Incentives for investors
Investment incentives are provided at the state, entity, and local levels.
In accordance with the Law on the Policy of Foreign Direct Investment in Bosnia and Herzegovina (Official Gazette of BiH, 17/98, 13/03, 48/10, and 22/15), the following is guaranteed to foreign investors:
The rights and privileges granted to foreign investors, as well as the obligations arising from the Law on the Policy of Foreign Direct Investment, cannot be revoked or annulled by the entry into force of subsequently adopted laws and regulations.If such subsequently adopted laws and regulations are more favorable to foreign investors, they shall have the right to choose the legal regime that will govern their investment.
Customs Incentives
Foreign investments shall be exempt from paying customs duties and obligations, except for passenger vehicles, amusement machines, and gambling devices.
To benefit from customs incentives for foreign investments, the beneficiary must submit a written request for exemption from import duties to the customs authority competent for the location of the beneficiary’s registered office, along with the following documents:
The customs authority shall issue a decision within 15 days from the date of submission of the request.
Free Zones
Free zones in Bosnia and Herzegovina are part of the customs territory of Bosnia and Herzegovina and have the status of legal entities. In accordance with the Law on Free Zones of Bosnia and Herzegovina, a free zone may be established by one or more domestic or foreign legal entities and individuals registered in Bosnia and Herzegovina.Users of free zones are exempt from paying VAT and import duties on equipment to be used for production.Investments in free zones, profit transfers, and the transfer of investments are unrestricted.The establishment of a free zone is considered economically justified if, based on the submitted feasibility study and supporting documentation, it can be determined that the value of goods exported from the free zone will exceed at least 50% of the total value of goods produced and leaving the free zone within a 12-month period.
Investment incentives are granted at both the entity and local levels. In order to consolidate data and improve the exchange of information, the Government of RepublikaSrpska has launched the development of a unifiedIncentive Registry, available at:www.regpodsticaja.vladars.rs.
Institutions at the level of RepublikaSrpska provide numerous incentives to the economy. Key ones include:
The Law on Incentives in the Economy of RepublikaSrpska (Official Gazette of RepublikaSrpska, 52/19, 78/20, 37/22, 56/22) provides for incentive funds to support economic development, specifically:
The Employment Service of RepublikaSrpska implements employment support projects for the economy of RepublikaSrpska. There are several categories of employment programs, with a special emphasis on the program titled:“Employment Support in the Economy through the Payment of Incentives Equal to the Amount of Paid Taxes and Contributions for Newly Hired Workers,”available at: www.zzzrs.net/index.php/javni_pozivi
The Ministry of Agriculture, Forestry and Water Management provides incentives for agricultural and rural development. Every year, the Ministry adopts a Rulebook on the requirements and methods for obtaining financial incentives for agricultural and rural development.
In addition to the above, there is a wide range of other incentives and tax reliefs.
More detailed information can be found in the BUSINESS section – Business Guide – Incentives in the Economy of RepublikaSrpska, at the following link:https://investsrpska.vladars.net/business-guide/incentives-in-economy-of-republic-of-srpska/
Incentives for Establishment of Small and Medium Enterprises (SMEs)
Tailored incentive programs for each individual investment, based on:
Example of incentives:
STATE LEVEL
In accordance with the Law on the Policy of Foreign Direct Investment in Bosnia and Herzegovina (Official Gazette of BiH, 17/98, 13/03, 48/10, and 22/15), the following is guaranteed to foreign investors:
- National treatment for foreign investors, meaning that foreign investors have the same rights and obligations as residents of Bosnia and Herzegovina.
- Foreign investors have the right, for the purposes of their investment, to open accounts with any commercial bank in the territory of Bosnia and Herzegovina in either domestic or freely convertible currency.
- Foreign investors have the right to freely employ foreign nationals from abroad, unless otherwise regulated by the labor and immigration laws of Bosnia and Herzegovina.
- Foreign investors are protected from nationalization, expropriation, requisition, and measures with equivalent effect; such measures may only be undertaken in the public interest, in accordance with applicable laws and regulations, and with the payment of appropriate compensation.
- Foreign investors have the same property rights over real estate as legal entities from Bosnia and Herzegovina.
- Foreign investors have the right to transfer abroad, freely and without delay, in a freely convertible currency, profits arising from their investment in Bosnia and Herzegovina.
The rights and privileges granted to foreign investors, as well as the obligations arising from the Law on the Policy of Foreign Direct Investment, cannot be revoked or annulled by the entry into force of subsequently adopted laws and regulations.If such subsequently adopted laws and regulations are more favorable to foreign investors, they shall have the right to choose the legal regime that will govern their investment.
