The Government of the Republic of Srpska plans to tax dividends and income from the share in the company’s profit, rather than income based on interest on citizen’s savings, and taxation of the total gross salary.
They stated that the goal of the measure is to relieve the burden of the economy and create more favorable conditions for the business of economic entities of the Republic of Srpska. This will lead to a rise in the competitiveness of the economy, higher employment in the population, an increase in the salaries of employees and better collection of public revenues.
To achieve that, the Government plans to carry out several activities:
Reduction of the cumulative contribution rate
Which is now 32,8 percent of the gross salary, and they have planned to further decrease that rate and reduce the total workload to the level of 2008, i.e., 30,6 percent. To achieve this, they must change Law on Contributions which would be finalised by 2025.
Expansion of the Tax base and the Base of Income Tax and Profit Tax
The goal of the RS Government is to introduce Income tax and Profit tax on all dividends and income from the share of profit of the legal entities, instead of taxation of income based on interest on citizen’s savings
, and taxation of total gross salary. The goal for this activity is also to be completed by 2025, and to achieve that, the Income Tax Act, the Profit Tax Act, as well as the bylaws for their implementation must be changed.
Improving indirect taxation policies
The Government also included indirect taxation in the Strategy, emphasizing that the Draft Law on VAT was proposed by the ITA, with the increase of threshold for registration of taxpayers from the current 50,000 BAM to 75,000 BAM of turnover or income.
They added that the introduction of differentiated rate on basic foodstuff would try to neutralize the negative effect on the most endangered categories of the population. In BiH, the VAT rate has been the same since 2006 and amounts to 17 percent.
Considering that the Government has set 2025 as the deadline for defining the mentioned issues, they also agreed that the issues of reducing the gray economy areas must be worked on faster.
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