Taxes
The tax system of the Republic of Srpska is composed of taxes that have income as their source, taxes that foresee the object of taxation as a property, contributions and fees determined by certain substantive regulations. A taxpayer is an individual or a legal entity, part of a legal entity or other entity that is obliged to pay the tax in accordance with the tax regulations in the Republic of Srpska.
The Law on Corporate Income Tax foresees the calculation and payment of personal income tax, self-employment, copyrights, rights related to copyright and industrial property rights, capital, capital gains, as well as the obligation to pay this tax for the income from foreign sources, and any other income.
Corporate income tax is payable at the rate of 10% on the tax base for that year. Corporate tax year is equal to a calendar year.
Corporate income tax is payable on a monthly basis, up to the tenth day in a month for the previous month, based on the data from the annual tax registration for the previous year.
The obligation to pay a real estate tax arises on the day the taxpayer acquires or begins to use the real estate, depending on which of the conditions is fulfilled sooner.
Annual corporate income tax registration is completed on the forms 1101 – Annual corporate income tax registration and 1102 – Appendix to the Annual corporate income tax registration. The form and the content of these documents are published in the Rules on the Form and the Content of Forms and Corporate Income Tax Registrations.
Personal income consists of all direct and indirect employment payments, according to the Law on Income Tax. A non-resident who is employed by an employer in the Republic of Srpska and earns personal income on this basis, meets the conditions for deduction of the tax base on the basis of a personal deduction.
Direct taxes are the sole responsibility of the entities in Bosnia and Herzegovina.
The Republic of Srpska applies unique income tax rate of 10%.
All foreigners with permanent residence in the Republic of Srpska are required to pay income tax based on the income earned in a calendar year at the territory of the Republic of Srpska. Also, all foreigners who do not reside permanently in the RS, but who earn their income in the RS, are considered as taxpayers.
Corporate income tax
Corporate income tax in the Republika Srpska is calculated at the rate of 10%.
Corporate income tax is adjusted to the EU standards. Foreign legal entities are liable to corporate income tax:
- if they practice an activity and have a permanent place of business in the Republic of Srpska for a profit related to that permanent place of business,
- if they derive an income from immovable property located in the Republic of Srpska for a profit relating to that immovable property.
The taxation of foreign legal entities is prescribed in more details by Articles 40 to 43 of the Law on Corporate Income Tax.
Laws covering the subject:
- the Law on Corporate Income Tax
- The Law on Income Tax
Real estate tax
The Law on Real Estate Tax prescribes that real estate tax is payable at a rate of up to 0.20%. Exceptionally, the tax rate for real estate in which the direct manufacturing activity is carried out is up to 0.10%. In this case, the real estate is considered to be a production and/or storage facility for raw materials, semi-finished and finished products, if they form a complete unit.
Municipal and city assemblies are required to decide on the amount of the real estate tax in the area of their jurisdiction, by January 31 for the current year.
In the case of practicing deficient and/or craft activity, the taxpayer may be exempted from the obligation, on which a special decision is made by the municipal or city assembly. The following categories are exempt from the payment of real estate taxes: cultivated agricultural land and real estate used for their own agricultural production.
Laws covering the subject:
- The Law on Real Estate Tax
Incentives and tax reduction
A program that supports the employment through the payment of incentives in the amount of taxes and contributions, administered by the Employment Service of the Republic of Srpska. All employers who have hired workers in the previous year will have the opportunity to get a refund of the taxes and contributions payed for those workers. Public call for this program is published individually for each year, and it can be found at the web portal of the RS Employment Service.
Amendments to the Law on Corporate Income Tax of the Republic of Srpska allow the right for a reduction of the tax base for a taxpayer who, at the territory of the Republic of Srpska, invests in an equipment and/or facilities for performing the registered production activities. The reduction of the tax base should be equivalent to the investment value.
The Law on Income Tax provides certain benefits, that is, privileges for the annual income for a qualified investor (sections 42-50).
Economy
Energetics
Tourism
Agriculture
ICT
Food