Bosnia and Herzegovina: Law on financial operations
International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX
Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Bosnia and Herzegovina: Law on financial operations

intl-updates-small.jpg
topic.jpg

Dajana Topic

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 creditor.

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 company/individual:

  • 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 15,000.

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 (dajana.topic@eurofast.eu), Banja Luka and Sarajevo

Eurofast Global

Tel: +387 51 961 610

Website: www.eurofast.eu

more across site & bottom lb ros

More from across our site

ITR is delighted to reveal all the shortlisted nominees for the 2024 Americas Tax Awards
Global chair Mohamed Kande and Australian CEO Kevin Burrowes are likely to be grilled on the firm’s lack of co-operation
Consensus on the amount A multilateral convention will take more than six months to achieve, one expert believes
ITR is delighted to reveal all the shortlisted nominees for the 2024 Europe Middle East & Africa Tax Awards
ITR is delighted to reveal all the shortlisted nominees for the 2024 Asia-Pacific Tax Awards
There is a 'critical need' for a unified platform to address challenges in TP, the organisation’s president told ITR
Tax specialist Kate Barton helped to transform EY’s global tax practice, Dentons has claimed
Alex Gerko had challenged HMRC’s positions on deferred trading profits that he and other traders made while working for hedge fund GSA
The Tax Practitioners Board had required PwC to overhaul its internal processes following the tax leaks scandal
With corporate tax rates already exceeding 15%, India will need to think creatively to extract additional revenue through new pillar two rules, local partners tell ITR
Gift this article