The policy on taxing the meal compensation and tax return enacted by the FBiH Government is not the solution that will improve the business environment in Bosnia and Herzegovina, but an additional burden for the already burdened employers.
According to the new Policy of the Government, the meal compensation exceeding 8.5 BAM will be taxed and the employers will have additional costs while paying tax returns exceeding 400 BAM. The previous limits were higher and it was possible to balance between paying taxes to workers’ salaries and additional payments, such as meal compensations and tax returns.
Bosnia and Herzegovina currently has laws that burden the employers with paying the greatest percentage of contributions on salaries in the region.
Although Prime Minister Fadil Novali? states that this decision will have a “neutral fiscal effect”, we would like to draw the attention to the fact underlined by the employers – that the total income of workers will decrease. We believe that a change was made in a wrong sequence and that the contributions to salaries should have been reduced prior to adopting the amendments of the Policy on implementing the Law on Income Tax. As stated by the employers, such reforms could result in an effet opposite to the desired one and lead to massive terminations of employment.
This sequence of changes represents a direct impact on the workers and it is a worrying fact that the FBiH Government is not considering this.
This measure will primarily affect those who already have small incomes, including youth who are not appreciated in the labor market and are often underpaid.
A reform agenda that aims to create a better business site must not be implemented on employees’ harm which is constantly emphasized by the Union and the Employers’ Association of FBiH.
A Network for creating a better business environment, “BH Business Site”, managed by the Institute for Youth Development KULT, is sending an appeal to the Government of FBiH to prolong the implementation of this Policy and invest its time in resolving key problems of employers, including contributions.
The “BH Business Site” is an initiative that aims to resolve system problems in the employment sector in BiH that aggravate investments in development and opening new workplaces, such as the inadequate distribution of budget incentives for programs and active measures of fighting unemployment, the burdening of the economy with an inadequate concept of tax payment and high contributions to workers’ salaries.