Foreign investors gain numerous benefits in BiH

Страни инвеститори

From the point of view of foreign investors, Bosnia and Herzegovina is a very attractive location for investment.

Geographical position as a link between the European Union and the countries of Southeast Europe, relatively low labor costs, and developed industrial culture are just some of the reasons why foreign investors choose BiH.

In addition, it is a very favorable destination for foreign investment because, in addition to the opportunity for good earnings, there is also a capable, skilled workforce, and tax rates that are lower than most countries in Europe.

Foreign investors are more than welcome in BiH, and the fact that they are provided with various benefits when it comes to investments, which we bring to you below, speaks in favor of that.

STATE LAVEL

Law on the Policy of Foreign Direct Investments of Bosnia and Herzegovina (Official Gazette of B&H, 17/98, 13/03, 48/10 and 22/15) ensures:

– National treatment of foreign investors, i.e, foreign investors have the same rights and obligations as residents of B&H.

– Foreign investors are entitled to open accounts in any commercial bank in domestic and/or any freely convertible currency on the territory of B&H.

– Foreign investors are entitled to freely employ foreign nationals, subject to the labor and immigration laws in B&H.

– Foreign investors are entitled to transfer abroad, freely and without delay, in convertible currency, proceeds resulting from their investment in B&H

– Foreign investors may own real estate in B&H. Foreign investors enjoy the same property rights in respect to real estate as B&H legal entities.

– Foreign investors are protected against nationalization, expropriation, requisition or measures having similar effects; such measures may take place only in the public interest in accordance with the applicable laws and regulations and against the payment of an appropriate compensation, i.e. compensation that is adequate, effective and prompt.

– The rights and benefits of foreign investors granted and obligations imposed by the Law on the Policy of Foreign Direct Investment (mentioned above) cannot be terminated or overruled by subsequent laws and regulations. Should a subsequent law or regulation be more favorable to foreign investors, the investor will have the right to choose the regime by which the investment will be regulated.

Customs benefits

Equipment of the foreign investor being imported as part of share capital is exempt from paying customs duties (with the exception of passenger vehicles, slot and gambling machines).

From the payment of import duties are exempted: production equipment that are not produced in Bosnia and Herzegovina, imported for the new or expansion of existing production, modernization of production, the introduction of new or modernization of the existing production technology, and carrying out the direct manufacturing activity

From the payment of import duties are exempted, on the production assets and other equipment belonging to the company which definitively ceases activity in another country and transfers to the customs territory of Bosnia and Herzegovina in order to carry out similar activities.

If the company that is moving is the farm, the animals on it are also exempted from import duties on importation.

In order to enjoy the benefit for foreign investor, he should submit a written request for exemption from paying import duties to the competent customs authority (according to the place of seat of the company) along with the following documents:

– contract or other relevant document about the investment on the basis of which the equipment is being imported,

– proof of registration of the investment at the competent authority,

– specification of equipment with tariff number, tariff mark (with quantity indication), single and total value, certified by the investor,

– statement of the investor that the equipment is not older than 10 years age limit,

– Certificate of the competent institution confirming that the imported equipment complies with the environmental and employment protection standards.

The Customs Office issues a decision within 15 days upon submission of the request

Free trade zones

Free trade zones in B&H are part of the customs territory of B&H and have status of legal entity. According to the Law on Free Trade Zones of B&H, free trade zone founders may be one or more domestic and foreign legal entities or natural persons. The free zone establishment is considered economically justified if the submitted feasibility study and other evidence can prove that the value of goods exported from a free zone will exceed at least 50% of the total value of manufactured goods leaving the free zone within the period of 12 months.

ENTITY LEVEL

Tax Incentives

In Federation of B&H:

Law on Corporate Income Tax enables foreign investors to enjoy the following benefits

– The taxpayer who invests, from its own funds, in production equipment more than 50% of the total profit in the current tax period, shall be reduced of the obligation of the calculated tax for 30% of the amount in the year of investment.

– The taxpayer who in a period of 5 consecutive years makes investments from its own funds, in the total amount of 10 million €, starting with the first year when taxpayer has to invest at least 2 million €, shall be reduced of  the obligations of the calculated income tax for 50% of the amount in the year of investment.

– The taxpayer is entitled to a tax-deductible expense in the double amount of the gross wage paid to newly employees if  meets the following conditions:

– duration of the employment contract must be at least for a period of 12 months with full-time working hour

– new employee was not employed with the taxpayer or a related person in the previous five years.

In Republic of Srpska:

A taxpayer who invests in property, plant, and equipment in the territory of the Republic of Srpska for the performance of registered manufacturing activity, shall be entitled to a tax base reduction by the value of the investment

The Register of Incentives in Republic of Srpska

The Register of Incentives in the Republic of Srpska is an electronic database of funds for incentives of the economy of the Republic of Srpska that are allocated at a national and local level, including data such as providers and implementers of incentives, the legal basis for their allocation, sources of funds, types, and purposes of incentives, all the way of information about who and which amount the funds were allocated. The register is available on two portals: – Public portal of the Register of Incentives, which is available for everyone, and which contains information about the Register of Incentives, and current public calls available for interested users; – Administrative portal of the Register of Incentives, which are available to institutions and authorized persons at the level of institutions, ie for registered users. Both portals are available at

www.regpodsticaja.vladars.net

Brcko district incentives

Law on Incentives to Economic Development of Brcko District ensures:

– Exemption from utility fees for displaying the company

– Compensation of court fees for registration of a business entity and the change  entry in the register for newly established enterprises and entrepreneurs

– Compensation of expenses of connection to power, water and sewage network

– Compensation of paid fees necessary for obtaining the location conditions, building permits and approvals for the use of the facility

– Compensation of expenses in  amount of the difference in price of electricity and water paid by the company and the price paid by households

– Compensation for paid employment contribution in the total amount for newly employed persons

– Compensation for salary for maternity leave in amount of 100%

– Stimulation of the employer in  amount of 50% of total duties for health insurance of newly employed workers from the moment of obtaining the benefit

– Compensation for amount of new investments invested in purchase of fixed assets and up to the amount of determined and paid profit tax or income tax in period for the year in which purchases of fixed assets was made, provided that the difference between the amount of profit tax or income tax, and made supply cannot be transferred to next year

Source: Foreign Investment Promotion Agency of Bosnia and Herzegovina

Leave a Reply

Your email address will not be published. Required fields are marked *

Reserve the conference room

The conference room is ready for you; if you should have special wishes concerning furniture rearrangement, this can be done easily. Please send us a request and we will contact you as soon as possible.





    Select the aim of inquiry: