Initiative to Change the Law on VAT Gathers Support

The Institute for Youth Development KULT continues the process of advocating for changes of the Law on Value Added Tax in Bosnia and Herzegovina.

Members of the Institute discussed the changes of the Law with Mr. Irfan ?engi?, the Secretary General of the SDP (Social Democratic Party) of BiH and Mr. Zaim Backovi?, the MP of BPS (Bosnian-Herzegovinian Patriotic Party) at the Parliamentary Assembly’s House of Representatives.

The idea on changing the Law received support from representatives of both parties, and there is strong will to work together in the following period on developing a new proposal and finding the best possible solutions. 

The initiative also invoked a vast interest of the professional cadre, and Jens Muller, the Expert on Economic Development at the Economic Chamber of the City of Mostar, also discussed the previous practices in this area with the representatives of the Institute.

For the purpose of aiding the economy by improving the existing business management systems, the Institute for Youth Development KULT, together with the members of the Network for creating a better business environment in BiH, is advocating to introduce changes in the Law on Value Added Tax, according to which the taxpayers would pay the VAT after charging for the provided services and delivered goods, and not after issuing an invoice.

In the beginning of March in Sarajevo, the “Amendments and Supplements of Law on VAT – Introducing a Taxation System According to Collected Receivables” Round Table was held in which it was concluded that changes are necessary, and that VAT payment deadlines in BiH have to be prolonged.

An Economic Expert and Round Table panelist Svetlana Ceni? added that the changes in the taxation system have to be approached strategically and at the level of changing the whole financial system in BiH. This primarily indicates, as she emphasized, to change the VAT system in distribution and changing the Law on Fiscal Liability. It is necessary, she added, to coordinate the fiscal system at state level and with tax and geodetic administrations.

In accordance with the current Law on Value Added Tax, taxpayers are obliged to submit a return and pay the VAT from the 1^stto the 10^thof each month on completion of the tax period, regardless of whether or not they have charged for their goods-and-services-based demands, which makes many of the business subjects insolvent.

By introducing changes in the Law on VAT, the development of small and medium entrepreneurships can be additionally incented, along with the improvement of the investment climate.

The Round Table will be organized as a part of the “BH Business Site” initiative, managed by the Institute for Youth Development KULT and which is the part of Civil Society Sustainability Project in Bosnia and Herzegovina (CSSP), realized by the Centers of Civil initiatives (CCI) and the Center for Promoting the Civil Society (CPCD) and supported by the US Agency for International Development (USAID).