Bosnia and Herzegovina offers businesses an opportunity to tap into its developing market. When establishing operations in the country, it is crucial to understand the corporate income tax rates applicable in each entity, as well as other important taxes such as VAT, personal income tax, customs duties, payroll taxes, property tax, and excise taxes. ToTo ensure compliance with tax regulations and to obtain accurate and up-to-date information, it is advisable to consult with tax professionals and refer to the official websites of the tax authorities in each entity: the Federation of Bosnia and Herzegovina (FBiH) Tax Authority Website and the Republika Srpska (RS) Tax Authority Website. These resources provide comprehensive information, guidelines, forms, and contact details for any inquiries related to business taxes in Bosnia and Herzegovina.
Bosnia and Herzegovina has a decentralized tax system, with tax regulations varying between its two entities: the Federation of Bosnia and Herzegovina (FBiH) and the Republika Srpska (RS). As of the knowledge cutoff date in September 2021, the corporate income tax rates are as follows:
Federation of Bosnia and Herzegovina (FBiH): The corporate income tax rate in FBiH is 10% on taxable profits. However, entities engaged in the production and sale of agricultural products, mining, and hotel and restaurant services enjoy reduced rates ranging from 0% to 2%.
Republika Srpska (RS): In RS, the corporate income tax rate is 10% on taxable profits. Similar to FBiH, specific sectors like agriculture, forestry, and fishery benefit from reduced rates ranging from 0% to 2%.
Value Added Tax (VAT): Bosnia and Herzegovina has a VAT system applicable throughout the country. The standard VAT rate is 17%. However, certain goods and services qualify for reduced rates of 5% or are exempt from VAT. Registration for VAT is mandatory for businesses meeting the relevant turnover threshold.
Personal Income Tax: While not directly a business tax, it's worth mentioning that individuals residing in Bosnia and Herzegovina are subject to personal income tax on their earnings. The rates vary between entities and depend on the level of income, ranging from 10% to 20%.
Customs Duties: Customs duties are levied on the importation of goods into Bosnia and Herzegovina. The rates vary depending on the type and value of the goods and are subject to international trade agreements.
Payroll Taxes: Employers are required to withhold payroll taxes, including social security contributions and health insurance contributions, from employees' salaries. The rates and specific requirements vary between entities.
Property Tax: Property tax is imposed on the ownership of real estate properties in Bosnia and Herzegovina. The rates and calculation methods differ between entities and municipalities.
Excise Taxes: Excise taxes are applicable to certain goods, including alcohol, tobacco, energy products, and vehicles. The rates and bases for excise taxes are determined by legislation and vary between entities.
For detailed and up-to-date information on business taxes in Bosnia and Herzegovina, it is recommended to visit the official websites of the tax authorities of each entity:
Federation of Bosnia and Herzegovina (FBiH) Tax Authority Website: Official FBiH Tax Authority Website
Republika Srpska (RS) Tax Authority Website: Official RS Tax Administration Website