From July 1, employers will pay lower contributions, the decree on tax-free aid expires, will workers' salaries increase?

(Patria) - From July 1, employers in the Federation of Bosnia and Herzegovina will pay lower contributions for health, pension and disability insurance. Until the end of July, the Decree on the payment of aid to workers by employers is also in force, allowing payments of up to 450 KM per worker per month tax-free.

At the last session of the Economic and Social Council, an idea was put forward to extend the decree until the end of the year. However, the Government of the Federation of Bosnia and Herzegovina has not yet commented, and there is no scheduled session of the ESC, with which the Government had previously agreed on decrees.

The Government previously announced that the plan is to reduce contributions by an additional five percent from the beginning of next year. However, all of this must be preceded by the adoption of the Law on Fiscalization of Transactions and new amendments to the Law on Contributions. The Parliament of the Federation of Bosnia and Herzegovina has not yet considered the Law on Fiscalization of Transactions.

Employers have expressed support for the reduction of contributions, especially after the increase in the minimum wage in January this year, which also increased costs. The Government of the Federation of Bosnia and Herzegovina provided subsidies for part of the contributions to employers, but any reduction in the burden is welcome. This decree is valid for the entire year 2025, and payments are made according to certain coefficients depending on the salary paid by the employer, which was less than 1,000 KM.

However, regardless of the reduction in contributions, this does not mean that workers' salaries will increase by that reduced amount. Salary increases will be solely at the discretion of employers.

The Union of Independent Trade Unions of Bosnia and Herzegovina called on employers to increase workers' salaries, taking into account the rising cost of living, after the application of reduced contribution rates begins.

To date, the Tax Administration of the Federation of Bosnia and Herzegovina has not publicly released data on the number of employers who have used the provisions of the Decree and made payments of the tax-free supplement. According to the decree, employers were obliged to submit a report on payments for the previous month by the 7th of the month.