In the “Official Gazette of the Federation of Bosnia and Herzegovina”, No. 85/23 of 03.11.2023. the Rulebook on amendments to the Rulebook on the application of the Income Tax Law was published.
The most important changes are:
It is possible to pay a non-taxable hot meal allowance and daily allowance. The change is in accordance with the Regulation so that daily allowances and hot meals are not mutually exclusive, therefore there is no restriction on paying a non-taxable daily allowance and non-taxable hot meal allowance to a person on a business trip;
Reimbursement of transportation costs to and from work for environmentally friendly vehicles (electric and hybrid) is multiplied by 0.30 KM per kilometer traveled, and up to a maximum of the price of one and a half monthly public transport tickets on the approved route;
Detailed conditions for increasing the personal deduction based on interest paid for a housing loan;
Below is the complete text of the Amendments to the Rules on the Implementation of the Income Tax Law of the Federation of Bosnia and Herzegovina.
Official Gazette of the Federation of BiH, No. 85/23
Based on Article 31, Paragraph (1), Article 36, Paragraph (2) and Article 48 of the Income Tax Law (“Official Gazette of the Federation of BiH”, No. 10/08, 9/10, 44/11, 7/13 and 65/13), the Federal Minister of Finance – Federal Minister of Finance, hereby issues
RULES
ON AMENDMENTS AND SUPPLEMENTATIONS TO THE RULES ON THE IMPLEMENTATION OF THE INCOME TAX LAW
Article 1
In the Rules on the Implementation of the Income Tax Law (“Official Gazette of the Federation of BiH”, No. 48/21, 77/21, 20/22, 57/22 and 5/23), Article 20 is amended to read as follows:
“Article 20
(Income not included in income from dependent activities)
(1) Income, the rights to which are regulated by special regulations, which are not included in income from dependent activities and which are not subject to taxation, are:
a) reimbursement of business travel expenses and field work allowances
b) reimbursement of other expenses to employees and
c) financial assistance to employees.
(2) Reimbursement of business travel expenses referred to in paragraph (1) item a) of this Article may include: accommodation, food, transportation, and other expenses determined by the Regulation on Reimbursement of Business Travel Expenses (“Official Gazette of the Federation of BiH”, No. 44/16, 50/16 and 31/23) which applies to budget users, as well as to other taxpayers.
(3) Fees from paragraph (2) of this article are considered non-taxable income of the taxpayer if they are paid/given to a natural person who has employee status with the payer and if they are determined according to criteria and paid under the conditions, in the manner and at most up to the amount prescribed in accordance with the Regulation on reimbursement of expenses for official trips (“Official Gazette of the Federation of BiH”, no. 44/16, 50/16 and 31/23).
(4) Compensation for work in the field (field allowance) is paid to the employee on the condition that the work is performed outside the place of employment and lasts longer than 30 days continuously in the amounts of:
a) 20% of the amount of the prescribed daily wage, if accommodation and meals are provided on the field by the employer,
b) up to 70% of the prescribed daily allowance, if only food is provided on the field,
c) up to the amount of the prescribed daily wage if only accommodation is provided to the employee on the field.
(5) Compensation for other expenses to employees referred to in paragraph (1) point b) of this Article includes: compensation for transportation costs to and from work, compensation for meals during work, compensation for accommodation and separate living expenses, holiday pay and severance pay.
(6) Compensation for transportation costs to and from work is recognized in the amount of the cost of a ticket for urban, suburban or intercity transportation, and in the case of using one’s own car, in accordance with internal regulations, in the amount of 15% of the price of 1 liter of gasoline per kilometer traveled on an approved route from the place of residence to the place of work, except for environmentally friendly vehicles (electric and hybrid) where the mileage traveled is multiplied by 0.30 KM per kilometer traveled, and at most up to the amount of the price of one and a half monthly tickets in public transport on an approved route.
(7) Compensation for meals during work (hot meals) is recognized in the amount of up to 1% of the average net salary paid in the Federation, according to the latest published data of the Federal Institute of Statistics.
(8) Compensation for accommodation and separate living of members of the Government of the Federation and their advisors under the conditions set out in Articles 2 and 3 of the Regulation on Compensation for Members of the Government of the Federation of Bosnia and Herzegovina and their Advisors (“Official Gazette of the Federation of Bosnia and Herzegovina”, No. 87/10, 22/11, 45/13 and 9/16), shall be recognised in the amount of 599 KM per month for accommodation costs, 300 KM per month for separate living and 299 KM per month for accommodation costs for members of the Government, and 250 KM per month for separate living, 299 KM per month for accommodation costs and 149 KM per month for accommodation costs for advisors.
