Incentives in economy of Republic of Srpska
Investment incentives are awarded at the national and local levels. In order to consolidate data and better information exchange, the Government of the Republic of Srpska has launched activities to create a Unified Register of Incentives, which is in the final stage of development and will be available soon on the portal www.regpodsticaja.vladars.rs
Incentives at the Republic level
Institutions at the level of the Republic of Srpska award numerous incentives to the economy, we single out the key ones:
Incentives of the Ministry of Economy and Entrepreneurship
The Law on Incentives in the Economy of the Republic of Srpska (Official Gazette of the Republic of Srpska, No. 52/19, 78/20, 37/22, 56/22) provides incentives for economic development, as follows:
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Incentives for increasing salaries to employees in economic entities
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Incentives for direct investment for new technologies
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Incentives for direct investment of special importance
Companies are entitled to incentive for increasing salaries in the amount of funds corresponding to 70% of paid contributions to the salary increase, depending on the initial amounts of employees’ salaries. This type of support is used by a large number of economic entities and has proven to be very effective, both for the state and the economy. Reimbursement of paid contributions is realiсed on a semi-annual basis. The content, form and manner of submitting a request for an incentive to increase the salary of workers is prescribed by the Rulebook on the procedure for granting incentives to increase the salary of workers ("Official Gazette of the Republic of Srpska", No. 127/22).
Incentives for direct investments aim to provide conditions for achieving greater competitiveness of the economy, in order to ensure sustainable economic growth and employment in the Republic of Srpska. The allocation of funds is made on the basis of the investment project, and the funds are available after the announcement of the public call. The subjects of direct investment projects, documents for proving the fulfillment of conditions for exercising the right to incentives, criteria for evaluation of applications and other issues of importance for the procedure of granting incentives for direct investments are defined by the Decree on the procedure of granting incentives for direct investments. (Official Gazette of the Republic of Srpska, no 32/21, 22/22, 54/23, 67/24).
Direct investments of special importance include the implementation of projects that achieve the following:
1) Employment of at least 100 workers or investments of at least BAM 10,000,000 in tangible and intangible assets on the territory of a developed and medium-developed local self-government unit.
2) Employment of at least 50 workers or investments of at least BAM 5,000,000 in tangible and intangible assets on the territory of an underdeveloped and extremely underdeveloped local self-government unit.
Regulation on the procedure for awarding incentives for direct investments of special importance is defined by Decree on the procedure of granting incentives for direct investments of special importance (Official Gazette of the Republic of Srpska, no 87/22, 56/23).
Incentives оf the Employment Bureau
The Republic of Srpska Employment Institute is a key organization at the labor market which takes part in preparing, executing and implementing employment projects in line with the Republic of Srpska Employment Strategy and the annual Employment Action Plan for Strategy Implementation. The institute is implementing a project of support to employment in the economy of the Republic of Srpska, based on the Rulebook on requirements, criteria and manner of implementation of active employment policy measures, through public call for this programme which is announced for each year individually and is available on the portal of the Republic of Srpska Employment Bureau. There are several different categories of employment programmes, and the programme that we especially emphasize on this occasion is the "Programme of employment support in the economy through the payment of incentives in the amount of taxes and contributions for new employment of workers" which is available at www.zzzrs.net/index.php/javni_pozivi/.
INCENTIVES OF THE MINISTRY OF AGRICULTURE, FORESTRY AND WATER MANAGEMENT
Incentives of the Ministry of Agriculture, Forestry and Water Management for agricultural and rural development. Every year, the Ministry adopts the Rulebook on requirements and ways of obtaining financial incentives for agricultural and rural development.
The Law on Profit Tax (Official Gazette of the Republic of Srpska, No. 94/15, 1/17, 58/19) stipulates that a taxpayer who invests in equipment and facilities on the territory of the Republic of Srpska to perform a registered production activity has the right to reduce the tax base by the value of the investment made.
The Law on Income Tax (Official Gazette of the Republic of Srpska, No. 60/15, 5/16, 66/18, 105/19, 49/21, 119/21, 56/22) contains benefits for investors. This law abolished the dividend tax, and introduced significant innovations for the taxation of income from foreign sources in a positive sense. The conditions for obtaining the status of a qualified investor are defined, on the basis of which the investor acquires tax benefits for annual income (Articles 42-50).
