COVID-19 related tax incentives and financial aid measures in Bosnia and Herzegovina

Republika Srpska

Financial aid

Republika Srpska has so far adopted a modest package of financial aid. Its Solidarity Fund will finance social contributions for March salaries to the businesses which were closed by order of the Government of Republika Srpska in March due to COVID-19 epidemics. Those are the businesses from the sectors such as hospitality, retail, hairdressers, beauty shops, wellness and spa centers, etc. The list of the businesses qualifying for this aid is available at the web page of the Ministry for Economic and Entrepreneurship. Those businesses which are eligible for the aid but are not included on the list are invited to contact the Ministry. Requests for this aid must be submitted until 11 May.

Furthermore, the businesses entitled to the foregoing limited March aid, as well as those which temporarily ceased or reduced their operations because of economic consequences of the pandemic (loss of markets, disruption to supply chain and similar), are entitled to the amount corresponding to the statutory minimum salary of their employees (BAM 520, i.e. approximately EUR 265) who were on the payroll in for April 2020, with accompanied tax and social contributions.

Qualifying businesses must submit applications for the April aid until 15 May 2020 online via the web page of the Government. Based on the applications, the competent ministries will prepare the list of those approved for the aid. Thereafter, the approved businesses will have to submit to the Tax Administration until 10 June 2020 a request for the aid with an affidavit attesting that they were temporarily closed and a payroll list. The form is available on the website of the Tax Administration.

Gaming operators which were closed due to COVID-19 related orders of the competent authorities are released from fees on electronic games via terminals, betting games, games at slot machines, proportionally to the period of time they were closed.

Tax relief

Minimum annual income tax for 2020 applicable to small entrepreneurs is reduced from BAM 600 (approx. EUR 306) to BAM 240 (approx. EUR 122).

 

Federation of B&H

Financial aid

All registered businesses, except for state-owned companies, financial institutions and entrepreneurs who are not taxed based on income but under lump-sum taxation regime will receive a subsidy for statutory social contributions of employees (pension, health, and unemployment insurance) in the amount of BAM 244, 85 per employee for the entire period of emergency situation starting with the month of April and ending in the month that follows the declaration of the end of emergency situation. The subsidy amounts will be paid directly to the relevant compulsory insurance funds.

Eligible businesses have to satisfy the following cumulative conditions in order to receive the foregoing financial aid:

  1. their turnover must have decreased for 20 % or more in the month for which they claim the aid, compared to the same month in 2019; and
  2. they must not have any outstanding liability for social contributions and payroll tax for the period ending in February 2020.

Applications must be submitted to the Tax Administration until 10th of the current month for the previous month, except for the April subsidy, which may be requested until 29 May 2020.

Guidance on the procedure and required documents is prescribed by the Tax Administration and published on their website. The guidance supplements the legislation by specifying that businesses registered after 1 March 2020 are not entitled to the subsidy and also that the subsidy does not apply to employees of businesses registered in the Federation B&H but working in the branches located in Republika Srpska and Brčko District.

Tax relief

Businesses that qualify for fiscal aid above are also relived from the obligation to pay advances on 2020 income tax. However, they are not released from payment of final income tax obligation for 2020.

Lump-sum tax obligation applicable to private entrepreneurs under lump-sum taxation regime is reduced for 50% for the period starting on 21 March 2020 and ending on 31 December 2020.

Guarantee Fund

The Government undertook to set up a guarantee fund with an initial deposit of BAM 80,000,000 from the funds maintained with the Development Bank of Federation B&H (DB). Relying on the Guarantee Fund, DB will issue guarantees on behalf and for account of Federation B&H. Further details are still to be prescribed by the Government of Federation B&H.

Suspension of default interest calculation and forced collection

Default interest does not run on any debt for the period from 1 March 2020 until the expiration of 30 days following the emergency situation termination. This also applies to private creditor-debtor relationships.

With respect to public revenues claims, default interest does not run  during the emergency situation and for a period of 60 days thereafter.

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