Bosnia & Herzegovina
Joined: 20 Apr 2007
Posts: 14
Home Country: bosnia_herzegovina
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 Posted: Mon May 14, 2007 5:15 am Post subject: DOING BUSINESS IN BOSNIA / BOSNIA BUSINESS GUIDE |
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DOING BUSINESS IN BOSNIA & HERZEGOVINA
STARTING A BUSINESS
STANDARDIZED COMPANY
Legal Form: Limited Liability Company
Minimum Capital Requirement: 2,000
City: Sarajevo
Registration Requirements:
Procedure 1. Stipulate a founding act and have it notarised in the municipality office
Time to complete: 1 day
Cost to complete: negligible
Procedure 2. Obtain a statement from commercial bank that full amount of the capital has been paid in; pay the registration fee to the budget account of the cantonal court
Time to complete: 1 day
Cost to complete: no charge
Procedure 3. Obtain the statement of tax authorities that the founder/s have no tax debts
Time to complete: 1 day
Cost to complete: no charge
Procedure 4. Court registration with canton court
Time to complete: 15 days
Cost to complete: BAM 405 (registration fee) + BAM 178 (publishing fee)
Comment: By law regulated forms need to be filled out; it is possible to by this forms in the stationery shop or the court (KM15) to be prepared in accordance to regulations on registering the legal entities in the court register; after registration in court register of new established company, court itself informs the Official Gazette to announce already prepared notice.
Companies are automatically registered for the membership of the chambers of economy at state, entity, canton and regional levels. Since the beginning of 2004 the membership of Chamber of Economy of the Federation of Bosnia & Herzegovina and Chamber of Economy of the Republic of Srpska is voluntary.
Organisation of the chambers of economy in B&H is like this:
- State level: Foreign Trade Chamber of Bosnia & Herzegovina (membership fee: a) 1 ‰ of the value of imported, or exported goods and services, established in the custom declaration, b) 2 ‰ of the monthly sum of paid salaries.
- Entity level (Federation of B&H and Republic of Srpska): Chamber of Economy (membership fee: 3‰ of the bruto paid salaries of all employees).
- Canton (for FB&H) and region (for RS) level (Cantonal or Regional) Chamber of Economy 3‰ of the company's bruto income.
- Brcko District level: Chamber of Economy
Procedure 5. Buy a company stamp
Time to complete: 1 day
Cost to complete: BAM 40
Comment: It is necessary to submit copy of court registration.
Procedure 6. Application for resolution on intended activities to the competent municipality
Time to complete: 1 day
Cost to complete: BAM 300-1000
Procedure 7. Application for utilization permit to the canton ministry of commerce
Cost to complete: BAM 150
Comment: The application should be submitted to the Canton Inspections (all the inspections are centralised at one place) and depending on the scope of business of the company the relevant inspector or inspectors will perform control at business premises of the company and issue the Approval to Perform Business. For example, in case that the scope of business of that company is trade the trade inspector and employment inspector shall perform control. For this permit it is necessary to submit (besides the copy of resolution on the intended activities) copy of court registration, evidence on possession the business premises, appropriate attest for electric power issued by a authorised institution (the landlord should have had obtained last document), copy of registration forms for employees.
Procedure 8. Apply for company ID number with the competent tax office
Time to complete: 15 days
Cost to complete: no charge
Comment: When filing the application for obtaining the statistical and taxpayer number, simultaneously with the competent tax authority (in accordance to Regulations on Obtaining ID Numbers (Official Gazette FBiH No. 39/02)), the newly incorporated company shall, together with the application form submit the photocopy of the court resolution (registration) and contract on lease of business premises, resolution of the competent municipality on the intended activities (this resolution shall confirm that certain activities may be exercised at a certain address) and utilisation permit (issued by canton ministry of commerce).
The competent tax office shall also nominate the committee (for company inspection) which shall confirm that the company exists at the specified address, and based upon the report of this committee the taxpayer's and statistical number shall be obtained.
