Federation of Bosnia and Herzegovina
Proposal of the Law on Mitigation of Negative Economic Consequences Caused by a Coronavirus Pandemic
€˘ The FBiH Government has submitted to the parliamentary emergency procedure a Law on Mitigation of Negative Economic Consequences Caused by a Coronavirus Pandemic
€˘ The Law provides a set of measures to mitigate the negative economic consequences of the COVID-19 pandemic, with the primary objective to preserve jobs. In this regard, minimum wage contributions should be paid from the Federal budget for all workers in the real sector, with the exception of the public and financial sectors. As the beginning of application it is taken the calculation and payment of the gross salary for April 2020 and every following month, including the calculation and payment of salaries for the month following the end of the pandemic.
€˘ The obligation of paying in advance corporate income tax and personal income tax (for craft trades) is abolished. The penalty interest on public revenues and operating debts in business is abolished. All administrative and judicial proceedings shall be suspended for the duration of the COVID-19 pandemic, until the expiration of the 10th working day following the end of the pandemic.
€˘ The Law prescribes the suspension of all administrative, litigation, non-litigation and enforcement proceedings during the pandemic, the suspension of the penalty interest calculation on late payments in debt-trust relations, the suspension of enforced collection, the maintenance of the individual payments stability, and the establishment of a Guarantee Fund
€˘ The Guarantee Fund, with a deposit of KM 80,000,000, will be managed by the Development Bank of the Federation of BiH and will be used to secure credit lines with commercial banks, with the aim of mitigating the negative economic consequences for businesses, in such a way that part of the credit risk has the Federal Govrnment and another part commercial banks. Regulations on Guarantee Fund functioning shall be prescribed by the Federal Ministry of Finance.
€˘ The Law will apply to all business entities that meet the requirements specified in the Law, and if the provisions of other laws conflict with this law, this law will have priority in applying.
€˘ The FBiH Employers”” Association, the Foreign Investors Council and the some cantonal Chambers of Commerce made serious objections to the content of the proposed measures and submitted their amendments to the Law assuming that the proposed LLaw will not be adopted in the originally proposed form.
Other activities and recommendations
€˘ Reduction of business premises rent owned by the FBiH Government by 50%
€˘ At a session held on March 26, 2020, the FBiH Government decided to reduce the rent for the use of business premises owned by FBiH Government for the month of March 2020, by 50%.
€˘ It has also been suggested that if the current situation with the pandemic lasts longer, from 1 April 2020 until the end of pandemic, the rent payment will be completely suspended. The final decision to completely suspend the rent payment for the month of April 2020 has not been made and is awaiting its formal approval.
A set of measures to help the economy and other activities
€˘ In the Official Gazette of RS, No. 35/20, issued on April 10, 2020, five decrees with force of law were published:
ž˘ Decree on tax measures to mitigate the negative economic consequences caused by COVID-19 Disease (SARS-COV-2 Virus);
ž˘ Decree on the exemption from paying lottery games fees;
ž˘ Decree to amend the Law on Primary Education;
ž˘ Decree to amend the Law on Secondary Education;
ž˘ Decree on deadlines and treatment in administrative and other procedures determined by special substantive regulations during a state of emergencyi n the territory of the Republika Srpska.
€˘ The aforementioned regulations entered into force on April 11, 2020.
Decree on tax measures to mitigate the negative economic consequences caused by COVID-19 Disease (SARS-COV-2 Virus)
€˘ This Decree integrates previously made decisions to a greater extent, such as delaying filing of tax returns based on the final account, deadlines for payment of certain tax liabilities, and payment of taxes and contributions from the Solidarity Fund for March 2020.
€˘ The adoption of this Decree shall terminate the Decision on temporary suspension of tax liabilities payments (“Official Gazette of RS”, No. 28/20) and the Decision on the method of payment of personal income tax and contributions for March 2020 (“Official Gazette of RS”, No. 32/20).
€˘ Decree provides from the Solidarity Fund payment of taxes and contributions for paid salaries for March 2020, for employers, legal entities, entrepreneurs, as well as for obligations arising from contributions of persons earning self-employed income, to whom the decisions of the competent authorities (emergency staffs) are prohibited from doing business activity. Such persons shall submit a written statement requesting the exercise of these rights to the Tax Administration no later than May 11, 2020 for March 2020.
€˘ Decree also provides from the Solidarity Fund payment of the lowest wage for April 2020 and related taxes and contributions, for employees of employers who are prohibited from doing business or who have temporarily shut down the business due to a pandemic. In order to exercise these rights, it is necessary that employers and eligible business entities submit a written statement to the Tax Administration requesting payment of the lowest wage by June 10, 2020 for April 2020 at the latest.
€˘ Decree postpone deadlines for filing tax returns and annual contribution calculation until April 30, 2020.
€˘ Decree extends the deadlines for payment of taxes and fees until June 30, 2020, including the payment of corporate income tax for 2019 (determined on the basis of the annual income tax return for 2019); fee payment for the promotion of common forest functions (determined on the basis of tax returns for other fees); payment of the fire-fighting fee (determined on the basis of tax returns for other fees); payment of personal income tax for 2019.
