Solving the problem of tax treatment of the value adjustment of bank receivables in the FBiH

16. February 2021by ficba

The Foreign Investors Council in BiH sent an initiative to the Federal Ministry of Finance and the FBiH Banking Agency regarding the harmonization of regulations and tax treatment at the level of both entities. This inequality of tax regulations in BiH has put banks that are members of the same group in an unequal position, since most of them in BiH operate as separate business entities in both entities.

The negative effects of tax treatment of the value adjustment of bank receivables in FBiH, due to unharmonized regulations are reflected in the fact that in FBiH, there is a fundamental difference in defining the level of credit risk 2, between FBA (Federal Bank Agency) regulations and FBiH Law on Profit Tax, and regulations in Republika Srpska.

Unfortunately, non-harmonization of tax regulations between the entities has negative effects on the operations of banks, especially those belonging to the same group, which have legal entities / branches in both entities. In this case, banks from the Federation suffer negative economic consequences due to unequal treatment and access to taxation and face the problem of keeping double records.

Relying on the successful cooperation of the FIC with these two institutions so far, a series of meetings were held in 2021 with the aim of resolving legal conflicts and harmonizing tax regulations in both entities.

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