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Law on Mitigation of Negative Economic Consequences

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Tax News, May 2020

Both houses of the Parliamentary of Federation of BiH have in an emergency procedure adopted the Law on Mitigation of Negative Economic Consequences (the “Law”), whose publication in the “Official Gazette of FBiH” is expected. The Law enters into force on the day following the day of publication in the “Official Gazette of FBiH”.

In further text, we provide an overview of potentially important remarks for business entities.

Right to a subsidy

Business entities are entitled to the subsidy of social security contributions, in the amount prescribed by the Law, starting from the calculation and payment of the gross salary for April, if there is a decrease in entity’s turnover of 20% or more in the month for which the payroll is calculated, compared to the realized turnover in the same month in 2019*.

The entity would be entitled to a right to subsidy under the condition that it has settled contributions and personal income tax payables, conclusively with February 2020.

*Tax Authority of FBiH determines the realized turnover, based on data on recorded turnover in the fiscal system.

Request for a subsidy

By the tenth of the current month for the previous one, business entities are obliged to submit to the Tax Authority a request for subsidy, together with tax returns regulated within the personal income tax and contributions’ legislation.*

*10 days upon the Law enters into force, the Tax Authority of FBiH shall adopt instructions on the manner of submission of the request and required documents.

Abolition of the obligation to pay corporate income tax advance payment

Obligation to pay corporate income tax advance payment is abolished for those business entities that use the subsidy.

Validity of the Law

The Law ceases to apply 60 days after the date of the declaration of termination of state of an accident.

Publishing the list of subsidy beneficiaries

The House of Representatives of the Parliament of FBiH has adopted the Conclusion pursuant to which the Tax Authority of FBiH and the Development Bank of FBiH are obliged to regularly, at least once a month, publish the list of subsidy beneficiaries on their official webpage.

Note: text of the Tax Alert has been prepared based on the latest available version of the text of proposed Law and adopted amendments. 

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