Tax collection

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.

THE TAXATION CATEGORIES	TAX RATES
	In FB&H	In RS	Brčko Distrikt
Value Added Tax	17 %	17 %	17 %
Corporate Income Tax	10%	10%	10%
Personal Income Tax	10%	10%	10%

 

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%

 

Tax exemptions

 

The Federation of BiH Law on the Corporate Income Tax enables the taxpayer, who in the year for which the corporate income tax is being determined, has achieved 30% of their total revenue by export to be exempted from the tax payment for that year.

Taxpayer who in the period of five consequent years invests into production in the value of minimum 20 million KM, on the territory of the Federation of Bosnia and Herzegovina, is being exempted from the payment of corporate income tax for the period of five years beginning from the first investment year, in which minimum four million KM must be invested.
If taxpayer from the above paragraph, in the time period of five years, does not achieve the prescribed census for investment, they lose the right of tax exemption, and the unpaid corporate income tax is being determined in accordance with the provisions of the Law on the Corporate Income Tax augmented for penalty interest payable for untimely paid public revenues.

In the Federation of BiH,  taxpayer who employs more than 50% of disabled persons and persons with special needs longer than one year is being exempted from the payment of corporate income tax for the year in which more than 50% disabled persons and persons with special needs were employed.

 

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 10% on net salary (in accordance with gross model).

 

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.