FBiH Government Considering Extending Decree on Tax-Free Aid for Workers, No New Contribution Cuts

(Patria) - The Decree on the payment of aid to workers by employers in 2026 expires on June 30, with the last payment of tax-free aid possible by July 31.

FBiH Minister of Finance Toni Kraljević confirmed to Patria that the Government is considering extending this decree.

The maximum amount that employers can pay to workers is 300 KM per month, but only if they regularly settle their tax and contribution obligations and have not previously reduced employee salaries.  

Although the Decree is not mandatory, many employers use it. Data on payments is collected by the FBiH Tax Administration, and the FBiH Government has never released data on the aid paid, neither last year nor this year.

This Decree was intended as a transitional solution until the FBiH Government sends amendments to the Law on Contributions into procedure again and further reduces the contribution rate. The original decree from 2025 provided for payments of up to 450 KM per month, and after the implementation of the lower contribution rate from July 1, 2025, the amount employers can pay was reduced to 400 KM, while in 2026 the Government opted for an amount of 300 KM.

During 2025, there was a decline in the number of employed persons in the FBiH, and with the reduction of the contribution rate, a drop in the collection of contributions for PIO was recorded. At the same time, the number of pensioners increased significantly, and 355 million KM is needed monthly for pension payments.

However, given that the implementation of the Law on Fiscalization of Transactions has not yet begun, which was supposed to be part of a package of fiscal reforms with additional contribution reductions, the Government will likely opt to extend the decree on tax-free aid and will not proceed with further reductions in the contribution rate.

The Law on Fiscalization of Transactions states that the law begins to apply after the adoption of all necessary by-laws for its implementation and the establishment of the technical and administrative capacities required for its implementation, and no later than 18 months from the month in which the Law entered into force. The Law was adopted in January 2026.