SDP BiH: Let's help BiH economy, change VAT collection method

The Social Democratic Party of Bosnia and Herzegovina (SDP BiH) has initiated activities to amend the VAT Law. The goal of this initiative is to introduce a system where companies pay VAT to the state only after they themselves collect the issued invoice. Saša Magazinović, a Member of the Parliamentary Assembly of BiH and President of the Main Board of SDP BiH, has sent parliamentary questions and, in cooperation with the non-governmental sector and representatives of BiH entrepreneurs, has initiated a solution to this problem.

According to the current system, entrepreneurs are obliged to pay VAT to the state by the tenth day of the month for all invoices issued in the previous month. However, it is not uncommon for entrepreneurs to sell a product or service and issue an invoice, but fail to collect payment or have to wait a long time for payment. In such cases, paying VAT on unpaid invoices is often devastating for small and medium-sized enterprises, as well as for public utility companies. It is even common for entrepreneurs to take out loans from banks to pay VAT and cover other business expenses, thereby deepening the problem of high interest rates and difficulties in keeping up with loan repayment dynamics.

In addition to paying VAT on unpaid invoices, entrepreneurs must also find ways to pay salaries and related contributions for their employees, cover operational and other business costs, etc. Amidst all this, it is difficult to find anything left for investment in growth, development, new employment, innovation, and everything that modern business trends demand.

SDP BiH calls on all parties to join this initiative that will help our economy. A Bosnian-Herzegovinian entrepreneur who has started their own business, employed themselves, employed other people, fights to survive, pays salaries and contributions to workers, and pays their taxes, deserves understanding and an effort to reduce current business barriers as much as possible.

European countries support the liquidity of small and medium-sized enterprises through an introduced system of paying VAT based on collected invoices. This actually means that entrepreneurs pay VAT to the state only when they themselves collect the invoice from their customers for the products sold and services provided. On the other hand, entrepreneurs are entitled to deduct input VAT for purchased and received goods and services from suppliers only after they have paid the invoice to their suppliers. This system is used by 22 EU countries, including Austria, Belgium, Bulgaria, Estonia, Greece, Croatia, Ireland, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, Germany, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and the United Kingdom.