FBiH Government Adopts Draft Law on Transaction Fiscalization

(Patria) - The FBiH Government adopted the Draft Law on Transaction Fiscalization in FBiH at an emergency session today, proposed by the Federal Ministry of Finance, which will be sent for further parliamentary procedure.

This law regulates the obligation to issue invoices, the electronic system for recording transactions, the oversight system in the field of transaction fiscalization, penalty provisions, as well as other matters of significance for fiscalization within the territory of the Federation of BiH.

The purpose of this law is to prevent tax evasion resulting from the informal economy by using technological systems that enable secure collection and real-time transfer of information for every transaction within the territory of the Federation of BiH.

As explained by the proposer, the process of fiscalizing turnover, i.e., transactions in the economy of the Federation of BiH, is not a new concept, as the fiscalization system is regulated by the Law on Fiscal Systems adopted in 2009, which began to be applied from 2010/2011.

However, considering that fiscalization essentially involves the use of modern technical and technological solutions and their integration into the daily operations of entities, the existing legal framework has proven insufficient to keep pace with the rapid development of information technologies and the comprehensive digitalization of business processes in the economy.

Primarily, the analysis of the current situation in the field of transaction reporting through the fiscal system in the Federation of BiH has revealed a number of problems in the application of the current legal and technical-technological framework.

Considering the identified shortcomings of the existing fiscalization system, as well as the experiences of other countries that have implemented some fiscalization models, and taking into account certain proposals, comments, and suggestions from all participants in the public debate, it is proposed to introduce fiscalization based on a combination that, according to estimates, yields satisfactory benefits relative to the associated costs.

The proposer emphasizes that the purpose of the new Law on Transaction Fiscalization in the Federation of BiH is to establish a comprehensive system for the Tax Administration to report on business transactions, provide free applications for small fiscalization taxpayers, reduce tax evasion through cross-checking of data in the Tax Administration, align with European directives and modernize the tax system, as well as increase the efficiency of tax collection and combat the grey economy.

Furthermore, the proposer highlights that this achieves two key goals. The first is the precise determination of the amount of VAT collected within the Federation, and the second is the accurate determination of other tax obligations arising from these transactions.

By establishing this system of transaction oversight, a higher level of fiscal stability of public finances is ensured, as the efficiency of collecting both indirect and direct taxes increases. This reduces the scope for tax evasion and the informal economy, contributing to a more stable and fairer tax system.

The main instrument in the fight against tax evasion is a synergistic combination of three key elements: quality and clear legislation, real-time access to information, and the application of modern technological solutions. Each of these elements plays an indispensable role in creating an effective tax system.

The new Law proposes that every transaction must be documented either through an invoice or a bill, and all transactions should be reported to the Tax Administration. The proposer emphasizes that without quality legislation, even the most modern technology cannot achieve the desired effect.

The commitment of the Government of the Federation of BiH to modernize the fiscal system and combat the informal economy represents a strategic step towards strengthening fiscal stability and sustainable economic development. The modernization of the tax system will have multiple positive effects.

The Law on Transaction Fiscalization in the Federation of Bosnia and Herzegovina represents one of the key reform laws within the fiscal system of this entity. Its alignment with the new tax rules of the European Union stems from the fact that the concept and basic principles of the law were developed in accordance with the guidelines and priorities of the fiscal policy of both the Federation and the EU.