(9) Accommodation and separate living allowances for persons referred to in Article 2 of the Regulation on Remunerations for Judges of the Supreme Court of the Federation of Bosnia and Herzegovina and Prosecutors of the Federal Prosecutor’s Office of the Federation of Bosnia and Herzegovina that do not constitute a salary (“Official Gazette of the Federation of Bosnia and Herzegovina”, No. 98/22) shall be granted in the amount of up to 250 KM per month for separate living, in the amount of up to 299 KM per month for accommodation when they do not have official accommodation provided or up to 149 KM per month when they have official accommodation provided.
(10) Accommodation allowances for persons referred to in Article 4 of the Regulation on Remunerations that do not constitute a salary (“Official Gazette of the Federation of Bosnia and Herzegovina”, No. 63/10, 22/11, 66/11, 51/12, 99/22, 15/23 and 68/23) shall be granted in the amount of up to 299 KM per month for accommodation when they do not have official accommodation provided or up to 149 KM per month when they have official accommodation provided.
(11) Separate living allowances for senior civil servants referred to in Article 4 of the Regulation on Non-Salary Allowances (“Official Gazette of the Federation of Bosnia and Herzegovina” No. 63/10, 22/11, 66/11, 51/12, 99/22, 15/23 and 68/23) shall be granted in the amount of up to 250 KM per month.
(12) Annual leave allowance shall be granted in the amount of up to 50% of the average net salary paid in the Federation in the last three months prior to payment.
(13) Severance pay upon retirement shall be granted in the amount of six net salaries of the employee paid in the previous six months or six average net salaries in the Federation according to the latest statistical data, if this is more favorable for the employee.
(14) Severance pay in the event of termination of the employment contract, pursuant to Article 10, paragraph (4), item 6) of the Law, is not subject to the obligation to pay income tax if it is paid to the employee up to an amount that constitutes 70% of the average monthly salary in the last three months before the termination of the employment contract, for each completed year of work with the employer – the severance pay payer.
(15) Financial assistance to employees referred to in paragraph (1), item c) of this Article includes one-time financial assistance in the amount of three average salaries of the employee paid in the previous three months or in the amount of three average net salaries in the Federation according to the latest statistical data, if this is more favorable for the employee for:
a) severe disability of the employee (at least 60% disability),
b) serious illness of the employee or members of his immediate family and
c) surgical interventions on the employee performed for health reasons and on the recommendation of a doctor.
(16) Severe disability referred to in paragraph (15) point a) of this Article shall be proven for tax purposes on the basis of the findings, assessment and opinion of the Institute for Medical Expertise of Health. If the employer bears the costs of the findings, assessment and opinion of the Institute for Medical Expertise of Health for its employee referred to in this paragraph and paragraph (17) of this Article, they shall be considered income referred to in Article 16, paragraph (4) point a) of this Regulation.
(17) Severe illness referred to in paragraph (15) point b) of this Article shall mean the following diseases: acute tuberculosis, malignant diseases, endemic nephropathy, surgical intervention on the heart and brain, all types of degenerative diseases of the central nervous system, infarction (heart and brain), disease of the muscular system, paralysis and other serious diseases specified in a general act of the Federal Ministry of Health, as well as serious bodily injuries. Illness, i.e. physical injury, is proven, for tax purposes, by the assessment and opinion of the Institute for Medical Expertise on Health.
(18) Financial assistance to employees from paragraph (1) point c) of this article also includes compensation for funeral expenses in the event of the death of an employee or a member of his immediate family, as well as the death of a retired employee, in the amount of actual funeral expenses, with a maximum of four average monthly salaries paid in the Federation for the previous four months before the adoption of the decision on the payment of compensation. If two or more family members work in the legal entity and are entitled to this compensation, only one compensation per death is considered a non-taxable compensation for funeral expenses.
(19) Financial assistance to employees from paragraph (1) point c) of this article also includes compensation for treatment costs of seriously ill employees or members of their immediate family, in accordance with Article 24, paragraph (5) of the Income Tax Act, in the amount of actual treatment costs according to documentation, under the conditions from paragraph (17) of this article.
