Mašić: The call to taxpayers earning income from abroad is illegal

SARAJEVO, (Patria) - Member of the SDP BiH Caucus in the Parliament of the Federation of BiH, Damir Mašić, on behalf of the Caucus, sent an open letter to Fadil Novalić, Prime Minister of the FBiH Government, Jelka Milićević, FBiH Minister of Finance, and Šerif Isović, Director of the FBiH Tax Administration.

- Dear Prime Minister Novalić, Minister Milićević, Director Isović,

We are addressing you regarding the "Call to taxpayers earning income from abroad" published by the FBiH Tax Administration on its website on July 12, 2018.

We consider the authorities' move that led to the publication of such a call to be illegal, therefore unacceptable, and particularly destructive for Bosnia and Herzegovina and all its citizens. We will state only some of the reasons on which we base this claim:

- The public call is based on, in our deep conviction, illegal amendments to the Rulebook on the Application of the Income Tax Law, which explicitly prohibited the recognition of 20 percent of expenses and prescribed the payment of four percent contributions for health insurance.

- In the period before these amendments to the Rulebook were adopted, it was not possible at all to declare tax liability or pay tax appropriately for these individuals, which is the fault of the executive authorities in the FBiH, and certainly not the taxpayers, i.e., citizens. It is immoral to demand that taxpayers now bear responsibility for the inaction and inertia of the executive authorities in the previous period, and to collect large sums of money and retroactively pay taxes for that period when, due to the same authorities, they could not do so in any way.

- The psychological effect that this call has caused is destructive to economic flows in Bosnia and Herzegovina and can lead to a reduction in remittances from the diaspora to the accounts of our citizens, which largely preserves economic and social peace in Bosnia and Herzegovina. Furthermore, it will reduce the number of people who decide to engage in self-employment abroad, and will shift many economic activities into illegal channels and the grey economy, which is certainly not and cannot be the interest of responsible public authorities.

- The call has caused justified indignation, especially among young people, and consequently can only intensify the exodus of young people from Bosnia and Herzegovina, which we are certainly witnessing. The role of responsible government is to implement measures to retain young people in BiH, not to adopt regulations that will only strengthen their conviction to seek a future outside the borders of BiH.

We, in the Social Democratic Party of BiH, support the existence of income tax and believe that everyone must be equal in their tax obligations, and that those with higher incomes and greater assets must bear a greater burden.

We also believe that the laws of this country must be respected, including the FBiH Income Tax Law, but we consider the attempt to shift the inability of the executive authorities to implement these laws onto the backs of freelancers, as one of the most economically independent and productive social groups, as well as our citizens living in the diaspora, and to impose a retroactive tax liability on them for the previous period, when they could not fulfill it precisely because of such authorities, to be unacceptable.

For all these reasons, the SDP BiH organized a round table on this topic, and together with a large number of participants, as well as various economic experts, formulated the following demands:

1. That the FBiH Government and the FBiH Ministry of Finance immediately repeal the Rulebook on Amendments and Additions to the Rulebook on the Application of the Income Tax Law (Official Gazette of FBiH, No. 30/18) because, contrary to the Income Tax Law, it abolishes the right to recognize 20% of expenses for self-employment abroad and prescribes health contributions in the amount of 4% for the same category.

2. That the Ministry of Finance proceed with drafting a new Rulebook on Amendments and Additions to the Rulebook on the Application of the Income Tax Law that will eliminate the previous shortcomings and organize a public debate on it, thus giving all interested parties the opportunity to provide their proposals and suggestions.

3. That the FBiH Tax Administration withdraw its call of July 12, 2018, and suspend all activities related to the collection of taxes on income from abroad for the previous period, and inform the public accordingly.

We demand that the collection begin with the adoption of the amendments to the Rulebook on the Application of the FBiH Income Tax Law, but no earlier than January 1, 2019.

We request that you respond to these demands no later than August 7, 2018. If you do not respond positively to the demands presented here by that date, and do not fulfill those listed in points 1 and 3, the Social Democratic Party of BiH will initiate the procedure for scheduling extraordinary sessions of both houses of the Parliament of the Federation of BiH. In the FBiH Parliament, we will present these demands as proposed conclusions and propose amendments to the FBiH Income Tax Law under an urgent procedure, which will stipulate that the tax liability for income from abroad begins on January 1, 2019.

As you may have noticed from the media, most parliamentary parties from the FBiH, both ruling and opposition, have supported the justified demands of freelancers (listed in this letter) and our people from the diaspora, and we state without any doubt that the FBiH Parliament will stand behind such demands.

Therefore, we urge you to act reasonably and fulfill the justified demands placed before you in this letter, to remove the public's anger from yourselves, and to do the right thing, thus showing that you acknowledge your mistake but are also ready to correct it.

We sincerely hope that there will be no need to schedule an extraordinary session of the FBiH Parliament and that you will, in the meantime, recognize the disastrous consequences of the previous actions of the FBiH Ministry of Finance and Tax Administration - the open letter states.