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

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

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

Indirect tax professionals now rate compliance as a bigger obstacle than technology and automation; in other news, Italy approved a VAT cut on art sales
AI-powered tax agents are likely to be the next big development in tax technology, says Russell Gammon of Tax Systems
FTI Consulting’s EMEA head of employment tax and reward tells ITR about celebrating diversity in the profession, his love of musicals, and what makes tax cool
Canadian Prime Minister Mark Carney and US President Donald Trump have agreed that the countries will look to conclude a deal by July 21, 2025
The firm’s lack of transparency regarding its tax leaks scandal should see the ban extended beyond June 30, senators Deborah O’Neill and Barbara Pocock tell ITR
Despite posing significant administrative hurdles, digital services taxes remain ‘the best way forward’ for emerging economies, says Neil Kelley, COO of Ascoria
A ‘joint understanding’ among G7 countries that ‘defends American interests’ is set to be announced, Scott Bessent claimed
The ‘big four’ firm’s inaugural annual report unveiled a sharp drop in profits for 2024; in other news, Baker McKenzie and Perkins Coie expanded their US tax benches
Representatives from the two countries focused on TP as they met this week to evaluate progress under a previously signed agreement – it is understood
The UK accountancy firm’s transfer pricing lead tells ITR about his expat lifestyle, taking risks, and what makes tax cool
Gift this article