(20) Gifts from Article 10, paragraph (4) point 5) of the Law, which employers give to employees in the form of money, things, services or rights, on the occasion of national or religious holidays and/or company jubilees, etc., are not subject to calculation and payment of taxes to income if their total value on an annual basis does not exceed a value equal to 30% of the average monthly salary published by the Federal Bureau of Statistics for the month when the gift is given.
(21) If the compensation from paragraph (1) item a) and b) of this article pays/gives to an employee in an amount greater than the prescribed amount, it will be considered, in accordance with Article 10, paragraph (2) point 1) of the Law, as taxable income from non-independent activity.
(22) If the compensation under paragraph (1) item a) and b) of this article paid/given to a natural person who does not have the status of an employee with the payer/provider of compensation, will be considered as income from other independent activities.
(23) The income data referred to in paragraph (21) of this Article shall be entered in the Payroll Sheet (Form OLP-1021) of the employee and other prescribed records that the employer is obliged to keep.”
Article 2
In Article 28, paragraph (5) is amended to read and reads:
“(5) Taxpayers who earn income from dependent activities from abroad are obliged, pursuant to Article 27, paragraph (10) of the Law, to calculate and pay an advance payment of income tax from dependent activities within five days from the date of receipt of the income. In Taxpayers employed in diplomatic or consular missions or international organizations with diplomatic immunity pursuant to Article 27, paragraph (9) of the Law shall also be obliged to calculate and pay income tax from dependent activities within the same period and in the same manner.”
Article 3.
In Article 52, paragraph (1), after the word “craftsman”, the following words are added: “as a primary or additional occupation”
Point a) is amended to read:
“a) if they perform activities that can be performed as a home craft, themselves without employing other persons according to the Regulation on activities that can be carried out as a home craft (“Official Gazette of the Federation of BiH”, No. 24/23),”
In point b) the words “Regulation on the Protection of Traditional and Old Crafts (“Official Gazette of the Federation of BiH” , No. 66/09, 3/10 and 16/12)” shall be replaced by the words: “Regulation on the Protection of Traditional and Old Crafts (“Official Gazette of the Federation of BiH”, No. 28/22)”
Point d) shall be deleted.
Previous point e) becomes point d).
In paragraph (3), the words: “c) to e)” are replaced by the words: “c) and d)”, and the words: “approves payment” are replaced by the words: “issues a decision on payment”
Article 4.
In Article 53, in paragraph (1), after the word “obligors”, the words: “who carry out independent activities of trades and activities related to trades as their main occupation and”, and the words: “approved payment” are replaced by the words: “issued decision on payment ”
In point a) the words: “craft activities and activities that are related to crafts” are replaced by the words: “activities that can be performed as home crafts”
A new paragraph (2) is added after paragraph (1), which reads:
“(2) Taxpayers who perform independent activities of trades and activities related to trades as an additional occupation and who have been issued a decision on payment of income tax in a flat amount, income tax pay in the amount of 50% of the amount from paragraph (1) of this article.”
In the previous paragraph (2), which becomes paragraph (3), the words: “paragraph (1)” are replaced by the words: “para. (1) and (2)”
The previous paragraph (3) and (4) become par. (4) and (5).
Article 5.
In Article 65, paragraph (5) is amended to read:
“(5) In accordance with Article 24, paragraph (2) point 6) of the Law, persons with disabilities are considered physical persons whose physical impairment and degree of disability have been determined by the findings, assessment and opinion of the Institute for Medical Expertise on Health.”
Article 6.
In Article 70, paragraph (5) is amended to read as follows:
“(5) For resident taxpayers referred to in Article 2, paragraph (3) of the Law, the personal deduction may be increased by the amount of interest paid on a housing loan if:
a) he/she has credible documentation that can prove that with that loan he/she is purchasing or building a housing unit that meets his/her needs; which (housing unit) is owned by him/her or by his/her spouse with whom he/she is in a marital union or jointly owned by the spouses,
b) he/she is solving his/her housing problem or the housing problem of his/her family for the first time and if neither he/she nor his/her spouse owns a housing unit.”
Article 7.
IN ANNEX 1 Instructions for completing the Application for Issuance of a Tax Card (Form PK–1001) in item 1.7. the words: “decision of the competent authority determining the physical damage and degree of disability” are replaced by the words: “findings, assessment and opinions of the Institute for Medical Expertise on Health.”
Article 8.
This rulebook enters into force on the eighth day from the day of its publication in the “Official Gazette of the Federation of Bosnia and Herzegovina”.
Number 05-02-2-4431/21-6
October 2023
Sarajevo
Minister
Toni Kraljević, s. r.