Bosnia & Herzegovina: Federation of Bosnia & Herzegovina amends profit tax law

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Bosnia & Herzegovina: Federation of Bosnia & Herzegovina amends profit tax law

vujasinovic.jpg

Igor Vujasinovic

The Official Gazette of the Federation of Bosnia & Herzegovina (FBIH), no. 15/16 as published on February 26 2016 included the new profit tax law applicable in FBIH. The law entered into force eight days after its publication.

Some of the most significant amendments in the new law include:

  • A taxpayer for income generated in FBIH is now also considered to include a subsidiary or a legal entity from the Republic of Srpska and Brčko District, which is registered in the territory of the federation;

  • Tax incentives previously valid for exports and for the employment of more than 50% of disabled persons have been abolished;

  • The provisions which stipulated tax deductions for investments in production and manufacturing have been modified in comparison to the previous version of the law. Consequently, taxpayers investing in production equipment of a value up to 50% of the profits may be eligible for a 30% deduction of the profit tax liability in the year of investment;

  • The new law introduces a tax incentive for newly-employed staff;

  • Expenses from sponsorship are now recognised as tax deductible expenses in the amount not more than 3% of total revenues;

  • The deduction of member fees for participation in trade chambers has been abolished;

  • The terms of recognition of write-offs have been modified. As a result, such expenses are now recognised if claims were included as income of taxpayers in the previous tax period but have not been collected within 12 months from the due date of payment or are under litigation, or are under liquidation or bankruptcy proceedings against the debtor;

  • Interest paid by a related party is deductible up to four times the amount of registered capital. Any difference between that amount of interest and the interest paid is treated as a dividend.

The Act stipulates that the federal minister of finance will define and implement the required rules and procedures related to the new income tax law and the transfer pricing rules.

Igor Vujasinovic (igor.vujasinovic@eurofast.eu)

Eurofast, Bosnia Office

Tel: +387 51 961 610

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

The OECD’s mínimum tax rules are set to affect M&A deals in several ways, says Osborne Clarke partner Esther Villa
The EU is preparing countermeasures to protect its interests, Ursula von der Leyen said; in other news, the NRA is suing the state of Colorado over a 6.5% tax on the sale of firearms
The ruling is ‘well-structured’ in its references to the OECD TP guidelines, one expert says, while another argues it overlooks key technical issues
India also brokered its first-ever multilateral APA last year, the Central Board of Taxes announced
A global tax framework may not materialise anytime soon, but a common set of principles is becoming increasingly necessary, Rudolf Winkenius also tells ITR
Kingsley Napley’s claimants are arguing that taxing the provision of education breaches the European Convention on Human Rights
While pillar two can progress without the US, it won’t reach the same heights without American involvement, argues Renáta Bláhová, founding partner of BMB Partners Taxand
There are unanswered questions as to how foreign investors could reclaim money via tax credits, advisers suggested
Amid an ever-changing tax environment, India’s advisory market is bustling with competition ahead of the 2025 World Tax rankings and ITR Awards
The deal comes after PwC had accused Paul McNab of using confidential information; in other news, McDermott hired a new London tax head from a US rival
Gift this article