Bosnia and Herzegovina (BiH) consists of two territorial and administrative entities – the Republic of Srpska (RS) and the Federation of BiH (FBiH)– and one district, the Brcko District (BD).
The basic taxation categories are:
Value Added Tax
Corporate income tax
Personal income tax
Social security contributions paid by employers and employees
Excises, a special type of sales tax paid on some commodities like oil products, tobacco products, soft drinks, alcohol drinks, beer, wine and coffee.
Each entity has its own income tax legislation. Generally, in both entities, a person’s personal income tax (PIT) status is determined by residence status for PIT purposes, and the source of the income derived by the individual. The PIT rate in the FBiH and RS is 10 percent.
Extended business travelers staying less than 183 days in a year in the FBiH or the RS are taxed on the income earned in the FBiH or the RS. If you live and work in Bosnia-Herzegovina for more than 183 days in a year, you are considered a resident for tax purposes, and will pay income tax at Bosnian rates on your worldwide income.
Most of the goods and services are taxable. The taxpayers are obliged to charge VAT when supplying the goods and services. VAT must be calculated if the goods and services are used in non-business purposes. The standard VAT rate is 17%, and the VAT regime applies equally throughout the country of Bosnia and Herzegovina. There is no reduced VAT rate in Bosnia and Herzegovina. Taxable persons are all individuals and legal entities registered, or required to be registered for VAT. Various goods are services are exempt from VAT, including medical care, posting services, financial services, education and various smaller occasions.