In the world of fiscal discipline, Bosnia and Herzegovina is often compared to an adventure of searching for lost treasure – except instead of buried chests, we’re looking for lost tax revenues. It’s as if we’ve sent a team on a treasure hunt who have never heard of maps, compasses, or even treasure! But don’t worry, we’re not looking for treasure here, but for properly paid taxes through a process known as fiscalization.
So, welcome to a country where fiscalization doesn’t happen once and for all, but looks more like a repeated game of “Hunt for Lost Revenues” – just without prizes. In this adventure, we explore how Bosnia and Herzegovina, with both entities and Brčko District, faces the challenges of fiscalization, with a bit of humor and hope that we’ll eventually find our ‘lost cash registers’. Ready for the adventure?
The genesis of this story dates back to 2009 and 2010, when changes regarding fiscalization were announced in both entities of Bosnia and Herzegovina, and somewhat later in Brčko District. Fiscalization has become imperative in modern society as a means of combating the gray economy, improving tax discipline, and increasing tax revenues. Today, looking back, we see that the existing fiscalization system in Republika Srpska has not yielded the expected results due to the technical obsolescence of fiscal devices, lack of strict control, insufficient coverage of economic activities, and lack of education and awareness about the importance of fiscalization. These shortcomings highlight the need for system reform to ensure greater efficiency, transparency, and compliance with legal regulations.
For several years, there has been talk about innovations in the fiscalization system, and that the adoption of new Fiscalization Laws could influence these. In the Federation of Bosnia and Herzegovina, new laws are still in the draft phase, while Republika Srpska has already gone a step further. The Law on Fiscalization was adopted at the beginning of 2022 and published in the Official Gazette in February of the same year. However, for technical reasons, the application of the law has been prolonged. First, there was a delay due to the COVID-19 pandemic, and then problems arose with the public procurement system regarding software acquisition. Now, after these problems have been resolved, conditions have been created for the implementation of the not-so-“new” Law.
Recently, on January 30, 2024, the Decree on activities for which there is no obligation to record turnover through an electronic fiscal device was published in the Official Gazette of RS No. 10/24. This Decree defines which activities are exempt from the new fiscalization. According to the Decree, the exempt activities are:
- Air transport of passengers, in the part related to international traffic;
- Provision of banking services and insurance services, except for currency exchange activities;
- Activities of lawyers who are members of the Bar Association of Republika Srpska;
- Gambling and betting activities;
- Activities of religious organizations;
- Sale of agricultural products produced on own family farms directly to the end consumer in production facilities, rural and family farms, and the sale of own agricultural products at stalls in markets and open spaces.
Why is all this important? First, there are fewer exempt activities; second, the new system will be more modern; also, the coverage will be broader, including all turnover, not just executed turnover, executed deliveries of goods and services, received advances for future deliveries of goods and services will be recorded, and as now, all turnover will be recorded regardless of how it is paid, in cash, non-cash, wire transfer, card, however the customer pays for the purchase from you, there will be an obligation to record it.
A stricter monitoring system will be established, which will enable tracking of each individual receipt in real-time. This also means that wholesale will not be exempt from fiscalization, and traditional crafts or sales through vending machines are not mentioned either. All of this will be of interest to business entities in the Federation of BiH as these are their upcoming activities.
Regarding the implementation itself, the Tax Administration of Republika Srpska is already announcing the Rulebook on the dynamics of fiscalization (hereinafter referred to as the Rulebook) and the start of the software testing phase at the end of February, with actual implementation expected from May 2024 for existing fiscalization subjects. The Tax Administration of RS will publish a public call in the coming period for existing fiscalization subjects to apply and start the procedure. The application will be done electronically. The second group of obligors (who are not exempt from the fiscalization process according to the new Decree) will enter the system next year, 2025. They will be fiscalized according to the aforementioned Rulebook.
A significant difference compared to previous phases of fiscalization is that the new software solutions that will help implement the new system will be financed by public funds. This means that business entities will not be exposed to additional costs as in the previous one, as the Government of Republika Srpska will finance the new software solution. Although the costs will be covered from the budget, it’s important to keep in mind that citizens ultimately pay for this, and in relation to the mentioned previous fiscalization, emphasis should be placed on impact assessment and testing of the system itself to ensure it produces the effects that the fiscalization system implies.
