The FIC is concerned primarily with improving business, legal and regulatory issues. In White Book 2008 we cover four key areas: registering a business, obtaining work and residence permits for foreign employees, reforming taxes, and obtaining construction permits. As in our first White Book (published April 2007), we are not attempting to present an exhaustive survey of all reforms needed. Rather, we wish to identify a short list of priority reforms that can realistically be implemented within the next 12 months. Unfortunately, some of our priorities are items that were presented 18 months ago in our first White Book, which we thought could have been implemented during year 2007, but were not.
In order to make the adoption of recommended reforms more feasible, we have narrowed our focus somewhat in the White Book 2008 - to four subject areas, rather than the previous five. We have continued with business registration permits, taxes, and construction permits, but dropped business finance and trade policy, while adding work permits for foreigners. We have also tried to be more specific and focused in our individual recommendations within these areas. The following table summarizes the four subject areas and draws our "top list" of desired individual reform recommendations in these areas.
Addressing Obstacles in 2008
Area
|
Identified Issues |
Key Recommendations |
Business Registration |
- Notaries
- Foreign investment registration at BiH Ministry of foreign trade and economic relations
- Cantonal/municipal inspectorates
- Municipal courts
|
Legislation:
- Full implementation of the Law on Electronic Signature
- Introduce "solemnizacija" process - between attorney and notary
- In FBiH, allow companies to be registered and start operating based on the registrant's declaration, with premises inspections thereafter
Practical Aspects:
- Establish a One-Stop Shop for the business registration process
- Establish "e-registration" - online business registration
- Establish a telephone public information service in the registration departments of the courts
- Post on respective state/entity's institutions web sites information on registration process
Human Resources Management:
- Improve managerial organization of institutions
- Improve technical knowledge and efficiency of institutional staff
|
Temporary Residence and Work Permits |
- Temporary residence permit
- Work permit
- No criminal record
- Medical examination
- Provision of documents - duplication, confidentiality, inconsistency
- Unequal standards
|
Legislation:
- Harmonize state, entity and cantonal laws and adjust the procedure for obtaining/extending temporary residence and work permits
- For aliens/directors who are not staying in the country for more than 3 months during a year, simplify the procedure for residence permit or appointment as an authorized person.
- Enable issuance of White Card at passport control units
- Application of the Framework Law on Higher Education
Practical Aspects:
- Publish procedures for obtaining/extending temporary residence and work permit at the web sites of respective institutions involved in the process
- Accept applicant's affidavit of no prior criminal record, and make it BH Ministry of Security's responsibility for further inquiry
- Accept medical examination documents from foreign licensed M.D.'s, and expand the list of BiH institutions authorized to conduct medical examinations
Customer Services:
- Enhance communication, exchange of information and cooperation between institutions
|
Taxes |
- Bilateral agreements with international institutions on dual taxation avoidance
- Corporate Income Tax:
- Dual taxation
- Dividends, capital gain withholding tax
- Tax treatment of general and special provisioning with banks in FBiH
- Real estate taxation
- VAT filing and refund
Brčko Distrikt:
- Income Tax (personal/corporate)
- Accounting standards
|
Legislation:
Corporate Income Tax
- Harmonization of law between the entities and Brcko District, enabling submission of only one tax return as per the location of the principal place of business of the taxpayer.
- Harmonization of taxation of dividends and capital gain between RS and FBiH
- The legal deadline for tax return filing should be pushed from the 10th to 15th of the month, and VAT payment deadline should be 7 days from the deadline for filing of the return.
Brcko District
- Introduction of two separate laws: Corporate Income Tax Law and Personal Income Tax Law that will be harmonized with entities laws
Practical Aspects:
- Publish all bilateral tax agreements on respective websites of the BiH Ministry of Foreign Trade and Economic Relations and the Ministry of Treasury and Finance
- Amend and extend bilateral tax agreements with all relevant countries to avoid double taxation and regulate mutual recognition of social insurance payments and rights
- In Brcko District tax authorities should issue an instruction for taxpayers with the principal place of business in RS and FBiH on how to properly calculate tax liabilities, i.e. how to complete the tax return.
- To enable simpler sales of new real estate, which is subject to VAT, make sale of real estate subject to VAT computation, as long as such sale is made between persons operating within VAT system
|
Construction Permits |
- Lack of spatial, urban and regulatory plans
- Complex procedure
- Disrespect of legally binding deadlines and lack of coordination among various institutions
|
Practical Aspects:
- Create a database with information on a status of spatial, urban and regulatory plans for all municipalities
- A handbook for businesses should be created along with roadmap for obtaining all approvals and permissions, with respective legislation, forms, and institutions involved in the overall process
- Develop a priority system where officials will sort all incoming request according to the following criteria, and functionally reorganize accordingly:
- Civil or private sector
- Project value
- Priority (if needed introduce VIP treatment )
- Use of information technology and GIS systems at the state level in order to reduce paper work and improve processes
Human Resources Management:
- Enhance capabilities of officials in order to improve customer service for citizens and businesses
|
BiH has a far greater potential to attract investment and to grow than it is currently realizing.
As many countries have shown, these issues are not difficult to address if the executive and legislative branches of government are committed to reform. We ask: why is this not the case in BiH, a country whose citizens long for more jobs and better pay? We again urge leaders to adopt an attitude of radical reform. This is even more important at the current juncture, with the world economy entering a recession.
The FIC cares - not just about the interests of our members, but about the overall economic growth in BiH, because that is ultimately what our business depends upon.
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