Amendments to the Law on Excise Duties in Bosnia and Herzegovina

On 15 December 2017, the Parliament adopted long-delayed amendments to the Excise Law in Bosnia and Herzegovina (BiH) following a 15-hour long debate in parliament and resistance from the major opposition parties. The amendments entered into force on 3 January 2018 and are applicable as of 1 February 2018.

The opposition parties expressed their dissatisfaction with the non-existence of a protective mechanism for businessmen, the inadequate explanation of reasons and the lack of any kind of analysis. Furthermore, in their opinion, the law changes will lead to higher costs of products and services in the country.

On the other side, the supporters of amendments pointed that the International Monetary Fund (IMF) will not release funds (in amount of around 550 million euro) to BiH until the country's parliament adopts a new law on excise taxes.

Additionally, the Law would unblock 220 million euro from the European Bank for Reconstruction and Development (EBRD) for infrastructure projects in BiH, as well as another 250 million euro of loans from the EBRD.

The main law changes relate to widening the tax base on bio-fuels and LPG, increasing the excise duty for heating oil as well as for oil derivatives and LPG. Accordingly, excise duties are as follows:

Fuel type Fuel amount Tax amount (BAM) Tax amount (EUR) Gas oil / bio-fuels 1000 liters 700 358 Unleaded petrol 1000 liters 750 383 Heating oil 1000 liters 450 230 LPG 1000 kg 400 205

Furthermore, the road tolls have been increased by 0.15 BAM per liter of fuel, in order to satisfy international creditors who consider increased road tolls as a safeguard for repayment of debts.

The future analysis will show the effect on the economy of the increasing of fuel price on one hand and the funds for the reconstruction and development on the other hand. Companies dealing with bio-fuels, LPG, oils and oil derivatives are advised to seek assistance in assessing the impact of the amendments on their businesses.