Bosnia Corporate Tax Guide 2026

Overview — Corporate Tax in Bosnia

Corporate income tax in Bosnia is governed by entity-level laws: the Corporate Income Tax Law of FBiH and the Corporate Income Tax Law of RS. Both entities have converged on a 10% flat rate, making Bosnia one of the most tax-competitive jurisdictions in Southeast Europe. A company is resident if it is incorporated in Bosnia or has its place of effective management in the country. Resident companies are taxed on worldwide income; non-resident companies with a permanent establishment are taxed on Bosnia-source income. Companies must register for tax and file annual returns. The tax administration is handled by the entity-level tax authorities (FBiH Tax Administration and RS Tax Administration).

Standard Corporate Tax Rate — 10%

The standard CIT rate is 10% on taxable profits in both FBiH and RS. This flat rate applies to all resident companies regardless of size or sector. Taxable profit is computed as gross revenue less allowable deductions including operating expenses, depreciation (capital allowances), interest costs (subject to thin capitalisation rules), and losses carried forward. Capital gains are included in ordinary taxable income and taxed at the standard 10% rate (no separate CGT). Dividends received from resident companies are generally exempt from CIT. The low 10% rate makes Bosnia attractive for holding companies and regional headquarters.

Small Business & Start-Up Incentives

Bosnia offers certain incentives for small businesses and new enterprises:

• New employment incentives — tax relief for employing previously unemployed workers (reduced CIT for the first 2-3 years)
• Investment incentives — tax credits for capital investments in qualifying assets (typically 10-30% of investment value)
• Free zones — companies operating in designated free zones (e.g., Mostar, Vitez) may benefit from reduced CIT rates or tax holidays for up to 5 years
• R&D incentives — additional deductions for research and development expenditure

Qualification criteria vary by entity. Businesses should apply for incentives before making the qualifying investments.

Capital Allowances (Depreciation)

Tax depreciation (capital allowances) is calculated using the straight-line method at prescribed rates:

• Buildings — 3-5% per annum
• Plant & machinery — 10-20% per annum
• Computers & office equipment — 20-33% per annum
• Motor vehicles — 15-20% per annum
• Intangible assets — 10-20% per annum (or over useful life)

Bosnia does not allow declining balance or accelerated depreciation for most assets. Assets are capitalised at cost and depreciated over their estimated useful life. Low-value assets (under BAM 1,000) may be fully expensed in the year of acquisition.

Loss Carry-Forward & Group Taxation

Tax losses may be carried forward for up to 5 years in both entities. Loss carry-back is not permitted. The loss offset is limited to 50% of the taxable profit in any given year in some cases. Group taxation is not available — each company is taxed separately. Transfer pricing rules apply to transactions between related parties, requiring arm's length pricing. Thin capitalisation rules limit interest deductibility on related-party debt where the debt-to-equity ratio exceeds 4:1.

FAQs

What is the corporate tax rate for branches of foreign companies?

Branches of foreign companies are taxed at the same 10% rate as resident companies on Bosnia-source profits. Branch profits remitted abroad generally do not attract additional withholding tax.

Are dividends paid by a Bosnian company taxable?

Dividends paid to resident companies are generally exempt from CIT. Dividends paid to resident individuals are subject to 10% WHT. Dividends to non-residents are subject to 10% WHT (reduced under applicable DTTs).

Can I carry forward losses if the company changes ownership?

Loss carry-forward may be restricted if there is a change in ownership exceeding 50% during the loss period, unless the company continues the same business activity.

Disclaimer

This guide provides general information about Bosnian corporate tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Bosnian tax advisor or the relevant tax authority for advice specific to your situation. InvestmentKit does not provide tax advice.