Supporting BiH Businesses During Coronavirus Pandemic by Extending VAT Payment Deadline

The Institute for Youth Development KULT supports and applauds the Proposal law on amending the Law on Value Added Tax which was submitted to the Parliament for urgent consideration by Member of the Collegium of the BiH Parliament’s House of Representative, Denis Zvizdić.

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.

While he was Chairman of the Council of Ministers of BiH, in September 2017, Mr. Zvizdić issued a public statement supporting the initiative to extend the deadline for paying VAT, reducing the daily penalty fee from 0.04% to 0.02%. This initiative was launched by the Institute for Youth Development KULT with the support of over 30,000 business owners in BiH, and representatives of the government and NGO sectors.

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 operations The proposal law on amending the Law on VAT should go through the regular adoption procedure and be adopted under normal circumstances as well, and not used just as a temporary measure during the coronavirus pandemic.

BiH has the stricter 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 only 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.

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