€˘ Taxpayers who have difficulties in doing business, and therefore do not pay their tax liabilities by June 30, 2020, may file to the Tax Administration a request to pay these obligations in installments by the end of the year. The statement of business difficulties must be attached to the request. This request must be submitted by June 30, 2020 at the latest.
€˘ Decree extends the deadline for payment of real estate taxes for 2020, for the first part of the tax until September 30, 2020 and for the second part until December 31, 2020.
Public call for allocation of funds in accordance with the Program of measures for damage reduction in business entities of BD BiH
€˘ BD Government Department for Economic Development, Sport and Culture has issued a Public call for allocation of funds in accordance with the Program of measures for damage reduction in BD enterprises occurred by work restriction due to a COVID-19 pandemic.
€˘ The funds will be provided in amount to 520 KM as well as the related taxes and contributions (860 KM in gross amount per worker) for March 2020, for enterprises, entrepreneurs and business units which are:
ž˘ based in BD BiH;
ž˘ registered in accordance with the laws of BD BiH,
ž˘ perform business activity in the territory of BD BiH;
ž˘ they are forbidden to work by BD Crisis Staff and Government decisions or because the nature of their business activity is affiliated with the companies whose business operations are prohibited
€˘ All other enterprises, entrepreneurs and business units in the territory of BD BiH, except those mentioned in Chapter III of Public Call, have the right to use the subsidy for paid taxes and contributions on salaries for calculated and paid salaries for March 2020 of 30%.
€˘ The initially announced Public Call on April 6, 2020, with a deadline for submissions until April 16, was extended until April 22 until 12:00 owing to the large number of requests.
€˘ More details at: http://www.vlada.bdcentral.net/Publication/Read/published-public-call-for-company-subjects
Sarajevo Canton (KS)
Public call for the allocation of budget funds for the partial payment of the salaries in KS for March 2020
€˘ Pursuant to the KS Government Decision from April 4, 2020, the Ministry of Economy of the KS has issued a Public Call for the allocation of budget funds for the partial payment of the salaries in KS for March 2020
€˘ In this sense, only those legal and natural persons who are residents of the KS are eligible to apply for the Public Call and who fulfill the following conditions:
ž˘ they are prohibited from doing business by orders of Federal Department of Civilian Protection and the Crisis Staffs;
ž˘ that public revenue obligations have been fulfilled as of December 31, 2019;
ž˘ that has kept the same number of registered workers on March 31, except for those workers whose employment contract has expired or who have terminated their employment by mutual agreement.
€˘ For the purpose of this Public Call, funds will be provided for the payment of the minimum wage as defined in the General Collective Agreement (up to 406 KM), in proportion to the number of days of work prohibition for March 2020.
€˘ The Public Call was announced on April 10, 2020, and the deadline for submitting an application for this Public Call is 10 days from the date of announcement.
€˘ Application forms can be found at the following link:
Zenica-Doboj Canton (ZDK), Bosnian-Podrinje Canton (BPK), Una-Sana Canton (USK)
A set of measures is underway to assist the economic sector and coronavirus affected legal entities
€˘ The ZDK Government adopted amendments to the Law on Incentives for the Development of Small Businesses and the Proposal for the Rebalance of the Budget of the ZDK for 2020, which provided additional financial resources of 7.7 million KM for the fight and rehabilitation of the coronavirus pandemic consequences. The ZDK Government has adopted amendments to the Ministry of the Economy””s spending program, and will subsidize 50% of the net salary for March and the full amount of the minimum wage in April for businesses that have been banned under orders of the Federal Department of Civilian Protection and who did not lay off workers. The public call for subsidizing part of the salary for March should be announced by April 16 and remain open for 15 days, while the announcement of the public call for salary subsidy for April is expected in early May. The program provides allocation of interest subsidy funds for loan beneficiaries from the Credit Guarantee Fund in the amount of 1.5 million KM for small and medium-sized enterprises and service legal entities, as well as more flexible criteria for granting funds. The loan operates on a revolving principle and the maximum loan amount is up to 100,000 KM.
€˘ The BPK Government tasked the Ministry of Economy to prepare the Program of expenditure from the economic code “Subsidies for stimulation of development, entrepreneurship and crafts in 2020”, and at the same time foresees funds for payment of subsidies of one half of the net salary for March to all business entities that suspended business activities due to the COVID-19 pandemic.
€˘ The USK Ministry of Economy plans to provide funds for the payment of minimum personal income to all business entities that have suspended business activities during April, so that the emergency funds, which currently amount to 2.5 million KM, are paid minimum wage in the amount of 450 KM for April. The Ministry, after receiving information from the Tax Administration on the number of employees, will decide on the applicability of this measure for March to companies that had 20% of reduced business activity. Depending on the situation development and the impact of the coronavirus further on the economy, the USK Ministry of Economy will try to secure funds for the payment of minimum personal income for May.