Bosnia and Herzegovina – and especially the Brčko District – counts as one of the states with the most beneficial tax policy. It is not without reason that Brčko is a tax haven, a sobriquet justified by numerous benefits we mention below.
According to the Brčko District of BiH Act on Subsidies from June 22, 2016, the following applies:
Article 3 – Aim of the Act
The aim of the Act is to promote the economic development of legal entities, to increase employment and competitiveness, to attract new investors to the District area.
Article 5 – Subsidy implementation methods
Subsidizing the economy is accomplished through benefits to that end as stipulated by this Act, as well as through financing new investments in compliance with the work schedule of the Government of the Brčko District of Bosnia and Herzegovina.
Article 8 – Benefits
Legal entities are entitled to the following tax incentives and benefits:
- total exemption from the company name display fee;
- refund of fees for registering business entity and registration of alteration in the court registry for legal persons;
- refund of service fees and the costs of the services as regards connecting to the electrical grid (the maximum amount for one legal entity in a calender year is 10.000,00 KM);
- refund of service fees and the costs of the services as regards connecting to the water supply and the sewer networks (the maximum amount for one legal entity in a calender year is 5.000,00 KM);
- refund of fees required for obtaining the urban, building and exploitation permits;
- refund for the amount of electric energy and water consumed equal to the difference between the electricity and water prices paid by a legal person and a residence respectively (the maximum amount for one legal entity in a calender year is 10.000,00 KM);
- refund for each new recruitment of the unemployed persons (at the end of the fiscal year on the basis of the increase in employee number compared to the previous fiscal year; relates exclusively to persons registered as unemployed in the District at least three months prior to employment); 5.000,00 KM for ED SEC and lower; 7.000,00 KM for College and High. Educ.
- reimbursement for taxes and contribution fees during maternity leave (the maximum amount to be paid is the average of gross salary/wages a legal entity had the previous year);
- reimbursement equal to the amount of money used for new investments for the purposes of fixed capital purchase after realization of the right to full exemption on the annual tax return, by reducing the tax base by the investment amount, in accordance with the Corporate Tax Law of the Brčko District of BiH. A positive difference between the corporate or income tax amount and that of the procurement cannot be transferred to the following year (the amount to be paid cannot exceed 300.000,00 KM);
- partial reimbursement of expenses on both certificates necessary for export and the following certificates: ISO 0991:2008; ISO 9001:2015; EN-SCC:2006;97/23/EG i AD 2000; AD 2000-HP0/HP 100R I DIN EN ISO 3834-2; ISO 14000; ISO 18000 (OHSAS); IFS International food standard), BAS 1049:2010 HALAL, HACCP, as well as the expenses on their renewal (the maximum amount to be paid on the basis of the benefit stated is 50% and not greater than 10.000,00 KM for all certificates during one calender year);
Article 18 – Conditions for benefits
To be eligible for benefits, a company has to fulfill the following conditions:
- it is founded and registered according to the legal regulations of the Brčko District BiH;
- it has its seat within the territory of the District;
- at least 50% (fifty percent) of its total full-time employees are resident in the Brčko District of BiH;
- the company has fulfilled its legal obligations concerning taxes, the taxes and contributions as regards salaries and wages, utilites as well as renting business and public spaces owned by the Brčko District of BiH;
- it has not been sanctioned for employing persons with no contract of employment.
Judging by what we have seen so far, it can be concluded that this region has unjustifiably been left out of the list of the places that can qualify as tax havens.
A tax haven is a country or a region which, due to the existence of a very favourable fiscal regime, is chosen as a place of legal existence by those physical and/or juridical persons who wish to pay less taxes, although in reality their business activities very often take place in other countries.