Incentives for foreign investors

Law on the Policy of Foreign Direct Investments of Bosnia and Herzegovina (Official Gazette of B&H, 17/98, 13/03, 48/10 and 22/15) ensures:

  • National treatment of foreign investors, i.e, foreign investors have the same rights and obligations as residents of B&H.
  • Foreign investors are entitled to open accounts in any commercial bank in domestic and/or any freely convertible currency on the territory of B&H.
  • Foreign investors are entitled to freely employ foreign nationals, subject to the labor and immigration laws in B&H.
  • Foreign investors are entitled to transfer abroad, freely and without delay, in convertible currency, proceeds resulting from their investment in B&H
  • Foreign investors may own real estate in B&H. Foreign investors enjoy the same property rights in respect to real estate as B&H legal entities.
  • Foreign investors are protected against nationalization, expropriation, requisition or measures having similar effects; such measures may take place only in the public interest in accordance with the applicable laws and regulations and against the payment of an appropriate compensation, i.e. compensation that is adequate, effective and prompt.
  • The rights and benefits of foreign investors granted and obligations imposed by the Law on the Policy of Foreign Direct Investment (mentioned above) cannot be terminated or overruled by subsequent laws and regulations. Should a subsequent law or regulation be more favorable to foreign investors, the investor will have the right to choose the regime by which the investment will be regulated.

OTHER INCENTIVES

Customs benefits

Equipment of the foreign investor being imported as part of share capital is exempt from paying customs duties (with the exception of passenger vehicles, slot and gambling machines). In order to enjoy this benefit, the foreign investor should submit a written request for exemption from paying import duties to the competent customs authority (according to the place of seat of the company) along with the following documents:

  • contract or other relevant document about the investment on the basis of which the equipment is being imported,
  • proof of registration of the investment at the competent authority,
  • specification of equipment with tariff number, tariff mark (with quantity indication), single and total value, certified by the investor,
  • statement of the investor that the equipment is not older than 10 years age limit,
  • Certificate of the competent institution confirming that the imported equipment complies with the environmental and employment protection standards.

The Customs Office issues a decision within 15 days upon submission of the request.

Free trade zones

Free trade zones in B&H are part of the customs territory of B&H and have status of legal entity. According to the Law on Free Trade Zones of B&H, Free trade zone founders may be one or more domestic and foreign legal entities or natural persons. The free zone establishment is considered economically justified if the submitted feasibility study and other evidence can prove that the value of goods exported from a free zone will exceed at least 50% of the total value of manufactured goods leaving the free zone within the period of 12 months.

For additional information on incentives at state level of BiH click here

TAX BENEFITS

In Federation of B&H:
Law Corporate Income Tax enables the taxpayer, who in the year for which the corporate income tax is being determined, has achieved 30% of their total revenue by export to be exempted from the tax payment for that year.

The taxpayer who in the period of five consequent years invests into production in the value of minimum 20 million BAM, on the territory of the Federation of Bosnia and Herzegovina, is being exempted from the payment of corporate income tax for the period of five years beginning from the first investment year, in which minimum four million BAM must be invested. If the taxpayer, in the time period of five years, does not achieve the prescribed census for investment, he loses the right of tax exemption, and the unpaid corporate income tax is determined in accordance with the provisions of the Law on Corporate Income Tax augmented for penalty interest payable for untimely paid public revenues.
– The taxpayer who employs more than 50% of disabled persons and persons with special needs longer than one year is being exempted from the payment of corporate income tax for the year in which more than 50% disabled persons and persons with special needs were employed.

In Republic of Srpska:
Amendments of the Law on Profit Tax  RS introduced tax base reduction in the value of investment for:

  • Investment in equipment intended for the company production activity
  • Investments in plants and immovable property used for manufacturing and processing activities

And tax base reduction in amount of paid personal income tax and mandatory contribution for the employer:

  • Employing 30 workers during a calendar year (workers who were on the official evidence of Employment Office of RS).

New incentives:

Regulation on Implementation of the Employment Support Program, Official Gazette of the Republic of Srpska 88/14

This Regulation governs the conditions and manner to encourage and increase employment in the territory of the Republic of Srpska, the criteria and procedures for funds award, the schedule of disbursement of the awarded funding, and manner of monitoring of the implementation of the Employment Support Program.
The funds can be used to finance employment programs in the manufacturing sector, with investors employing minimum 50 workers for undetermined period on the day of issue of the public call. These funds cannot be used to finance employment projects in the fields of hospitality, industry and trade.
Total funding to be awarded will be determined based on the number of workers newly employed in the manufacturing sector, subject to the fulfilment of criteria set forth by this Regulation. The funding to be disbursed per newly employed worker amounts to BAM 3,000.
Grants are awarded under the following conditions:
a) the user did not reduce the number of employees who are employed for an indefinite time in the past year from the date of public announcement, as well as in the period of project implementation,
b) number of employees who are employed for an indefinite period, after project implementation, ie after the the payment of the second (and last) tranche of funds does not reduce the minimum period of 18 months of the payment.
With the entry into force of this Regulation, cease to have effect the Decree on conditions and methods of implementation of the Programme of support  to investments and employment (“Official Gazette of the Republic of Srpska”, no. 70/12 and 38/13).

For additional information on incentives in RS click here

Brcko district incentives

For information on incentives in Brcko District click here

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