The Governing Board of the Indirect Taxation Authority of Bosnia and Herzegovina has adopted the Rulebook on Amendments to the Rulebook on the Application of the Law on Value Added Tax, introducing numerous and significant updates to the VAT system.

The Rulebook was adopted at the 9th session held on April 14, 2025, and its application will commence on August 6, 2025, following the 90-day period after its entry into force.

Overview of several key amendments:

Special Tools – New Criteria for Ancillary Transactions

A new provision has been added that treats the transfer of special tools between domestic and foreign entities as ancillary transactions, provided specific conditions are met. The tools must be used exclusively for export production and exported after use, with mandatory notification to the Indirect Taxation Authority (ITA) within eight days.

Exchange of Renewable Energy – VAT Exemption

A new provision clarifies that the mutual exchange of electricity within the distribution system between a taxpayer and an individual generating electricity for personal use from renewable sources shall not be considered a taxable supply for VAT purposes.

Write-off of Inventory – More Flexible Procedure

In cases of inventory destruction due to expiration of shelf life, a sanitary inspection is no longer required; any competent authority is sufficient, provided that written notice is submitted to the ITA at least seven days before destruction.

Low-Value Gifts – Additional Clarifications

The amendments specify that low-value gifts must not originate from the taxpayer’s production or sales assortment. A record of such gifts within the tax period must now be maintained.

Clearly Defined Electronic Services

Major changes are introduced in the definition of electronically delivered services, now explicitly listing:

• Web hosting and server space,

• Acquisition and updating of software,

• Databases and digital content (music, films, games),

• Online education.
  These services are not subject to VAT in BiH if provided to recipients outside BiH, subject to proof of the recipient’s residence.

VAT Refunds to International and Diplomatic Entities

The procedure for VAT refunds to international organizations and diplomatic missions has been detailed:

• New forms introduced: CD-PDV 1 and CD-PDV 1M,

• Clear conditions, limitations, and required documentation are prescribed,

• Refunds are not granted for specific items (tobacco, alcohol, restaurants, hotels),

• Annual refunds to individuals are limited to BAM 1,200, excluding vehicles.

VAT Refunds to Foreign Nationals – Stricter Records

The procedure for VAT refunds to foreign individuals exporting goods from BiH has been clarified:

• Identity must be confirmed via passport or ID card,

• Refund applies to purchases exceeding BAM 200,

• A unique reference number issued by the ITA must be included on the PDV-SL-2 form.

Fixed Assets Purchased Prior to Registration – VAT Deduction Possible

A new article allows newly registered VAT taxpayers to claim input VAT deductions for fixed assets purchased up to one year prior to registration. Detailed documentation is required, including specifications, invoices, and a statement of intended use.

VAT Deduction and Payment

VAT is to be paid in decimal amounts rounded to two decimal places.

Input VAT deduction is recognized at the earliest in the tax period in which the conditions for deduction are fulfilled.

These amendments aim to modernize, clarify, and ensure more efficient management of the VAT system in BiH, with stronger oversight and better definition of taxpayer obligations. Special emphasis is placed on digital services, international operations, legal certainty, and transparency.

The Rulebook will enter into force on August 6, 2025.

The Stevanović Law Office and Standard Prva Group invite all legal and natural persons subject to VAT obligations, including regular tax reporting and record-keeping, to closely follow legislative developments to ensure timely compliance with the new rules.

For additional information, professional legal interpretation, or assistance in aligning your internal processes with the new Rulebook, feel free to contact us by email or directly at our headquarters in Bijeljina.

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"Standard Prva" LLC Bijeljina is a company registered in Bijeljina at the District Commercial Court in Bijeljina. Company’s activities are accountancy, repurchases of receivables, angel investing and other related services. Distressed debt is a part of the Group within which the company repurchases the receivables, which function and are not returned regularly.

Lawyer’s Office Stevanović is the leading lawyer’s office in the region with the seat in Bijeljina. The LO abbreviation represents Lawyer’s Office of Vesna Stevanović and Lawyer’s Office of Miloš Stevanović.

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