The Law on financial business activities in Bosnia and
Herzegovina (FBiH) was published in the Official Gazette of
FBiH No. 48/16 in June 2016, while it became effective as of
December 30 2016.
The law is the result of harmonisation of FBiH's legislation
with the EU directives on combating late payments. The main
purpose of the law, however, is to protect and upgrade the
position of small and medium-sized companies acting as
creditors in financial transactions, by reducing the lack of
liquidity of debtors. Deadlines for fulfilling financial
obligations between taxpayers and public entities are also
regulated by this law, as are the consequences of missing those
deadlines and the obligations of entrepreneurs in the event of
a lack of liquidity.
The law applies to contracts concluded after the law entered
into force and to business transactions carried out after
December 30 2016.
Taxpayers to which the law applies include all legal
entities that carry out activities in FBiH, who are aiming to
operate with certain profit, as well as natural persons who
independently carry out business activities. The financial
institutions, insurance and reinsurance companies, investment
funds and pension funds are not affected by this law.
Pursuant to Articles 8 and 9 of the law, the management of a
company is obliged to undertake necessary measures in case the
capital of a company becomes inadequate. The inadequacy of
capital occurs in case if, on the day of the drafting of the
financial statements, the loss in the current year, together
with accumulated losses from previous years, has reached half
of the company's share capital.
As far as financial obligations are concerned, Articles 10
to 16 of the law prescribe the following deadlines:
- Up to 30 days for the payment in case a
payment deadline is not contracted;
- Up to 60 days if the payment period has
been agreed in the contract; and
- A longer term (up to a maximum of 360
days) can be arranged in writing, provided that the debtor
issues an irrevocable bank guarantee or bill of exchange to
If the debtor fails to meet above deadlines, a fine ranging
from BAM 5,000 ($2,900) to BAM 15,000 may be imposed.
Another important point that has been covered by this law,
specifically in Articles 17 and 18, is the event of insolvency,
which has been described as an event where the
- Has delayed the payment of salaries and
related tax obligations for more than 30 days; and/or
- Has delayed over 20% of its short-term
obligations disclosed in the last year financial report for a
period exceeding 60 days.
The insolvent company/individual is not entitled to perform
any kind of payments, except those that are regulated by
Article 18 of the law. Otherwise, the company/individual could
be penalised with an amount ranging from BAM 5,000 to BAM
The supervision of the enforcement of the law will be
conducted by the tax authority of FBiH, as well as by the
Federal Ministry of Finance through budgetary inspection.
Dajana Topic (firstname.lastname@example.org),
Banja Luka and Sarajevo
Tel: +387 51 961 610