Customs Incentives
Foreign investments shall be exempt from paying customs duties and obligations, except for passenger vehicles, amusement machines, and gambling devices.
- Production equipment not manufactured in Bosnia and Herzegovina that is imported for the purpose of establishing new or expanding existing production, modernizing production, introducing new or upgrading existing production technology, and which is used for direct production activities, shall be exempt from import duties.
- Production assets and other equipment belonging to a company that has definitively ceased operations in another country and is relocating to the customs territory of Bosnia and Herzegovina to perform similar activities shall be exempt from import duties.
- If the relocating company is an agricultural holding, the animals located on the property shall also be exempt from import duties upon importation.
To benefit from customs incentives for foreign investments, the beneficiary must submit a written request for exemption from import duties to the customs authority competent for the location of the beneficiary’s registered office, along with the following documents:
- A contract or other appropriate investment act based on which the equipment subject to the exemption is being imported
- Proof of registration of the foreign investment with the competent national authority
- A specification of the equipment with tariff codes and names according to the Customs Tariff of Bosnia and Herzegovina, including quantity, individual, and total value, certified by the beneficiary
- A statement from the investor that the equipment is not older than 10 years
- A certificate that the imported equipment meets environmental protection standards and other occupational safety standards, issued by an institution or other authority competent in the relevant field
The customs authority shall issue a decision within 15 days from the date of submission of the request.
Free Zones
Free zones in Bosnia and Herzegovina are part of the customs territory of Bosnia and Herzegovina and have the status of legal entities. In accordance with the Law on Free Zones of Bosnia and Herzegovina, a free zone may be established by one or more domestic or foreign legal entities and individuals registered in Bosnia and Herzegovina.Users of free zones are exempt from paying VAT and import duties on equipment to be used for production.Investments in free zones, profit transfers, and the transfer of investments are unrestricted.The establishment of a free zone is considered economically justified if, based on the submitted feasibility study and supporting documentation, it can be determined that the value of goods exported from the free zone will exceed at least 50% of the total value of goods produced and leaving the free zone within a 12-month period.
ENTITY LEVEL
Investment incentives are granted at both the entity and local levels. In order to consolidate data and improve the exchange of information, the Government of RepublikaSrpska has launched the development of a unifiedIncentive Registry, available at:www.regpodsticaja.vladars.rs.
Institutions at the level of RepublikaSrpska provide numerous incentives to the economy. Key ones include:
Incentives of the Ministry of Economy and Entrepreneurship
The Law on Incentives in the Economy of RepublikaSrpska (Official Gazette of RepublikaSrpska, 52/19, 78/20, 37/22, 56/22) provides for incentive funds to support economic development, specifically:
- Incentives for increasing salaries of workers employed in business entities
- Incentives for direct investments in new technologies
- Incentives for direct investments of special importance
Incentives of the Employment Service of Republika Srpska
The Employment Service of RepublikaSrpska implements employment support projects for the economy of RepublikaSrpska. There are several categories of employment programs, with a special emphasis on the program titled:“Employment Support in the Economy through the Payment of Incentives Equal to the Amount of Paid Taxes and Contributions for Newly Hired Workers,”available at: www.zzzrs.net/index.php/javni_pozivi
Incentives of the Ministry of Agriculture, Forestry and Water Management
The Ministry of Agriculture, Forestry and Water Management provides incentives for agricultural and rural development. Every year, the Ministry adopts a Rulebook on the requirements and methods for obtaining financial incentives for agricultural and rural development.
In addition to the above, there is a wide range of other incentives and tax reliefs.
More detailed information can be found in the BUSINESS section – Business Guide – Incentives in the Economy of RepublikaSrpska, at the following link:https://investsrpska.vladars.net/business-guide/incentives-in-economy-of-republic-of-srpska/
LOCAL LEVEL
Incentives for Establishment of Small and Medium Enterprises (SMEs)
- Incentives for establishing enterprises – START-UP
- Incentives for the development of existing and START-UP enterprises
- Incentives for the implementation of quality management systems
- Incentives for women entrepreneurs
- Incentives for returnee entrepreneurs
- Incentives for craft and entrepreneurial businesses
Tailored incentive programs for each individual investment, based on:
- Size of the investment
- Number of jobs created
- Value of the jobs created
- Whether the investment is in a priority sector or sub-sector
Example of incentives:
- Payment of land in industrial zones over a period of 60 months without interest
- 70%–90% reduction in fees and charges for production facilities
