Moving VAT Deadline to Last Day of Month Should Be a Permanent Solution!

During yesterday’s session, the House of Representatives of the BiH Parliamentary Assembly adopted the Proposal of law amending the Law on VAT. The initiative to amend the VAT law, however, dates back to 2016, when the Institute led advocacy efforts to amend the Law, with the support of more than 30,000 business owners.

Adopting this proposal would mean that the deadline for paying VAT is moved from the 10th of the month, to the last business day in the month. This decision would be valid for 90 days, and the Council of Ministers of BiH can extend it for another 90 days.

MP who submitted the Proposal, Mr. Zvizdić, supported the initiative to amend the law since 2017, when he issued a public statement in support of the initiative to extend the deadline for paying VAT and reduce the daily penalty rate from 0.04% to 0.02%. Unfortunately, the Council of Ministers of BiH rejected the initiative which was proposed through an MP question by BiH Parliamentary Assembly MP Saša Magazinović, and prepared in cooperation with the Institute. The response stated that the initiative was unacceptable for several reasons: it required amendments to relevant laws and regulations and changes in administrative procedures; it would compromise the ability of the Indirect Tax Authority to pay refunds to tax payers; it would jeopardize payments of international obligations, i.e. foreign debt payments; introducing a new VAT payment system would be costly.

The need to amend the Law and extend the VAT payment deadline is even more urgent now during the coronavirus pandemic, when the economy is under threat due to limited or halted business operations. The Proposal of law amending the Law on VAT should go through the regular adoption procedure and be adopted under normal circumstances as well, and not be used just as a temporary measure during the coronavirus pandemic.

BiH has the strictest VAT payment deadlines in Europe. Other countries give significantly more time and use significantly longer accounting periods than the one month used by BiH. Also, most European countries allow small business owners to pay their VAT after they have received payment for their work or services. This measure was included in a comprehensive set of measures advocated by the Institute through our initiative and is in line with current EU directives.

The Institute for Youth Development KULT fully supports this Proposal and encourages MPs in the House of Peoples of the BiH Parliamentary Assembly to adopt the Proposal.

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