VAT is the same for bread and for an expensive yacht

04.08.2024. / 14:00

BANJALUKA – Value added tax was introduced in Bosnia and Herzegovina 18 years ago, but citizens do not see any benefit from this tax. The higher the prices, the higher the taxes, the money accumulates in the republic’s budget and is dispersed in the republic’s apparatus. The same tax is paid by those who can hardly afford to buy bread today, and those who buy an expensive car and yacht.

VAT is planned as a tax that will be returned to citizens through projects, however projects, schools and hospitals are still waiting to move from idea to construction. For eighteen years, the rule remained intact. Citizens pay 17 percent VAT for baby food, bread and milk, but also for luxury vehicles, jewelry, villas, yachts…

Only last year, this tax was abolished on food for public kitchens. A differentiated VAT rate is being considered for 10 years, but there is no progress in implementation.

“Life has changed so much in those 18 years. When a child is born, he becomes an adult, except in the case of the ITA, which will not change anything, nor will it adopt a differentiated VAT rate, which would have to be done because we have become a very divided society, divided into the poor and the extremely rich. And it is not right that the extremely rich pay for luxury at the same rate that the poor buy bread and medicine. Because today, buying a Mercedes for 500,000 marks is really a gift to pay only 17 percent”, economist Zoran Pavlović believes.

For the first six months of this year, revenues from indirect taxes amount to five billion and 422 million marks, which is 8.42 percent more compared to the same period last year.

Although a huge amount of money was poured into the budget in half a year, citizens do not benefit from it. The tax refund initiative for the purchase of the first property is still waiting for someone to take it out of the drawer. And from previous experiences, it is evident that there was no approval for many initiatives to abolish this tax.

“The Directorate for Indirect Taxation has prepared a Preliminary Draft of the Law on Amendments to the Law on VAT in terms of the possibility of refunding the VAT paid on the purchase of the first residential unit. This document will be submitted to the Board of Directors of the Directorate for Indirect Taxation for further consideration. Therefore, there is no provision for a direct exemption from paying VAT, but it is provided that VAT will be paid, and that VAT will be refunded to those persons who exercise the right to it“, they say from the Regulation on Indirect Taxation. BN.