.

As part of its aftercare program, FIPA assisted the company with its expansion plans. Among other things, the agency helped facilitate veterinary permissions, navigate various bureaucratic hurdles and played an important role in securing funding for the company’s expansion. It also helped develop a network of local suppliers and customers. As a result of these efforts, the Dutch investor developed stronger links with the Bosnian economy, thus increasing the positive spillover effects on the local economy.

Currently a new investment to establish a drying facility for milk powder is under way. This will further expand the processing facilities of unused milk ingredients. This additional planned investment is worth approximately US$2.8 million, thus nearly trebling the company’s original investment in the country“.

 

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