Incentives for foreign investors

• ESTABLISHED FOREIGN INVESTORS SUPPORT FUND. The BiH Council of Ministers, at the proposal of Foreign Investments Promotion Agency (FIPA) in BiH adopted on September 20, 2007 the last three decisions necessary for the Foreign Investors Support Fund in BiH to become operative. The Council adopted Rule Book on way of distribution of resources for support to foreign investors in BiH, Decision on establishment and functioning of the Fund’s Board and Decision on appointment of members of the Board. Foreign investors interested in applying for the Fund’s resources will soon have more information on the procedures and conditions for resources distribution.

• The Law on the Policy of Foreign Direct Investments of Bosnia and Herzegovina (Official Gazette of BiH, 17/98, 13/03) ensures national treatment of foreign investors, i.e, foreign investors have the same rights and obligations as residents of BiH.

• Foreign investors are entitled to open accounts in any commercial bank in domestic and/or any freely convertible currency on the territory of BiH.

• Foreign investors are entitled to freely employ foreign nationals, subject to the labour and immigration laws in BiH.

• Foreign investors are protected against nationalisation, expropriation, requisition or measures having similar effects; such measures may take place only in the public interest in accordance with the applicable laws and regulations and against the payment of an appropriate compensation, i.e. compensation that is adequate, effective and prompt.

• Investment capital is exempt from paying import customs and customs duties (with the exception of passenger cars, slot and gambling machines).

• The rights and benefits of foreign investors granted and obligations imposed by the Law on the Policy of Foreign Direct Investment (mentioned above) cannot be terminated or overruled by subsequent laws and regulations. Should a subsequent law or regulation be more favourable to foreign investors, the investor will have the right to choose the regime by which the investment will be regulated.

• Foreign investors may own real estate in BiH. Foreign investors enjoy the same property rights in respect to real estate as BiH citizens and legal entities.

• Foreign investors are entitled to transfer abroad, freely and without delay, in convertible currency, proceeds resulting from their investment in BiH.

• Free trade zones in BiH are part of the customs territory of BiH and have status of legal entity. According to the Law on Free Trade Zones, free trade zone founders may be one or more domestic and foreign legal entities registered in BiH. Free zone users do not pay taxes and contributions, with the exception of taxes and contributions related to salaries and wages. Investors are free to invest capital in the free zone, transfer their profit and retransfer capital. The free zone establishment is considered economically justified if the submitted feasibility study and other evidence can prove that the value of goods exported from a free zone will exceed at least 50% of the total value of manufactured goods leaving the free zone within the period of 12 months.

• The Federation Law on Corporate Income Tax enables the reduction of the tax for a period of 5 years equal to the percentage of foreign capital invested in the assets of the company, provided that the foreign capital is greater than 20% of total capital. This incentive includes companies with 100% foreign capital investment.

• In the Federation of BiH, companies, investing their taxable profits in their own production activities and apartment building are given a tax relief in the amount of 100% of the invested value, or in the amount of 75% if they invest in other activities of their company.