Tax breaks

The Law on Profit Tax of the Republic of Srpska (Official Gazette of the Republic of Srpska, No. 94/15, 1/17, 58/19) stipulates that a taxpayer who invests in equipment and facilities for the performance of a registered production activity in the territory of the Republic of Srpska shall be entitled to tax base reduction 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) 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

Tax legislation

  • free trade area
    Law on Profit Tax (Official Gazette of the Republic of Srpska, No. 94/15, 1/17 and 58/19)
  • free trade area
    Law on Income Tax (Official Gazette of the Republic of Srpska, No. 60/15, 5/16, 66/18, 105/19, 49/21, 119/21)
  • free trade area
    Law on Real Estate Tax (Official Gazette of the Republic of Srpska, No. 91/15)
  • free trade area
    Law on Contributions (Official Gazette of the Republic of Srpska, No. 114/17, 112/19, 119/21)
  • free trade area
    Law on Customs Policy of BiH (Official Gazette of BiH, No. 58/15)

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 highlighting 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, by amendments to the Law on Agricultural Land ("Official Gazette of Republic of Srpska", No. 93/06, 86/07, 14/10, 5/12, 58/19 and 119/21) , construction of facilities in the field of processing industry is exempt 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.