Bosnia and Herzegovina is a sovereign state located in Southeast Europe, which has undergone significant transformation, transitioning into an upper-middle-income country since the mid-1990s. This article will provide a comprehensive overview of business activity in Bosnia and Herzegovina.
Bosnia and Herzegovina’s Diverse Economy
The country’s economy is mostly oriented towards services, which constituted for 55% of its Gross Domestic Product (GDP) in 2016. This is accompanied by a notable industrial sector, contributing 23% to the GDP, and a modest agricultural sector, representing 6% of the GDP. The combination of these economic activities, along with its strategic location in the Balkans, offers a unique perspective on the opportunities of doing business in Bosnia and Herzegovina.
The economy relies heavily on the export of metals, energy, textiles, and furniture, as well as on remittances and foreign aid. Agriculture, forestry, and fishing are significant, with about one-third of the land under cultivation or in pasture. The country also has reserves of iron ore, bauxite, lignite, bituminous coal, and zinc.
Investment Advantages in Bosnia and Herzegovina
Bosnia and Herzegovina present an attractive environment for investment, characterized by its evolving transitional economy that has demonstrated notable growth in recent years, driven by both consumer spending and public investments. The nation’s progress towards European Union (EU) accession, underscored by its status as a candidate and the enforcement of the Stabilization and Association Agreement, significantly enhances its political, economic, and trade engagements with the EU, by building trust among investors.
The support extended by international organizations, including the U.S. Commercial Service, offers invaluable resources and advocacy for enterprises aiming to part of the Bosnian market. These services include market intelligence, business matchmaking, and market entry assistance, highlight the comprehensive support system available for business and investment endeavours in Bosnia and Herzegovina.
Tax advantages and rates
The Corporate Income tax rate in the Federation of Bosnia and Herzegovina is 10%, while the VAT rate is 17%. Tax incentives are available for companies with over 30% of turnover from exports or those investing in production. Foreign investors are treated the same as domestic investors, with protections and a liberal trade policy aimed at attracting investment by offering low tax rates and a secure environment.
Sector Opportunities and Emerging Industries
Bosnia and Herzegovina’s economic growth is encouraged by its vibrant tourism sector, which capitalizes on the nation’s historical, cultural, and natural assets. The agriculture industry benefits from the country’s rich natural resources, offering considerable potential and making this country an ideal place to invest in tourism with high return on investments.
Manufacturing and mining, play also an important role, with a focus on producing essential raw materials such as steel, coal, and various metals. On the other hand, the information and communication technology (sector stands out as one of the fastest-growing industries. These sectors are ideal to invest and gain significant income.
Moreover, renewable energy sources like hydro, wind, and solar present significant opportunities due to the country’s natural resources. The healthcare sector is expected to expand in response to the aging population’s needs. Additionally, there is a recognized demand for the development of transport and energy infrastructure, indicating substantial investment opportunities. This diverse economic landscape showcases Bosnia and Herzegovina’s potential for future growth and a great place to make business.
Investing in Bosnia and Herzegovina offers opportunities but requires careful consideration of the regulatory environment rights. The country’s decentralized structure means that regulations can vary significantly between entities. However, with proper planning, consultation, and understanding of local laws and procedures, businesses can navigate these challenges and capitalize on Bosnia’s potential for growth and investment.
Nimrod Yaron Albania Specializes in offering professional guidance in international taxation in Bosnia and Herzegovina. For an initial consultation, we invite you to contact us.
