Bosnia and Herzegovina: Amendments to the Law on Excise Duties in Bosnia and Herzegovina

March 21, 2018

On December 15 2017, the Parliament adopted long-delayed amendments to the Excise Law in Bosnia and Herzegovina (BiH) following a 15-hour-long debate in Parliament and resistance from the major opposition parties. The amendments entered into force on January 3 2018 and became applicable as of February 1 2018.

The opposition parties expressed their dissatisfaction with the non-existence of a protective mechanism for businessmen, the inadequate explanation of reasons and the lack of any kind of analysis. Furthermore, in their opinion, the legislative changes will lead to higher costs of products and services in the country.

On the other side, the supporters of the amendments pointed out that the International Monetary Fund (IMF) would not release funds (in the amount of around €550 million ($676 million)) to BiH until the country's Parliament adopted a new law on excise taxes.

Additionally, the Law would unblock €220 million from the European Bank for Reconstruction and Development (EBRD) for infrastructure projects in BiH, as well as another €250 million of loans from the EBRD.

The main law changes relate to widening the tax base on bio-fuels and LPG, increasing the excise duty for heating oil as well as for oil derivatives and LPG. Accordingly, excise duties are shown in Table 1.

Table 1
Fuel type	Fuel amount	Tax amount (BAM)	Tax amount (€)
Gas oil/bio-fuels	1,000 litres	700	358
Unleaded petrol	1,000 litres	750	383
Heating oil	1,000 litres	450	230
LPG	1,000 kg	400	205

Furthermore, the road tolls have been increased by BAM 0.15 ($0.09) per litre of fuel, in order to satisfy international creditors who consider increased road tolls as a safeguard for repayment of debts.

Future analysis will show the effect on the economy of the increasing of fuel prices, on the one hand, and the funds for the reconstruction and development on the other. Companies dealing with bio-fuels, LPG, oils and oil derivatives are advised to seek assistance in assessing the impact of the amendments, on their businesses.