How to register and become a value added tax (VAT) taxpayer in Bosnia and Herzegovina?
The matter of VAT is regulated at the state level of Bosnia and Herzegovina, and refers to the legal and natural entities of both entities (Federation of Bosnia and Herzegovina and Republika Srpska) and Brčko District BiH.
Accordingly, legal and natural entities may submit a request for VAT registration to the competent authority for the implementation of legislation and policies of indirect taxation and for the collection and distribution of revenues from indirect taxes – ITA BiH.
In terms of VAT registration, the two most common types are mandatory VAT registration and voluntary VAT registration.
1. Mandatory registration
Prescribed Art. 57 of the Law on VAT of BiH, mandatory VAT registration is prescribed for every person whose taxable turnover of goods or services and turnover of goods released with a loan in the previous year exceeds or is likely to exceed the threshold of 50,000 BAM is required to register as a taxpayer. When determining whether or not the threshold of 50,000 BAM has been exceeded, the turnover of related companies and other entities that are through joint ownership or in any other way, under joint direct or indirect control, is also taken into account.
All persons who become or may become taxpayers for the first time are obliged to submit an application for VAT registration to ITA BIH no later than the 20th of the calendar month following the end of the month in which they realized or are likely to realize a turnover of goods or services in the amount greater than the amount of 50,000 BAM.
The documentation submitted for VAT registration is provided in Art. 12. Rulebook on registration and entry in the unified register of indirect taxpayers of BiH.
After reviewing the submitted documentation and determining the exact date of crossing the VAT threshold, ITA BiH registers a new VAT payer in the single register of VAT payers, and issues a Decision on registration of the obligation to pay VAT in the tax register. ITA BiH in the Certificate of registration/entry in the Unified Register of Indirect Taxpayers determines the exact date from which the rights and obligations are established, for each person.
2 .Voluntary registration
Article 61 of the Law on VAT and Article 5 of the Rulebook on Registration and Entry in the Unified Register of Indirect Taxpayers of BiH prescribe voluntary registration in the VAT system of taxpayers.
A person who is not obliged to register for VAT, based on the provisions of Article 44, paragraph (1) of the Law on VAT, may submit a request for voluntary registration for VAT.
Registration is granted if the applicant can prove the following:
- that the investment was made for the purpose of performing a taxable activity;
- that the applicant has realized more than 50% of the taxable turnover with another VAT payer; or
- the existence of other circumstances justifying the request.
Registration may be granted in other cases of voluntary registration as defined in Article 61 of the Law on VAT. Voluntary registration is given for a period of at least two calendar years.
Voluntary registration may be granted to a person who rents premises, unless those premises are rented out for habitation. ITA BiH may conditionally issue a decision for voluntary registration to a person who buys and builds facilities and makes land improvements for the purpose of sale to the taxpayer.
The person submitting the application for voluntary VAT registration should submit the documentation provided for in Art. 12. Rulebook on registration and entry in the unified register of indirect taxpayers of BiH, as well as additional documentation at the request of ITA BiH.
In case of voluntary registration, the ITA BiH Support Department may request an insurance measure (bank guarantee), and if the entity fails to provide it, a cash deposit in the amount of 8,500.00 BAM will be required to complete the voluntary registration procedure.
VAT representation (Registration of tax representatives)
Article 60 of the Law on VAT and Article 8 of the Rulebook on Registration and Entry in the Unified Register of Indirect Taxpayers of BiH prescribe voluntary registration of persons who do not have their registered office in Bosnia and Herzegovina through tax representatives. A person who does not have a registered office in Bosnia and Herzegovina and realizes taxable turnover of goods and services in Bosnia and Herzegovina in terms of Article 60 of the Law on VAT is registered with ITA BiH and appoints a tax representative based in Bosnia and Herzegovina. The tax representative is a VAT payer, who on behalf of the registered person, after VAT registration of the said person and referring to the identification number of the same, submits to ITA BiH all applications, orders, requests and other acts in accordance with laws and regulations. The rights and obligations of taxpayers in Bosnia and Herzegovina, in accordance with this law, also apply to the representative. The taxpayer and the tax representative are jointly and individually liable for the tax calculated in accordance with the law.
In the case of registration of tax representatives, in addition to other registration prescribed by the Rulebook, taxpayers are required to provide a tax representation agreement and Power of attoney for the Tax representative.
Exemptions (activities that are exempt from VAT)
A taxpayer engaged in the supply of goods or services exempt from VAT may not calculate or deduct VAT paid during its acquisition. Input VAT in these cases represents the cost of the taxpayer.
Activities that are exempt from VAT:
- Activities in the public interest (more detailed in Article 24 of the Law on VAT of BiH)
- Financial and monetary services (more detailed in Article 25 of the Law on VAT of BiH)
- International transport (more detailed in Article 28 of the Law on VAT of BiH).
Unija can support you with VAT registration. If you are interested in this service, please contact the contact persons listed below.