Blow to workers: Taxation of meal allowances above 8.5 KM, holiday bonuses larger than 400 KM begins...

In the Federation of Bosnia and Herzegovina, the Rulebook on the Application of the Income Tax Law has come into effect, which will tax every meal allowance exceeding 8.5 KM per day, writes the BH news agency Patria.

According to this rulebook, holiday bonuses exceeding 400 KM will also be taxed. Employers and the Economic and Social Council claim that the application of the Rulebook is a new blow to employers and workers because the taxation of meal allowances has not been accompanied by a reduction in wage taxes.

Although a meeting with the Minister of Finance Jelka Milićević was requested, it did not happen, and the Rulebook came into effect. 

The President of the Employers' Association of FBiH, Adnan Smailbegović, told the Patria agency earlier that only the package of the Contribution Law and the Income Tax Law would make sense.

- If the rulebook on taxing meal allowances starts to be applied, and then a new law is passed in a month or two, it would cause complete confusion. As employers, we requested the first step to be neutral, meaning it would not be an additional burden on employers – said Smailbegović.

Smailbegović believes that the main problem in Bosnia and Herzegovina is unemployment, and that the state must create an environment to increase the number of employed people.

The President of the Economic and Social Council, Edhem Biber, told NAP that according to the reform agenda, the adoption of these laws was planned for the last quarter of 2016.

- The task of the reform agenda is to reduce burdens on the economy in order to create jobs – says Biber.

Safudin Čengić, owner of Centrotrans, believes that the application of the rulebook on taxing meal allowances would be an additional burden on employers.

- It is irresponsible to talk about introducing taxes without a reduction in contributions and taxes. In no case should it be introduced separately – believes Čengić.

As highlighted by the Employers' Association of FBiH, the Government is only declaratively in favor of relieving the economy, and legislative authorities have introduced more than ten regulations that impose new burdens in the last year alone.

Now, two scenarios are possible: employers reduce the meal allowance to 8.5 KM to avoid additional costs, which will be at the expense of workers whose monthly income will decrease by an average of 100 KM. 

The second scenario is to reduce the meal allowance and increase the base salary, which increases the costs of taxes and contributions paid by the employer. There is a smaller chance that employers will opt for this step, especially in companies with several hundred employees.