Financial Crime World

Simplifying Tax Compliance in Bosnia and Herzegovina

Simplifying Regulatory Compliance for Financial Institutions

Bosnia and Herzegovina (BiH) is taking steps to simplify regulatory compliance for financial institutions in the country. Despite recent progress in fiscal sector reform, direct taxes remain burdensome due to complex legal and institutional arrangements across tax administrations.

USAID’s Fiscal Reform Activity

The U.S. Agency for International Development (USAID) has designed the Fiscal Reform Activity to enhance tax legislation and improve tax administration efficiency in BiH. The goal of this initiative is to reduce tax compliance costs and align the country’s regulatory framework with international tax standards.

Key Objectives of the Fiscal Reform Activity

  • Improving Operational Efficiency: Enhance the operational efficiency, efficacy, and capacity of tax administrations in BiH.
  • Analyzing Tax Authorities: Produce analysis, reports, and recommendations for various tax authorities and ministries of finance that make up the country’s complex fiscal landscape.
  • Implementing Recommendations: Implement these recommendations to improve the legislative framework for direct taxation, reduce the number of parafiscal fees, and recommend digital solutions to enhance tax authorities’ performance and taxpayer services.

Supporting International Tax Standards

The activity aims to support the adoption of base erosion and profit shifting (BEPS) tax planning strategies to improve tax collection and adhere to international standards.

Benefits for BiH

By simplifying regulatory compliance, BiH hopes to:

  • Diminish High Compliance Costs: Reduce high compliance costs that have a negative impact on the business environment.
  • Attract Foreign Investment: Attract foreign investment and promote economic growth in the country.
  • Align with International Standards: Align its regulatory framework with European and international tax standards, making it easier for financial institutions to operate in the country.

With USAID’s support, BiH is working towards creating a more favorable business environment and promoting economic growth.