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TAXES

Republic of Srpska leads a stimulating tax policy with the lowest taxes in the region.

  PROFITS TAX INCOME TAX VAT
Republic of Srpska 10% 10% 17%
Albania 10% 5-20% 20%
Croatia 20% 15-45% 23%
Serbia 10% 10% 18%
Montenegro 9% 9% 17%
FYR Macedonia 10% 10% 18%
Bu¸lgaria 10% 10% 20%
Romania 16% 16% 19%

 

Profits tax (Profit tax Law – The Official Gazette of RS, 91/06, 120/08 and 71/10) is one of the lowest in the region:

  • The law predicts a faster depreciation (the plant and the equipment used could be depreciated up to 40% in the first year and 30% in each of the two following years)
  • The small taxpayer’s tax is calculated at the rate of 2% of the gross annual income of a small company. The small taxpayer is a legal entity from Republic of Srpska that meets every of the following conditions during the whole tax year: runs the agency, except the banking or financial services or insurance transactions or reinsurance; does not employ more than nine workers; its gross annual income in the past year does not, by any terms, exceed the amount of 100.000 KM; it hasn’t made more than 50% of its gross income from one client, i.e. buyer, or a body linked with that client, i.e. buyer; the share in the ownership is shared among two natural persons at the most.

A unique tax rate of 17% for VAT (Value added tax Law – The Official Gazette of BiH 09/05, 35/05), is one of the lowest in the region.

CUSTOMS

The basic elements of the Bosnia and Herzegovina economy customs protection, as well as the rights and obligations of every subject in the acts of goods and passenger customs, are regulated by the Law of Customs policy of Bosnia and Herzegovina. The customs area, customs line, customs border belt, customs surveillance, the act of passing through customs of goods and other departments that regulate the system of customs protection are also regulated. The customs regulations are practiced singularly on BiH land.

With the signing the Contract of stabilization and association, a free export of almost all goods to EU that meet the standards has been brought to life, and concurrently, the market of BiH is being gradually opened for goods from EU, according to the dynamics agreed on in the annexes and protocols that are a part of this Contract.

Import customs are determined on the basis of tariff lists in which the goods and services are classified into 21 categories, and the rate level fluctuates between 0 and 15 percent. There are many points that are free of paying customs, for example, the equipment imported on the basis of foreign investments, the equipment used for Republic of Srpska reconstruction, the materials used for production of export goods, as well as capital and industrial equipment imported on the basis of business transfer activities from abroad. The value of the imported goods is determined on the basis of the supplier’s statement on the goods’ value, with additional expenses for the transfer of the goods from their point of origin to the customs.

The act of passing goods through customs, imported to BiH customs territory, is sanctioned by the customs office by which the goods have been applied for customs.

There are 4 main regional centers in BiH: CI Banja Luka, CI Sarajevo, CI Tuzla, CI Mostar.

Customs Exemption

Foreign investors can be exempted of the import levies on the equipment put to free currency, which represents a foreign subject’s investment.

Import Limitations for Equipment that’s a Part of Foreign Investments

Equipment imported in BiH as a foreign investment must not be older than 10 years. A certificate proving that the equipment meets the certain environment and work protection standards, must be provided from the authorities.

For further information on tax and customs regulations, visit the RS Tax Administration web page.

COMPANY REGISTRATION

The process of company establishment in Republic of Srpska has went through numerous reforms in the past few years, with the goal of creating the most advantageous business ambient possible. The results are visible and there’s constant work on this subject. Specialized economic courts have been established, and they make procedures of business companies’ registration much easier. Registering a company with a foreign investment is made equal to the registration of local business companies. It is not needed to have a local partner to start a business. The Law on Business Companies of RS (“The Official Gazette of RS”, no. 127/08, 58/09 and 100/11) regulates establishment, work and transaction halt of business companies in Republic of Srpska. Work initiation, i.e. the registration of business companies is regulated by the Law on Registration of Companies (“The Official Gazette of RS”, no. 42/05 and 118/09).

Legal forms of business companies, in terms of this law, are:

Partnership company, (p.c.);

Limited (liability) partnership, (l.p.);

Private limited company, (Ltd.) and

Joint-stock company, (JSC).

The act of company registration (Business companies and other companies established with the goal of agency restoration), after a public notary’s processing and/or founder’s documentation verification, starts with filing an application of the registration subject in the Intermediary Agency for IT and financial services (APIF), where it also ends by taking the processed documentation.

That means that the company doesn’t have to turn to the amenable economic registration court, the Republic statistics institute and the Tax office of Republic of Srpska individually anymore, and all that has the goal of ending all activities needed to commence the economic activity.

The most common form of company establishment is the private limited company establishment. You can see a detailed establishment procedure of this type of company here.

The issuing of the permits for carrying out, changing data and the cease of the crafting-entrepreneurial agency is in the jurisdiction of the Economy Department of the Administrative service of the City of Banja Luka, and all needed information could be seen here.

OPERATING EXPENSES

In Republic of Srpska, in the period of January-December 2013, the average net paycheck was 820 KM (421 EUR), while the average gross paycheck was 1351 KM (692 EUR). The sum rate of the gross paycheck fee in Republic of Srpska is 33%.

Pension-disability insurance

18,5%

Health insurance

12,0%

Child protection

1,5%

Unemployment insurance

1,0%

TOTAL

33%

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