Bosnia and Herzegovina

FBiH tax incentives

FBiH foreign tax credit

When a taxpayer generates income or profit through business activities outside of the Federation of Bosnia and Herzegovina (directly or through a business unit) and pays the profit tax on such activities, the tax paid abroad shall be credited, up to the amount of the profit tax that would have been paid for the income or profit generated by the same activities in the Federation of Bosnia and Herzegovina.

FBiH investment incentive

Taxpayers who invested their own resources in production equipment worth more than 50% of realised profit in the tax period shall be relieved from 30% of taxation for the year of the investment.

A taxpayer who invested in production within the territory of the Federation of Bosnia and Herzegovina for five consecutive years for a minimum fee of BAM 20 million will be relieved from 50% of taxation for a period of five years, starting with the first year in which it has invested at least BAM 4 million.

FBiH employment incentive

A taxpayer who employed new employees is entitled to a tax-deductible expense in the double amount of gross salary paid to newly employed employees if the following conditions are met:

• Employment contract has to be concluded on a full-time basis for period of minimum 12 months.
• Newly employed employee has not been employed by the taxpayer or by a related legal entity in the past five years.

RS tax incentives

RS foreign tax credit

If a legal entity resident of Republika Srpska generates revenue in a foreign state and that revenue is taxable both in Republika Srpska and in the foreign state, then the tax paid in the foreign state will be deducted from the tax liability of the resident in Republika Srpska.

RS incentive for investment in production

For a taxpayer who in the territory of Republika Srpska invests in plant and equipment for performing registered production activity, the tax base will be decreased for the amount of performed investment.

Tax base can be decreased in the tax period in which the plant and equipment were put in use. 

If the taxpayer disposes the property and equipment before expiry of three years from the date when they were put in use, the taxpayer losses right to incentive and will have to pay the additional tax as if they never used the incentive, as well as penalty interest for late payments.

BD tax incentives

BD foreign tax credit

If a legal entity from Brčko District obtains revenue from a foreign state and the revenue is taxed both in Brčko District and in the foreign state, then the tax paid to the foreign state, whether paid directly or withheld and remitted by another person, is to be credited from the BD CIT, unless such legal entity from Brčko District elects to treat the foreign tax as a deductible expenditure in determining the fiscal year tax base.

BD investment incentive

For a taxpayer who invests in machines and equipment for performing its own registered business activity on the territory of Brčko District, a deduction is allowed for the amount of the investment.

BD employment incentive

For a taxpayer who employs new employees for an indefinite period of time during the tax period, a second deduction is allowed for the total amount of paid gross salaries for the new employees.