Authorities Abolish Export Incentives: BiH Companies to be Further Weakened

Dozens of successful BiH exporters from the Federation will abandon multi-million investments and hiring thousands of new workers this year if they are forced to retroactively pay profit tax. Namely, the authorities have abolished export incentives, directly endangering the market position of BiH companies, which will not be able to compete under these conditions, reports Patria.

Fears are that companies will incur significant losses, which could lead BiH into an economic growth decline and recession. The Employers' Association of BiH has therefore requested the Constitutional Court of BiH to prevent the application of the law that seeks the retroactive collection of millions of marks, even though companies did not plan for this cost when setting their prices.

In this manner, the Government of FBiH is stifling production instead of encouraging employment. One of the owners of an exporting company presented the shocking consequences of this scandalous measure.

- The profit achieved in 2015 was around KM 600,000.00, and the law at the time stipulated that exporters with at least a certain percentage of exports were exempt from profit tax, and we had planned investments with that money. But now we will have to reduce everything and give up – he says.

The second, and perhaps greater, loss will be seen later, as they generate about 60% of their turnover with foreign customers.

- To be competitive, we offered prices that included the incentive, which they are now abolishing. With the calculation of profit tax on profits earned in foreign and domestic markets, we are now losing much more than the profit from exported goods. Not to mention that we will not buy new machines and will give up on hiring workers who would operate them – he adds.

In the long term, we expect, as he says, "a reduction in export business due to non-competitiveness and better business environments around us, especially new incentives for exporters from Turkey."

The planned investment for the construction of a new production facility of approximately 1800 m2, which is to be realized in 2017, is also in question, states the owner of one company.

Representatives of the Employers' Association of BiH have requested the implementation of an urgent measure whereby the Constitutional Court would suspend the collection of this tax by the end of the month, until another solution is found. If this happens, things could take a different course. Otherwise, one of the few bright examples of the BiH economy, namely exporters, will become a problem, rather than a sector that fills the lavish budgets of BiH institutions.

(novi.ba)