The Law on Real Estate Tax (Official Gazette of RS, No. 91/15) stipulates that in case of performing deficient production and craft activities, the taxpayer may be released from obligations, on which a special decision is made by the municipal or city assembly. The following are inter alia exempt from real estate tax: cultivated agricultural land and real estate used for own agricultural production.
Incentives in the textile sector Workers in the textile, clothing, leather and leatherware sector who earned less than the average gross salary in the Republic for the previous year, have a lower contribution base, which is 25% of the average gross salary paid in the Republic in the previous year. This stimulates investment in this sector, which employs a large number of workers (labour-intensive sector).
Amendments to the Law on Communal Taxes (Official Gazette of the Republic of Srpska, No. 4/12, 123/20 and 119/21) abolished the obligation of business entities, legal entities and entrepreneurs to pay an annual fee for displaying a business name. This measure aims to further relieve the economy by reducing non-tax benefits, which will bring significant savings to businesses.
Also, in order to facilitate investment in the construction of production facilities, amendments to the Law on Agricultural Land (Official Gazette of the Republic of Srpska, number: 93/06, 86/07, 14/10, 5/12, 58/19 and 119/21 ), it is possible to exempt the construction of facilities in the field of manufacturing industry from the obligation to pay compensation for changing the purpose of agricultural land for non-agricultural purposes, regardless of whether construction is planned in an urban zone or in a rural area, which has not been the case so far.
Article 17 of the Law on Audio-Visual Activities (Official Gazette of the Republic of Srpska 56/22) sets forth that, in order to encourage investors to finance the production of audio-visual works in the Republic of Srpska, the investor shall be paid 30% of the total amount spent on the production of audio-visual work on the territory of the Republic, subject to the resources provided in the budget of the Republic.
Exemption from payment of import duties - Provisions of Article 207 of the Law on Customs Policy in Bosnia and Herzegovina (Official Gazette of BiH, No. 58/15), applicable from April 25, 2018, set forth the cases of exemption from import and export duties. The exemption procedure is regulated by the Decision on requirements and procedure to exercise the right to exemption from import and export duties payment (Official Gazette of BiH 24/18). The following shall be exempt from payment of import duties:
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Equipment that is put into free circulation, and represents the stake of a foreign person, except for passenger vehicles, slot machines and games of chance,
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Equipment for production that is not produced in Bosnia and Herzegovina, which is imported for new or expansion of existing production, modernisation of production, introduction of new or modernization of existing production technology for performing direct production activity,
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Production assets and other equipment belonging to a company that definitively ceases its activity in another country and moves to the customs territory of Bosnia and Herzegovina to perform a similar activity.
RS Investment and Development Bank: Several credit lines, of which we single out the credit line for the introduction of new technologies
Credit line for the procurement of new technologies and equipment is aimed at developing the economy of the Republic of Srpska and maintaining its competitiveness. The fixed interest rate of this credit line is three percent to the amount of 5.000 BAM to 500.000 BAM, with a repayment period of 10 years and a grace period of 12 months. More information on all IRBRS credit lines is available on the website https://www.irbrs.org/
Incentives of the Ministry of Energy and Mining
In order to support the improvement of business activities and improve the operations of companies within its competence, the Ministry of Energy and Mining, in accordance with the Rulebook on granting incentives in the field of energy and mining ("Official Gazette of Republic of Srpska", No. 98/19) and available budget funds, allocates funds to economic entities within its competence.
Funds allocated in this way are intended for:
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investment in tangible assets (land, buildings, production or sales facilities, machinery or equipment or other similar tangible assets) and
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investment in intangible assets (business software packages, patents, licenses, certification, accreditation, quality management standards or information security management standards, control systems or marking the products with "CE" mark of conformity or industrial design, that is redesign of products or packaging or other similar intangible resources).
Guarantee credit lines of the Guarantee Fund of the Republic of Srpska
The Guarantee Fund of the Republic of Srpska issues guarantees in the name of securing a part of the loan that the bank approves to the users of funds under guarantee lines, in case the users of funds cannot offer adequate loan security required by the bank. There are several types of guarantee lines, such as for initial business activities, for companies, for entrepreneurs, for export support, for agriculture, etc., and the Guarantee program of economic support for mitigating the consequences of the COVID-19 pandemic caused by the SARS virus has been established. CoV-2. More information on the guarantee lines of the Republic of Srpska Guarantee Fund can be found on the website www.garantnifondrs.org
Incentives at the local level
Incentives at the local level differ, and information about them can be found at the portal www.regpodsticaja.vladars.rs as well as at the official websites of the local government units.
