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Incentives in Economy of the Republic of Srpska
The Law on Incentives in Economy of the Republic of Srpska ("Official Gazette of the Republic of Srpska", No. 52/19) provides incentive funds for the development of economy: incentives for increasing the salaries of employees in business entities and incentives for direct investments.
The amount of incentives for increasing the salary of employees is determined in accordance with the criteria as follows:
1) For the initial employee salary higher than 550 KM, the business entity is entitled to pecuniary benefits in the amount corresponding to 70% of the paid contributions for the salary increase,
2) For the initial employee salary equal to or higher than the lowest salary in the Republic of Srpska, not exceeding the amount of 550 KM, the business entity is entitled to pecuniary benefits in the amount corresponding to 30% of the paid contributions for the salary increase.
All companies and entrepreneurs operating in the Republic of Srpska in the field of production, trade and services, as well as business units of companies whose head offices are outside the Republic of Srpska, are entitled to incentives for the employee salary increase. The incentives hereof can only be used by business entities for those employees with whom they concluded a labor contract no later than March 2019. Businesses are entitled to incentives for salary increase in two accounting periods, one of which runs from January 1 to June 30, and the other from July 1 to December 31 within one calendar year. Businesses have a deadline of 60 days after the expiration of the accounting period for which they are requesting incentive funds to submit an incentive request.
Incentives for direct investments aim to provide conditions for achieving greater economic competitiveness, in order to ensure sustainable economic growth and employment in the Republic of Srpska. The adoption of a Regulation that will define these incentive entitlements is underway.

 

Programm of support to employment in the economy of the Republic of Srpska
The Republic of Srpska Employment Institute is a key organization at the labor market which takes part in preparing, executing and implementing employment projects in line with the Republic of Srpska Employment Strategy and the annual Employment Action Plan for Strategy Implementation.
The institute is implementing a project of support to employment in the economy of the Republic of Srpska, based on the Rulebook on requirements, criteria and manner of implementation of active employment policy measures, through public call: Public Call to employers and unemployed persons for the use of funds for employment projects in 2018.
All current public calls of the Institute are available here. Further details about these and other programs of the Institute are available at www.zzzrs.org

In order to encourage investment, the following incentives are available:


Law on Income Tax (Official Gazette of the Republic of Srpska, no. 60/15, 66/18) includes benefits for investors. This Law abolished dividend tax, and introduced significant positive novelties in taxation of income from foreign sources. Requirements are defined for obtaining of the status of a qualified investor, based on which investors obtain tax benefits on annual income.


The Law on Amendments to the Law on Income Tax of the Republic of Srpska ("Official Gazette of the Republic of Srpska", No. 58/19) stipulates that taxpayers who invest in equipment and facilities for conducting registered production activities in the territory of the Republic of Srpska are entitled to the tax base reduction for the value of the investment made.

The banking sector of the Republic of Srpska is stable and liquid. There are eight banks operating in the banking sector of the Republic of Srpska with majority private capital, and dominated by foreign private capital.

Credit lines of the Republic of Srpska Investment Development Bank
The Investment Development Bank of the Republic of Srpska offers several credit lines at subsidized interest rates, longer repayment periods, and low processing costs and other costs that may arise from loan approval
Eligible beneficiaries of the funds managed by the RS IDB are both legal entities and natural persons with headquarters or residence in the Republic of Srpska, for projects implemented in the territory of the Republic of Srpska.
For more information about the IDB credit lines, please visit the web page
The IDB credit lines are offered through commercial banks


Incentives of the Ministry for Scientific and Technological Development, Higher Education and Information Society

Pursuant to the Law on Scientific and Research Activities and Technological Development (Official Gazette of the Republic of Srpska no. 6/12, 33/14 and 66/18), general interest and strategic objectives in the field of technological development shall be achieved by means of the following programs: research in the field of technological development; encouragement of inventiveness, innovations, and protection of intellectual property; transfer of knowledge and technologies and encouragement of the application of scientific research work results; support to organizations for infrastructural support to technology development.

Incentives for the above programs are granted under special rulebooks:

  • Rulebook on procedure and criteria for financial support to organizations for infrastructural support to technology development (Official Gazette of the Republic of Srpska no. 12/14).
  • Rulebook on procedure and criteria for financial support to technology development projects, procurement of equipment and participation in expert events on technology development (Official Gazette of the Republic of Srpska no. 59/15),
  • Rulebook on procedure and criteria for financial support to innovativeness in the Republic of Srpska (Official Gazette of the Republic of Srpska no. 59/15).

Funds from the Ministry of Trade and Tourism budget for financing of minor tourism projects

Implementation of the Program of allocation of funds earmarked for tourism development from the current and capital grant is based on the adopted Tourism Development Strategy of the Republic of Srpska 2011 - 2020 (Official Gazette of the Republic of Srpska no. 68/11), Economic Policy of the Republic of Srpska 2014 (Official Gazette of the Republic of Srpska no. 107/13), Law on the Budget of the Republic of Srpska 2014 (Official Gazette of the Republic of Srpska no. 107/13, 65/14) and in line with the Regulation on requirements and criteria for allocation of funds earmarked for tourism development (Official Gazette of the Republic of Srpska no. 31/12, 78/14).

In connection with this, the funds earmarked for tourism development are allocated based on the following:

  • Public call of the Ministry of Trade and Tourism,
  • Conclusions of the Government of the Republic of Srpska,
  • Article 17 of the Regulation on requirements and criteria for allocation of funds earmarked for tourism development (projects planned by strategic documents, i.e. Tourism Development Strategy of the Republic of Srpska 2011 - 2020 and Economic Policy for funding),
  • Article 19 of the Regulation on requirements and criteria for allocation of funds earmarked for tourism development (projects financed in the amount of up to BAM 5,000).

Local Incentives

In the municipalities of the Republic of Srpska where natural resources exploitation fee is in force (fees for submerged land and exploitation of forests, stone or ores), there are legal grounds for a portion of funds collected by the municipalities from this source to be directed to support the small- and medium-sized enterprises sector. The funds earmarked by local governments are certainly significant, since they are closest to the beneficiaries by their purpose, i.e. they can best satisfy the specific needs of local companies directly.