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.net

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) provides incentives for economic development, as follows:

  • free trade area
    Incentives for increasing salaries to employees in economic entities
  • Companies are entitled to incentive for increasing salaries in the amount of funds corresponding to 70% or 30% 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. 106/19).

  • free trade area
    Incentives for direct investment
  • 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).

    Also, for new direct investments which realise new employment of at least 100 workers, an incentive is realiсed, based on a special decision of the Government on that investment (Article 15, paragraph 3 of the Law on Incentives in the Economy of Republic of Srpska).

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 LINK. Further details about these and other programs of the Institute are available at www.zzzrs.org.

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) 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.

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:

  • free trade area

    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,

  • free trade area

    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,

  • free trade area

    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

The new 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 30 000 to five million KM, with a repayment period of 12 years and a grace period of 24 months. More information on all IRBRS credit lines is available on the website https://www.irbrs.org/

Incentives of the Ministry of Agriculture, Forestry and Water Management

Every year, the Ministry of Agriculture, Forestry and Water Management allocates financial incentives for the development of agriculture and villages. The Ministry adopts the Rulebook on the conditions and manner of realisation of financial incentives for the development of agriculture and villages. The Rulebook for 2021 was published in the Official Gazette of the Republic of Srpska, No. 8/21, 17/21, 33/21).

Within the support of capital investments, the beneficiary of the incentive realizes the right to a financial incentive in accordance with the Rulebook on the conditions and manner of realization of financial incentives for capital investments in agricultural production in 2021. (Official Gazette of the Republic of Srpska, No. 13/21, 17/21)

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.net as well as at the official websites of the local government units.