The National Assembly of the Republic of Srpska, in the first part of the 21st regular session, on April 14, 2022 adopted  the Law on Amendments to the Law on Incentives in the Economy of the Republic of Srpska.

After two years, the Analysis of the application of the Law on Incentives in the Economy of the Republic of Srpska was performed, showing the necessity to amend the Law in order to improve the procedure for awarding incentives.

Amendments to the Law changed the concept of determining the initial amount of salary, harmonised with the new methodology for calculating salaries, as well as simplified the procedure for submitting requests for incentives to increase salaries.

Accordingly, the current concept of the initial amount of salary, as a constant, is replaced by the concept of the initial amount of salary as a variable element in the incentive procedure, i.e. the initial amount of the salary represents the amount of the employee’s salary for the month of December in the calendar year which precedes the accounting period for which the request for incentives is submitted.

In case of change of the minimum wage, for workers who had a salary lower than the valid minimum wage in the Republic of Srpska in the month of the initial salary amount, the amount of the valid minimum wage on the last day of the accounting period for which the application for incentive is valid.

Amendments to the law stipulate that an economic entity shall receive incentives individually per employee, in the amount corresponding to the value of 70% of paid contributions to increase workers’ salaries and prescribe a maximum amount of incentives in one accounting period of BAM 1,000 per employee. These changes will apply in the accounting period as of July 1, 2022.

Also, the procedure for submitting requests for incentives to increase salaries has been simplified, by abolishing the obligation to submit employment contracts.

In addition to interventions in the part of the law related to the incentive to increase salaries, this law provides intervention in the part of incentives for direct investments of special importance approved by the Government of the Republic of Srpska.

In relation to the previous provision of the law, according to which the condition for entitlement to incentives for direct investments of special importance was the employment of at least 100 workers, this amendment introduces a minimum amount of investment, as an alternative option for exercising the right to such incentives.

Accordingly, and depending on the level of development of the local self-government unit, general conditions are prescribed which the economic entity shall fulfill in order to exercise the right to incentives for direct investments of special importance.

Also, the law creates a legal basis for the adoption of a bylaw which will prescribe special conditions and regulate in more detail the procedure for granting incentives for direct investments of special importance.