Incentives for investors

Incentives for investments are granted at state, entity and local level.

STATE LEVEL

Pursuant to the Law on the Policy of Foreign Direct Investment in BaH (Official Gazette of BaH, 17/98, 13/03, 48/10 and 22/15) guarantees the foreign investors the following:

National treatment for the foreign investors, meaning that the foreign investors shall have the same rights and obligations as the residents of Bosnia and Herzegovina.
Foreign investors shall be entitled, for their investments in the territory of Bosnia and Herzegovina, to open accounts with any commercial bank in domestic or freely convertible currency.
Foreign investors shall be entitled to freely employ foreign citizens unless prescribed otherwise by the laws of Bosnia and Herzegovina related to labour and immigration.
Foreign investors shall be protected from nationalisation, expropriation, requisition and measures with equal effect; such measures can be introduced only in the public interest, in accordance with the current laws and by-laws, with payment of adequate fee.
Foreign investors shall have the same ownership rights over the real estate as the BaH legal entities.
Foreign investors shall be entitled to transfer abroad the profit resulting from their investment in Bosnia and Herzegovina, freely and without delay, in a freely convertible currency.

Rights and privileges granted to foreign investors, and the obligations arising from the Law on the Policy of Foreign Direct Investment cannot be cancelled or made void by entering into force of subsequently passed laws and by-laws. If such subsequently passed laws and by-laws are more favourable to the foreign investors, they shall be entitled to choose the regime which will be competent for their investment.

Customs privileges

Foreign investments shall be exempt from payment of customs and customs obligations, except for passenger vehicles, entertainment machines and for games of chance.

Manufacturing equipment not produced in Bosnia and Herzegovina, which is imported for a new or expanding an existing manufacture, modernisation of manufacture, introducing new or modernisation of existing manufacturing technology, directly necessary for manufacturing activity, shall be exempt from customs fees.
Production means and other equipment of the company stopping its operation in another country to move to the customs area of Bosnia and Herzegovina to perform similar activity shall be exempt from customs fees.
If the company moving is an agricultural farm, the animals belonging to it shall also be exempt from customs fees.

In order to use the customs privileges for foreign investments, in addition to the written application for exemption from payment of import fees, the privilege user shall submit the following documents to the customs authority according to the place of registration of the privileges user:

contract or other appropriate document related to the investment based on which the equipment for which exemption from customs fees is requested is being imported,
proof of registration of foreign investment with the competent state authority,
specification of equipment according to the tariff labels from the Customs tariff of BaH, with the information related to the quantity and individual and total value, verified by the privilege user,
statement of the investor that the equipment is not older than ten years,
certificate confirming that the imported equipment meets the standards related to environmental protection and other standards related to the safety at work, issued by an institution or other authority competent for that activity.

Customs service shall make a decision within 15 days from the application submission.

Free trade zones

Free trade zones in BaH are part of the customs territory of Bosnia and Herzegovina with a status of legal entities. Pursuant to the Law on Free Trade Zones of BaH the founder of a free trade zone can be one or more domestic or foreign legal entities or individuals registered in BaH. Users of a free trade zone are exempt from paying VAT and import fees for the equipment which will be used for manufacturing. Investments in free trade zones, transfer of profit and transfer of investments are free. Establishment of a free trade zone is economically justified if, based on submitted study on the economic justification of the establishment of a free trade zone and other submitted evidence, it is possible to assess that the value of the goods exported from the free trade zone are going to exceed at least 50% of the total value of the manufactured goods which leaves the free trade zone in the 12-month period.

ENTITY LEVEL

Employment Service of Republika Srpska is the key organisation in the labour market which participates in the preparation and implementation of employment projects in line with the Employment Strategy of Republika Srpska and the Action employment plan for implementation of the Strategy for every year. Employment Service implements projects for supporting employment in Republika Srpska, on the grounds of the Rulebook on conditions, criteria and manner of implementing measures for active employment policy, through a public call which is published every year. All current public calls of the Employment Service can be found at www.zzzrs.net.

Republika Srpska Investment-Development Bank (IRBRS) introduced a new credit line in 2019 which enables companies planning to introduce new technologies in their manufacturing process to have favourable loans at an interest rate below 3%, with a repayment period of 12 years and a grace period of 24 months.

Law on Profit Tax of Republika Srpska (Official Gazette of Republika Srpska, 94/15, 01/17, 58/19) prescribes that companies investing in equipment and facilities for performing registered manufacturing activities in the territory of Republika Srpska shall be entitled to the reduction of the tax base for the value of the investment.

Law on Income Tax (Official Gazette of Republika Srpska, 60/15, 66/18, 105/19, 49/21, 119/21) prescribes certain advantages in privileges for the annual income of a qualified investor (articles 42 through 50).

Ministry of Agriculture, Forestry and Water Management grants financial incentives for agricultural and rural development. The Ministry issues the Rulebook on applications and manners of obtaining financial incentives for agricultural and rural development every year.

Register of incentives in the economy of Republika Srpska

Register of incentives in Republika Srpska is an electronic data base of the funds for incentives in the economy of Republika Srpska which are granted on both entity and local levels. It includes information like: providers and implementers of incentives distribution, legal grounds for their grant, sources of funds, types and purpose of incentives, and information about who and in what amount the funds were granted to. The Register is available on two portals as follows:

Public portal of the Register of incentives, available to all, which contains information on the register of incentives, current public calls, as well as incentives available to the interested beneficiaries;
Administrative portal of the Register of incentives, available to the institutions and authorised persons at institutions level, or to the registered users.

Both portals are available at https://regpodsticaja.vladars.net/home/o-registru.

LOCAL LEVEL

Incentives for establishing small and medium sized enterprises

Incentive for establishing an enterprise – START-UP;
Incentive for development of existing and START-UP enterprises;
Incentive for introducing quality system;
Incentive for women – entrepreneurs;
Incentive for returnees – entrepreneurs;
Incentive for craft and entrepreneurial shops.

Customised incentive programmes for individual investments based on:

the size of investment,
number of jobs,
value of the jobs,
whether the investment belongs to the priority sector or sub-sector.

Example of an incentive: Payment for the land in the industrial zones in the period of 60 months without interest; 70%-90% decrease of fees and taxes for manufacturing facilities.