INTERNET SALES AND PURCHASES: In which cases are you exempt from paying VAT

SARAJEVO, (Patria) – After the Amazon platform included the end of BiH as a country from which companies and vendors can register and directly sell their products, the question arises about the obligations of vendors and companies from BiH, as well as the customers, and how the goods sold outside the borders of BiH will be taxed.

The Indirect Taxation Authority of BiH clarified in which cases the supply of goods in this manner is not subject to value added tax (VAT).

“When it comes to the supply of goods via the internet (Amazon platform), if in a specific case the goods (merchandise) were purchased abroad and immediately sold abroad as well, without entering the goods into the customs territory of BiH, and in that case, there was no supply within the territory of BiH, nor import of goods into the customs territory of BiH, such supply of goods, in accordance with Article 3 of the Law, is not subject to VAT in Bosnia and Herzegovina.

Also, the export of goods from Bosnia and Herzegovina by or on behalf of the seller, in accordance with the VAT Law, is exempt from paying (taxed at a zero rate) value added tax. This applies to the export of goods from BiH, i.e., it is a direct supply of goods to a buyer abroad, i.e., outside the customs territory of BiH,” the ITA stated for Patria.

In order for a supply to be considered an export from BiH, and to be taxed at a zero VAT rate in accordance with the current legislation, the condition that the goods have crossed the border of BiH must be met, and for this, taxpayers in BiH who sell goods abroad must have proof that these goods have actually left the customs territory of BiH.

“When goods are sent abroad by mail or express mail, a taxpayer from BiH can issue an invoice at a zero VAT rate if they possess an export customs document issued in accordance with customs regulations. When goods are sent abroad by mail or express mail without submitting an export customs document, the taxpayer can achieve tax exemption if they possess a postal dispatch note and a transport document on the basis of which it can be determined that the goods were sent abroad by mail or express mail.

In accordance with the aforementioned provisions, if a taxpayer (a registered taxpayer for VAT and foreign trade) exports the goods in question to a buyer abroad outside the customs territory of BiH, the export of these goods is exempt from paying value added tax, i.e., the goods in question are taxed at a zero rate of value added tax, and the taxpayer is obliged to issue a tax invoice without VAT shown. Of course, the taxpayer must fulfill all the previously mentioned conditions,” the ITA of BiH explained.

As explained, when buyers from BiH order goods from abroad via the internet and when such goods arrive at their personal names and addresses in BiH, they should know that they have the right to exemption from paying import duties on goods purchased for their personal use up to a value of 300 KM. Anything exceeding this value should be subject to customs clearance and payment of import duties (customs and VAT).

Regarding the data for the first five months of this year, citizens of BiH used the option of ordering via the internet, and they paid 252,545 KM for the customs clearance of these shipments. The total value of ordered goods was 1,232,117 KM.

Compared to the first five months of 2020, there is a noticeable decline, which can be attributed to the coronavirus pandemic and the difficulties in the movement of goods and services.

The value of ordered goods for the first five months of 2020 was 2,685,217 KM, while the duties amounted to 567,010 KM.

As noted by the ITA of BiH, this does not represent the total value of internet orders by BiH citizens, as shipments with a value of less than 300 KM, for which import duty exemption was granted, are not included, nor are data on internet orders included if the shipments are already in BiH.