Employers in FBiH can pay employees two average salaries tax-free by mid-2024

(Patria) - The Government of the Federation of BiH, at today's session in Sarajevo, upon the proposal of the Federal Ministry of Finance, adopted a Decree regulating the right to payment of assistance by the employer, the payment schedule, and the method of implementation.

The right to assistance, due to the inflationary rise in prices, belongs to any person employed by an employer in accordance with Article 4 of the Labor Law. This right applies to persons employed on the day the monetary amount is paid.

Based on this decree, the employer can pay assistance in a maximum amount of up to 2,520 KM. The employer can also pay assistance in an amount less than this amount.

Assistance can be paid from the date this decree enters into force, and no later than the date it ceases to be valid.

Assistance will be paid exclusively to employees' transaction accounts. This assistance is not considered salary or salary compensation under the provisions of the Labor Law.

Assistance can be paid in up to six installments (parts), with the total amount not exceeding 2,520 KM. Assistance can also be paid in a single installment.

Assistance is paid to all employees employed on the day of assistance payment, without discrimination in any way.

The employer is obliged to adopt an internal act that will regulate, among other things, the amount of assistance, the payment date, the number of installments, and the payment conditions.

Individual acts adopted by the employer to exercise the rights from this decree must be in writing.

This decree enters into force the day after its publication in the Official Gazette of the Federation of BiH and ceases to be valid on June 30, 2024.

As stated in the explanation of the Decree, the set of fiscal laws represents a priority activity of the Government of the Federation of BiH and the Federal Ministry of Finance, as the authorized proposer.

These regulations plan to reduce employer costs and increase employee salaries at the expense of the budget.

However, this has not yet been realized due to the complexity of the impact of these two laws on employers, employees, and budgets, the impact of the minimum wage increase, and the method of covering potential budget deficits that will arise from the adoption of these regulations.

In order to overcome the current situation and create prerequisites for the adoption of a new set of fiscal laws, it was necessary to adopt this decree, which has a limited period of validity.

This decree provides for the possibility of increasing employee income to protect jobs and avoid additional pressure on employers by exempting them from the obligation to pay income tax and contributions on the foreseen income increase.

It is expected that the laws on income tax and mandatory contributions will be amended as soon as possible, and this temporary measure provided by the Decree will achieve the desired effect with the aim of protecting jobs.