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
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 Brcko 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 in respect of investments in production and
manufacturing have been modified in comparison to the previous
version of the law. Consequently, taxpayers investing in production
equipment in value up to 50% of the current profits may be eligible
for a 30% deduction of the profit tax liability in the year of
The new law introduces a tax
incentive for newly-employed staff;
Expenses from sponsorship are now
recognized as tax deductible expenses in the amount not exceeding
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
recognized 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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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