Support the initiative for supplements and amendments to the Law on VAT
Dear business owners and organisations active in the business sector,
We hereby kindly ask that you express your support to the initiative to amend the Law on VAT of Bosnia and Herzegovina. The Initiative proposes changes that would enable tax payers to pay VAT upon the collection of receivables, as opposed to upon issuing an invoice for the services and goods supplied, and would stipulate that they have the right to deduct entry tax only after having paid their suppliers for the services and goods received. Furthermore, the initiative advocates for moving the deadline for paying the VAT from the first to the last day of the current month for the previous month. These changes would apply to tax payers with an annual turnover (without VAT) of up to 1 million BAM.
Namely, pursuant to the Law on VAT, tax payers are obligated to file and pay their VAT in the period between the 1st and 10th day of the month, upon expiration of the tax period, regardless of whether or not they collected their claims based on the goods and services provided. This means that employers with long collection periods are faced with difficulties in their work, because their primary obligation is settling this type of tax liability, although they were not yet paid for the goods and services they provided. This ultimately leads to insolvent businesses that are often driven to fraud, corruption and loss of business. Mandating taxation upon collection of receivables would provide additional impetus to small and medium-size enterprises, which would in turn spur the development of the economy and an improved investment climate. The aforementioned measures would improve the liquidity of small and medium-size enterprises since they would no longer be required to provide additional funds to pay the VAT for goods and services that have not yet been paid. The cash accounting scheme for VAT is currently used by many European countries such as Austria, Spain, Portugal, United Kingdom, Hungary, Bulgaria, Romania, Croatia, Serbia, etc.
During the 15 years since its founding, the Institute for Youth Development KULT has successfully worked on developing and implementing legislation aimed at improving the social position of youth, but also citizens in general. Since economic issues are at the root of the majority of problems faced by youth, the Institute has been conducting initiatives and activities intended to foster a better business environment in BiH, not only for youth, but for all entrepreneurs.
Advocating for amendments to the Law on VAT is part of the “BH Business Site” initiative which is being implemented by the Institute for Youth Development KULT. It is part of the BiH Civil Society Sustainability Project (CSSP), which is being implemented by the Centers for Civic Initiatives (CCI) and the Civil Society Promotion Center (CPCD), and is supported by the United States Agency for International Development (USAID).
Kindly complete the LETTER OF SUPPORT and send a scanned copy by email ( belma.gijo@kultbih.org), fax (033 778 779) or by post to the address stated in the Letter of support.
Deeply convinced that you will support this initiative, whose aim is to contribute to improving the business environment in our country, we thank you in advance.
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