FBiH Government Adopts Decree Again: Employers Can Pay Workers 2,768 BAM, Must Report to FBiH Tax Administration

(Patria) - The Government of the Federation of BiH at today's session, upon the proposal of the Federal Ministry of Finance, with the aim of
mitigating the economic consequences caused by the rise in prices of basic foodstuffs, adopted a Decree
regulating the right to payment of aid by the employer, the dynamics of payment and the method of implementation. The right to
this aid, due to inflationary price growth, belongs to a person who has an established employment relationship with the employer in accordance
with Article 4 of the Labor Law.

The employer may, based on this decree, make a payment of aid in the maximum amount of up to 2,768 BAM
in accordance with financial capabilities and the rules prescribed by this decree. Also, the employer may make a payment
of aid in an amount lower than this amount. The aid can be paid in the period from the day this decree enters into force,
and no later than the day it ceases to be valid. This aid is not considered salary or compensation
for salary according to the provisions of the Labor Law.

The decree specifies that the payment of aid can be made in a maximum of six installments (parts), provided
that the total amount cannot exceed 2,768 BAM. Also, the aid can be paid in a single lump sum. The right
to payment of aid is held by all employees who are in an employment relationship on the day of adoption of the act that the
employer is obliged to adopt (for example, decision, rulebook) which will, among other things, regulate the amount of aid,
the payment date, the number of installments and the payment conditions, without discrimination in any way. If the employee's
employment relationship ends, the employer who pays the aid in multiple installments has no obligation to pay the remaining installments to the employee
after the termination of the employment relationship. It is also determined that the individual acts adopted by the employer for exercising
this right must be adopted in writing.

The employer is obliged, by the 15th of the month for the previous month in which the payment of aid or part of the
aid was made, to submit to the competent Tax Office a Report on the payment of aid. The Tax Administration of FBiH is obliged
to submit the aggregate data from this report to the Federal Ministry of Finance by the end of the month for the previous
month. The Tax Administration is obliged to submit data on the total paid aid, in accordance with this decree,
to the Ministry by February 15, 2025. Based on this data, the Ministry will submit to the Government of FBiH
Information on the payments of aid made in accordance with this Decree.

This Decree enters into force on the eighth day from the day of publication in the Official Gazette of FBiH, and ceases to be valid on December 31, 2024.

As stated in the explanation of the Decree, the payment of tax-free aid to workers will directly have an
impact on increasing their purchasing power and making it easier to bear the inflationary pressure caused by both external and
internal influences over which they have no control. From the aspect of fairness, the measure aims to increase
social justice, especially taking into account employees with the lowest incomes.

According to data from the Tax Administration, about 120,000 workers receive the lowest salary, and an additional 70,000 workers receive a slightly higher salary than the minimum, i.e., a salary in the amount of up to 800 BAM. On the other hand, it was emphasized that this measure should be considered from the aspect of employers as well, from several sides. Primarily, it should be borne in mind that employers will have the opportunity through this Decree to help their employees, without additional tax burden, while on the other hand, this measure will contribute to retaining jobs and reducing employee turnover.

It was pointed out that this decree is only part of a set of fiscal measures that the Government of FBiH plans to implement through its work programs, and this especially refers to the adoption of new laws on contributions and income tax,
and the Decree should be viewed in the overall context of the measures implemented by the Government. All these measures in
combination with the investment cycle in the field of transport connectivity aim to generate greater economic growth
of the Federation of BiH.

It was stated that with the prescribed aid, each worker can receive up to 2,768 BAM during the validity period of the Decree, which amounts to 461 BAM on a monthly level. Full implementation of this decree will ensure that the minimum monthly income received by the employee via a transaction account is above the average net salary in FBiH, including allowances paid by employers to employees. With this Decree, the Government of FBiH enables, but does not prescribe an obligation, for employers to pay financial aid to their employees.