AmCham wrote to the Government and Parliament of FBiH: Urgently adopt comprehensive fiscal reform

(Patria) - The American Chamber of Commerce in BiH (AmCham) addressed a letter today to the Prime Minister, relevant ministers in the Federal Government and the Parliament of FBiH, expressing support for efforts aimed at improving the position of workers.

From AmCham, they called for urgent action to implement a comprehensive fiscal reform in Bosnia and Herzegovina.

They emphasize that, parallel to improving the position of workers, it is necessary to urgently reduce labor costs, i.e., relieve employers, which would result in increased competitiveness of goods and services they provide on the domestic and foreign markets.

"In order to protect investments, government action is needed that is in line with the principles of legal certainty, economic predictability and legitimate expectations, as key elements for creating a business environment that encourages investment and economic development," state from AmCham.

They also believe that it is necessary to act without delay, through urgent and systemic measures:

- Urgent measures (reduction of salary burden)

a) by determining a part of the salary that is not subject to income tax and contributions;

b) by amending the Law on Contributions in the part related to contribution rates borne by the employer and the worker, in a way that contributions borne by the employer are reduced from 10.5% to 5.5% and contributions borne by the worker are reduced from 31% to 26%,

Systemic measures (long-term fiscal plan and fiscal reform)

The only sustainable solution is a comprehensive systemic reform of the fiscal system, which should be carried out as soon as possible, i.e., by urgent procedure.

The implementation of the reform should be preceded by the adoption of a three-year Fiscal Plan with measures that will ensure a positive trend of annual GDP.

The Fiscal Plan would be the basis for defining the fiscal reform strategy.

a) adopt the Law on Fiscalization of Transactions in FBiH, which the FBiH Government submitted in draft form for public discussion in December 2024.

The law should significantly reduce the "gray economy", because, in addition to the hardware fiscalization currently in use, it will also enable software (online) fiscalization, which is necessary to monitor trends and changes in the market (online stores, internet sales, distance selling, etc.) in real time, thereby further preventing manipulations of turnovers initially registered through fiscal cash registers;

b) the aforementioned increase in public revenues creates the preconditions for abolishing contributions "on" gross salary borne by the employer at the current rate of 10.5% and possibly further reducing contributions "from" salary.

These changes need to be reflected through amendments to the Law on Contributions of FBiH. In the described manner, the economy should be relieved with the aim of influencing the competitiveness of products on the domestic and foreign markets;

c) an increase in public revenues can also be ensured through changing the tax treatment of other types of income and compensation through amendments to the Law on Income Tax of FBiH by introducing a differential tax rate or expanding the tax base.