Agreed introduction of zero VAT rate on basic necessities of life
The joint commission of both houses of the Parliamentary Assembly of BiH for harmonization of the text of the Law on Amendments to the Law on Value Added Tax (VAT) agreed today on the introduction of a differentiated VAT rate in BiH of zero percent on basic foodstuffs, food and equipment for children, seeds and seedlings material, and 22 percent on luxury goods.
The current single VAT rate of 17 percent would apply to other products and services.
According to the agreed amendments to the Law, the Directorate for Indirect Taxation /ITA/ BiH is responsible for specifying the goods to which these VAT rates will be applied, the application of which is time-limited until December 31.
At the initiative of SDS, the House of Representatives of the BiH Parliamentary Assembly adopted the introduction of a rate of five percent for the first category of products, and a rate of 22 percent for luxury products.
After the House of Peoples of the BiH Parliamentary Assembly adopted the amendments of the Serbian delegate Dušanka Majkić on the introduction of a zero tax rate for the first category of products and limiting the application of the law until December 31, and giving the ITA to specify the products to which the new tax rates will be applied, the formation of Joint commissions of both parliamentary houses for harmonizing the text of the law.
SDS MP Mirko Šarović, who welcomed the adoption of the zero tax rate, told reporters that he was dissatisfied with the time limit on the application of the law, and announced that a procedure would immediately be initiated in the House of Representatives to apply the agreed zero rate of VAT permanently.
According to him, the problem is that the ITA needs to specify which products will be subject to differentiated tax rates instead of the current general rate of 17 percent.
“Given that the ITA has announced the necessary time, we have reasonable doubts that the application of the zero, or differentiated rate, would not be possible within the time limit provided for the application of the law, i.e. by the end of the year,” Šarović said.
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