Procedure 9. Open a company account with commercial bank
Time to complete: 1 day
Cost to complete: no charge
Procedure 10. Enroll the employees in health insurance with Health Insurance Institute (Zavod za zdravstveno osiguranje)
Time to complete: 1 day
Cost to complete: no charge
Comment: Submitting the copy of the concluded employment contract and copy of the Registration Set of the Company at the Court Register of Companies.
Procedure 11. Enroll the employees in pension insurance with Pension Insurance Institute (Zavod za penziono osiguranje)
Time to complete: 1 day
Cost to complete: no charge
Comment: Submitting the copy of the concluded employment contract and copy of the Registration Set of the Company at the Court Register of Companies.
Procedure 12. Adopt and publish a rule book on matters of salary, work organisation, discipline and other employee regulations.
Time to complete: 1 day
Cost to complete: no charge, BAM 250 minimum if made by a lawyer, depending of complexity
Comment: The procedure applies to employers who hire more than 15 workers. A company's body authorised to issue internal regulations shall pass these rulebooks and does not have to submit them anywhere.
FORMS OF BUSINESS ORGANISATION
Foreign entities can establish and own business enterprises with the same rights as domestic entities. The only exceptions are armaments and the media, where foreign control is limited to 49%.
TAXATION
Corporate tax
Main rate: 30%
Bosnia and Hercegovina (BiH) is divided into three jurisdictions for tax purposes: the Federation of BiH, the Republika Srpska and Brcko district. The corporate tax rate in the Federation of BiH is 30%, but a 10% rate applies in the Republika Srpska and Brcko District. In the Federation of BiH, some tax holidays are available for certain activities, but these tax breaks are not available in the Republika Srpska or in Brcko District. A new corporate tax on the state level is to be introduced in 2006. According to the draft law, the main changes will be a decrease in the corporate income-tax rate and reduction or elimination of tax holidays, deductions and incentives.
Individual tax
Main rate: 10% (Brcko District)
Brcko District was the first of the three jurisdictions to pass a comprehensive modern individual income-tax law, effective from 2004. Under this law, individuals resident in Brcko District are subject to tax on their worldwide income; non-residents are taxed on income sourced in Brcko District only. Income tax applies at a flat rate of 10%. The other two jurisdictions, the Federation of BiH and Republika Srpska, are expected to introduce similar personal tax laws in the near future.
Capital gains
Taxed as income
Capital gains are generally taxed as income.
Indirect tax
VAT standard rate: 17%
Up to January 1st 2006, the Federation of BiH, Republika Srpska and Brcko District all impose separate sales taxes that are administered separately. From January 1st 2006, a federal value-added tax (VAT) applies with a centralised indirect tax authority. The VAT applies to most transactions at a standard rate of 17%.
Tax administration and compliance
Tax year: Companies: accounting year; Individuals: calendar year
Each of the three entities—the Federation of BiH, Republika Srpska and Brcko District—has its own tax administration responsible for collecting taxes within the entity. There is no central tax administration except for the indirect tax authority, which is responsible for the value-added tax (VAT) from January 1st 2006. Brcko District has introduced a system of self-assessment, under which taxpayers make a payment of tax with the return, except for those receiving only employment income, who are taxed by withholding. The Federation of BiH and Republika Srpska are moving towards a similar system.
Additional tax information
Withholding taxes: Dividends, Interest and Royalties 15% (only in the Federation of BiH).
Tax treaties: Bosnia and Hercegovina (BiH) has concluded treaties with Moldova, Pakistan, Turkey, Croatia, and Serbia and Montenegro. Some treaties concluded by the former Yugoslavia are also still applied.
Dividends: Dividends are taxable at the usual corporate or income-tax rates.
Revenue protection: There is no transfer-pricing or anti-haven (CFC) legislation.
Groups: There is no provision for group taxation.
Incentives: Project-related incentives.
Other taxes: Customs duties. |
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