On October 14 2015, the House of Peoples of Bosnia and Herzegovina (Upper House of the Parliament) approved the tax treaty signed between Bosnia & Herzegovina and Poland. The treaty was signed in June 2014, and was ratified by Poland on April 8 this year.
The taxes to which this treaty applies include the tax on income of individuals and the tax on profit of enterprises in Bosnia and Herzegovina and, on the Polish side, personal income tax and corporate income tax.
Per the treaty, withholding tax charged on dividends shall not exceed 5% of the gross dividend amount (in case of 25% participation) or 15% of the gross amount (in all other cases). As regards withholding tax on interests, the treaty stipulates a tax rate of 10%, with the same rate set to apply to withholding tax on royalties.
Article 22 of the treaty defines the method of avoiding double taxation. To prevent instances of double taxation, Bosnia & Herzegovina will allow a deduction from taxes in amount equal to the tax paid in Poland (not exceeding the amount of taxes calculated in Bosnia before such deduction is granted).
Given that both countries have ratified the agreement, it will be effective as of 2016. Once it is effective, the 1985 Agreement (concluded by Poland and the Socialist Federal Republic of Yugoslavia, which is still applicable) will be terminated.
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