Bosnia and Herzegovina
Over the last two decades, Bosnia and Herzegovina (BiH) has become a middle-income country and made some progress to improve the socio-economic development and quality of life of its population (European Commission, 2021[1]). However, gross domestic product (GDP) per capita remains one of the lowest in the region, indicating the country’s ongoing struggle to raise productivity and living standards. As of 2015, around 17% of the BiH population was living below the poverty line and there are large regional disparities in terms of access to services and well-being outcomes (World Bank, 2020[2]). Similar to other countries in Europe, the COVID-19 pandemic has led to a contraction in the BiH economy, exacerbating challenges that were already present, such as raising revenue for public services and allocating resources efficiently. Recovery efforts and future growth will depend on the extent to which BiH governments can address structural challenges, including demographic shifts, high levels of unemployment, especially among youth, and the need for investment in infrastructure and human capital.
Bosnia and Herzegovina can legally issue the following four types of rulings within the scope of the transparency framework: (i) cross-border unilateral APAs and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (ii) rulings providing for unilateral downward adjustments; (iii) permanent establishment rulings; and (iv) related party conduit rulings. It is noted that the Tax Administration in the Bosnia and Herzegovina entity of Republic of Srpska is the only authority issuing rulings in scope of the FHTP work.
Bosnia and Herzegovina can legally issue the following four types of rulings within the scope of the transparency framework: (i) cross-border unilateral APAs and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (ii) rulings providing for unilateral downward adjustments; (iii) permanent establishment rulings; and (iv) related party conduit rulings. It is noted that the Tax Administration in the Bosnia and Herzegovina entity of Republic of Srpska is the only authority issuing rulings in scope of the FHTP work.
Bosnia and Herzegovina can legally issue the following five types of rulings within the scope of the transparency framework: (i) cross-border unilateral APAs and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (ii) rulings providing for unilateral downward adjustments; (iii) permanent establishment rulings; and (iv) related party conduit rulings. It is noted that the Tax Administration in the Bosnia and Herzegovina entity of Republic of Srpska is the only authority issuing rulings in scope of the FHTP work.
This report is Bosnia and Herzegovina’s first annual peer review report. Consistent with the agreed methodology this report covers: (i) the domestic legal and administrative framework, (ii) the exchange of information framework as well as (iii) the appropriate use of CbC reports.
Bosnia and Herzegovina has made incremental progress since the 2012 assessment, but its business environment continues to be cumbersome and it still lags behind its regional neighbours in small and medium-sized enterprise (SME) policy development. The weak co-ordination between public institutions at state and entity levels not only leads to the creation of disconnected policies but also impedes their implementation. More positively, a new public procurement law was adopted in 2014. The signing of the Stabilisation and Association Agreement with the European Union established access to EU public procurement markets. The country has made efforts to promote entrepreneurial skills with the introduction of a nationwide entrepreneurial learning strategy, and introducing entrepreneurial skills into school curricula. Bosnia and Herzegovina continues to face severe issues with bureaucratic procedures such as company registration and business licensing, which currently have to be performed twice, once in each respective entity, creating serious market distortions within the country. SMEs and start-ups would benefit from a strategic approach to innovation and financial instruments to promote it. Access to finance remains a major obstacle for SME development. These challenges, and others, highlight the growing need for increased policy co-ordination between the state and entities and the need to introduce a nationwide SME development strategy.
Bosnia and Herzegovina entered a recession in 2009. In order to mitigate the effects of the global crisis, the government has sought support from the International Monetary Fund. On 8 July 2009, the executive board of the International Monetary Fund approved a 36-Month Stand-By Arrangement amounting to EUR 1.1 billion for Bosnia and Herzegovina. In line with many economies in South-East Europe (SEE), the crisis exposed Bosnia and Herzegovina’s dependence on high domestic demand fuelled by rapid credit growth and external financing.
The Constitution of Bosnia and Herzegovina explicitly prohibits all direct or indirect discrimination, whether on the grounds of sex, race, language, politics, religion or national or social origin. The country ratified the European Convention on Human Rights (ECHR) in September 2003.
The Thematic Review of Education Policy of Bosnia Herzegovina describes the current status of the education system and reform efforts underway. The country is introduced by general and demographic data; language, the geographic and historical context; the political, economic and the labour market situation; it also describes the structure and the legal framework. The whole education system is covered, from general education to vocational education, from higher education to lifelong learning, but focusing on early childhood and care, teachers and teacher training, curriculum and governance and administration. Equity in access, attainment and achievement are central issues, and special consideration is given to ethnic and minority questions and education for children with special needs. Attention is paid to decentralisation and financing of education; to quality, assessment and evaluation in education; to preservice and in-service teacher training; working conditions and teacher salaries, the role of school inspectors; textbook provision and material and resources in general. The report describes issues and barriers at all levels of the education system and gives recommendations for policy makers, practitioners and donors...
With a population of over 80 000, Brčko District represents less than 1% of the territory of Bosnia and Herzegovina (BiH), and is on average more densely populated than the rest of the country (). Nearly half of the district’s population lives in the city of Brčko, the centre of the administrative unit. The District is one of the richer regions of the country, and its economy is more closely linked to trade than that of many other regions of BiH, as Brčko District has historically taken advantage of its strategic location near the three-party border of BiH, Croatia and Serbia. Due to its unique structure of governance within Bosnia and Herzegovina, Brčko District faces particular challenges, especially when it comes to education. From the outset, the district ensured a harmonised curriculum for its population, while in some other parts of BiH, curricula is still administered differently among ethnic lines. The district’s education system, however, displays a similar structure of governance to that of other self-governing administrative units of BiH of similar size.
This note focuses on the multi-faceted structural challenges in the Western Balkans, which have exacerbated by the COVID-19 pandemic, and it assesses the economic impact of COVID-19 on the region, with special focus on SMEs, tourism, education, employment, digitalisation, trade, and investment. As governments combat the economic and societal consequences of the crisis, the note offers policy considerations towards the objective of building back better a better future, with more inclusive, sustainable and resilient economies.