Corporate Income Tax System in Bosnia and Herzegovina
Bosnia and Herzegovina's corporate income tax system is designed to generate revenue for the government while fostering economic growth and investment. The tax system is governed by the Law on Corporate Income Tax, which outlines the calculation methods, applicable tax rates, definitions of taxable income, exemptions, and legal framework for these elements.
Calculation of Corporate Income Tax
The corporate income tax liability is calculated based on the taxable income of a company. Taxable income is determined by deducting allowable expenses from the company's total revenue. Allowable expenses include costs incurred in generating revenue, such as salaries, rent, and depreciation.
Applicable Corporate Tax Rates
Bosnia and Herzegovina has a flat corporate income tax rate of 10%. This rate applies to all companies, regardless of their size or industry.
Definition of Taxable Income
Taxable income for corporations in Bosnia and Herzegovina includes all income derived from business activities, including:
- Sales of goods and services
- Interest income
- Dividend income
- Rental income
- Royalties
- Capital gains
Exemptions from Corporate Income Tax
Certain types of income are exempt from corporate income tax in Bosnia and Herzegovina, including:
- Dividends received from other companies
- Capital gains from the sale of shares in other companies
- Income from the sale of agricultural products
- Income from the sale of real estate used for residential purposes
Legal Framework
The Law on Corporate Income Tax (Official Gazette of Bosnia and Herzegovina, No. 23/05) provides the legal framework for the corporate income tax system in Bosnia and Herzegovina. The law defines the tax rates, taxable income categories, and exemptions. It also outlines the procedures for filing tax returns and paying taxes.
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