The Federation of Bosnia and Herzegovina made a decision on the complete write-off of interest on public revenues for legal entities that have debts ending on December 31, 2023, on the condition that they pay the main debt within 18 months.
While the government claims that this move will facilitate collection and relieve the economy, economic experts warn that the practice of “erasing debts with an eraser” is being repeated, which, they say, sends the message that in Bosnia and Herzegovina, obligations are valid only for those who pay them off regularly.
The proposal submitted by the Government of the Federation of BiH to both houses of the Parliament of the Federation of BiH was passed in an emergency procedure in both the House of Representatives and the House of Peoples of the Parliament of the Federation of BiH.
Interest accrued on the above basis with the balance as of 12/31/2023. will be written off in full on the condition that the debtor settles the main part of the debt no later than 18 months from the date of entry into force of that law.
Slaven Raguž, representative of the Croatian Republican Party in the Parliament of the Federation of Bosnia and Herzegovina, said at the session in September that he does not agree with this proposal and will not support it because this “eraser” erases 364 million KM that are part of the debt.
The last previous amendments to the legislation of this type dictate the state of interest as of December 31, 2019. year and payment of the main debt no later than 12 months in order for the debtor to get the possibility to write off half of the accrued interest.
The official name of the new act is the Proposal of the Law on Amendments to the Law on the Rate of Default Interest on Public Revenues.
According to the data of the Tax Administration of the Federation of Bosnia and Herzegovina, the effect of the previous measures is the collection of the main debt and the costs of compulsory collection of 54,553,721.29 KM, while the amount of written-off interest on public revenues is 23,047,131.35 KM.
According to the same records, tax debtors from the date of entry into force of the last amendment to the Law on the amount of late payment interest on public revenues, until December 31, 2024. submitted a total of 2,870 requests for write-off (form ZAOK), and the Tax Administration issued 2,728 decisions.
The difference between the number of requests received and the decisions made is actually in the number of those requests that were not resolved due to the short remaining time, until the payment deadline of 21.10.2024. year.
Millions of debts are “erased” with an eraser
Economic experts, as well as some parliamentarians, believe that this is not a good move because, as they point out, the 364 million KM that taxpayers owe on the basis of interest is being “erased” with an eraser.
Igor Gavran, an economic expert, points out for Faktor that this, unfortunately, is similar to the legalization of illegal construction.
– This is not an exception, but rather a kind of tradition that governments lightly waive the collection of claims and practically reward them earlier, and encourage future non-payment of obligations. Although there are exceptions when the reduction of obligations, including the write-off of interest, can be justified (for example, if someone suffered from natural disasters or the government prevented him from doing business during a pandemic or there was a third extreme situation), it would have to depend on individual circumstances and have very strict criteria – explains Gavran.
He points out that public companies are often among the leading debtors for taxes, contributions and other public revenues, so by reducing their obligations, the government practically reduces the responsibility of its own staff (or the staff of a previous government) who created these obligations through incompetent and illegal management.
– If the government considers that it is justified to reduce the effective debt payment obligations in money for the sake of the business of an entity, even then it does not have to write off anything, but can reprogram the debt for payment over a longer period or it can be collected by taking over a share in the capital, so it can be collected when it is possible to turn that capital into money again. Lightly writing off obligations tells those who regularly pay them that they are stupid and naive because someone else obviously doesn’t have to pay – concludes Gavran.
He underlines that in general, additional contributions are certainly at a low level of legal certainty and unpredictability in BiH, where regulations do not mean an obligation, but there are numerous ways to avoid it, and what is an obligation today may not be an obligation tomorrow.
However, the Bosniak Club in the House of Peoples of the Parliament of the Federation of Bosnia and Herzegovina told Faktor that they supported this government proposal with 13 votes.
The reasons, as Faktor was told, are to make business easier for the economy.
