Companies with no employees made a profit of 170 million KM

SARAJEVO, (Patria) - One thousand eight hundred and thirty-eight companies in the Republika Srpska had no employees last year, but this did not prevent them from ending the business year with a profit of almost 170 million marks. These are mostly foreign companies, with the largest number coming from Serbia, Slovenia, Italy, Croatia, and Austria.

According to data from the Agency for Intermediary, IT, and Financial Activities, companies operating without employees are most often IT firms or entities that sell from abroad and have an intermediary in Republika Srpska.

The five sectors that recorded the highest profits are business consulting and other management, construction of residential and non-residential buildings, engineering activities and related technical consulting, non-specialized wholesale trade, and electricity production.

As unbelievable as it may sound that a profit of 170 million marks can be made without a single employee, experts say that in most cases, there is nothing controversial about it.

"There are companies that operate completely legally and legitimately, and that is normal. On the other hand, there are certainly companies involved in suspicious activities, where registered companies serve, as colloquially put, for 'money laundering'. Control bodies at all levels should pay attention to such firms," points out Saša Grabovac from the Association of Economists "SWOT".

The laws in Bosnia and Herzegovina allow a company to have no employees. It is only important that they regularly pay profit tax and VAT.

"A certain company can have a small number of employees and generate sales of goods or services in such a volume that it actually has a large reported turnover. VAT is calculated and paid on this reported turnover, and this absolutely does not affect the number of employees who may be working there," says Ratko Kovačević, spokesperson for the Indirect Taxation Authority of BiH.

The 10 percent profit tax rate in both entities is the main reason why an increasing number of foreign companies with no registered employees are deciding to operate in BiH.

"Whether they will go for an offshore zone concept, where the operations of such companies are questionable, or they will come to work in BiH, which is as it is, but is tax-compliant. And on that basis, they can withdraw their cash, on which they have paid tax, and take it to their home country," states economic analyst Zoran Pavlović.

The average profit tax rate in Europe is 30 percent, which is three times higher than in Bosnia and Herzegovina. This is good for foreign companies, and even better for the governments in both entities, for whom the profit tax paid by foreigners is a godsend, given that they have done nothing for this money.