Incentives for Investors
Incentives for foreign investors
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 labour 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.
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). In order to enjoy this benefit, the foreign investor 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.
For additional information on incentives at state level of BiH click here
In Federation of B&H:
The FBiH offers a full corporate income tax exemption for companies whose exports exceed 30% of total income (turnover) and companies investing not less than BAM 20 million over five consecutive years in production, provided the investment during the first year is at least BAM 4 million. A company, whose workforce is comprised more than 50% of persons with disabilities or special needs hired for a period longer than one year, is exempt from corporate income tax for that year. All costs relating to R&D may be recognized as expenditure. There are also incentives for scientific and development research.
In Republic of Srpska:
Tax incentives are granted in the RS for investments, made into equipment, plants and real estates necessary for performing the taxpayer’s business operations, up to the amount of the investment. Tax incentives are also granted for hiring at least 30 new employees for an indefinite period of time, up to the amount of personal income tax and social security contributions paid for the new hired employees.
Regulation on Implementation of the Employment Support Program, Official Gazette of the Republic of Srpska 88/14
This Regulation governs the conditions and manner to encourage and increase employment in the territory of the Republic of Srpska, the criteria and procedures for funds award, the schedule of disbursement of the awarded funding, and manner of monitoring of the implementation of the Employment Support Program.
The funds can be used to finance employment programs in the manufacturing sector, with investors employing minimum 50 workers for undetermined period on the day of issue of the public call. These funds cannot be used to finance employment projects in the fields of hospitality, industry and trade.
Total funding to be awarded will be determined based on the number of workers newly employed in the manufacturing sector, subject to the fulfilment of criteria set forth by this Regulation. The funding to be disbursed per newly employed worker amounts to BAM 3,000.
Grants are awarded under the following conditions:a) the user did not reduce the number of employees who are employed for an indefinite time in the past year from the date of public announcement, as well as in the period of project implementation,
b) number of employees who are employed for an indefinite period, after project implementation, ie after the payment of the second (and last) tranche of funds does not reduce the minimum period of 18 months of the payment.
FDI Insurance Instruments in Bosnia And Herzegovina
Foreign investors concerned about risks of transfer restrictions, expropriation, war and civil disturbances and denial of justice, can be insured against these risks with the European Union Investment Guarantee Trust Fund for Bosnia and Herzegovina, administered by the Multilateral Investment Guarantee Agency (MIGA, member of the World Bank Group).
Agreements on Avoidance of Double Taxation
Bosnia and Herzegovina has Agreements on Avoidance of Double Taxation with the following countries
Albania, Algeria, Austria, Azerbaijan, Belgium, China, Croatia, Czech Republic, Cyprus, Denmark, Egypt, Finland, France, Germany, Greece, Iran, Ireland, Italy, Jordan, Kuwait, Hungary, Malaysia, Macedonia, Montenegro, Moldova, Netherlands, Norway, Pakistan, Poland, Romania, Slovakia, Slovenia, Serbia, Spain, Sweden, Sri Lanka, Turkey, United Arab Emirates, United Kingdom and Northern Ireland, Qatar.
Free Trade Agreements
Bosnia and Herzegovina has signed the Central European Free Trade Agreement (CEFTA), with the following countries:
B&H has also signed a Free Trade Agreement with Turkey which provides additional free access to this consumer market with 70 million people. Free Trade Agreement between Bosnia and Herzegovina and EFTA (Switzerland, Norway, Iceland and Liechtenstein) was signed on 24 June 2013 in Norway, and entered into force on January 2015.
Agreements on promotion and protection of investments
Bosnia and Herzegovina has Agreements on Promotion and Protection of Investments with the following countries:
Albania, Austria, Belgium and Luxemburg, Belarus, Canada, China, Croatia, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, India, Iran, Italy, Jordan, Kuwait, Lithuania, Macedonia, Malaysia, Moldova, Netherlands, OPEC Fund, Pakistan, Portugal, Qatar, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Switzerland, Sweden, Turkey, Ukraine, United Kingdom, USA – OPIC.