The Official Gazette of the Federation of Bosnia and Herzegovina, No. 5/23 of 25.01.2023, published the Rulebook on Amendments to the Rulebook on the Application of the Income Tax Law of the Federation of Bosnia and Herzegovina.

It shall enter into force on 01.02.2023.

The amendments relate to Article 12, where a new paragraph is added and it is stipulated that the payer of income for compensation regulated by a special regulation, except for non-taxable income defined by the Rulebook, for a person undergoing professional training is obliged to calculate, withhold and pay the advance payment of income tax, and report it to the Tax Administration within five days from the date of payment on Form APR-1036.

Article 14 also adds that employer obligations also apply to non-resident taxpayers who are employed by a foreign legal entity and earn income by performing work on the territory of Bosnia and Herzegovina, i.e. the Federation of Bosnia and Herzegovina. Therefore, the essence is that the income is earned in BiH, i.e. FBIH.

A paragraph is added to the article that refers to the non-taxable amount of accommodation allowances for judges of the Supreme Court of FBIH as well as accommodation and separation allowances for senior civil servants.

Paragraph 5 of Article 53, which referred to lump sum tax amounts that defined a 50% reduction until 31.12.2022, is also deleted.

A new paragraph is added that regulates the taxation of income earned by non-residents on the territory of BIH, i.e. FBIH, if it is paid abroad by foreign legal entities, and they are obliged to calculate and pay income tax upon payment of such income in the manner now determined by Article 14 of these Rules.

The above does not apply to the calculation, withholding and payment of income tax by branches of a foreign company that are assigned a taxpayer identification number starting with 48 on the territory of the Federation, in the case when non-resident income recipients perform dependent activities for that foreign company.

Regarding the payment of income tax from dependent activities of posted/detached employees, the obligation to submit Form MIP-1023 is prescribed. The instructions on completing the MIP 1023 form state the obligation to submit it as already stated and prescribed for detached workers as well as for non-resident persons who earn income on the territory of BiH or the FBIH.