A People to People (P2P) event dedicated to the Application of the Valued Added Tax practices on donations for CSOs in Bosnia and Herzegovina (BiH) was organised by EU TACSO 3 on 9 March. In a fruitful and wide-ranging discussion among participants and speakers from Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia, the VAT policy and legislation in BiH, as well as, the position of CSOs in the VAT system were explained through practice and legislation. Substantial attention was paid to the guidance on the application of the Law on VAT to donations and grants.
During the meeting, the participants had an opportunity to hear the VAT expert Amir Avdagic who explained that the Law on VAT in BiH specifies the taxpayers as legal and individual representatives who have some trade in goods and services, including associations and foundations (as civil society organizations). They are obliged to be registered in the VAT system of BiH if the value of total turnover on an annual basis exceeds the prescribed threshold of 50,000 KM. He explained that for associations and foundations to become VAT payers, they must be engaged in the economic activities that are considered taxable.
Four guest speakers (Biljana Dakic- Đorđevic, Zeljko Mitrovski, Slavko Lazovski and Anica-Maja Boljevic) shared their experiences from the respective countries, explaining the VAT system in general, the procedure how CSOs become a part of VAT structure according to the current legislation in Serbia, Montenegro and Northern Macedonia, then the legal definition of grants and donations and the application of VAT on grants and donations. Also, the different procedure and cases for VAT exemptions and application of the rules for sub-granting were discussed.
The representative from the Delegation of the European Union in Bosnia and Herzegovina addressed the audience and highlighted the importance of the VAT issue in terms of CSOs.
The meeting resulted in an agreement on the next steps for reaching a better enabling environment for the work of the CSOs in Bosnia and Herzegovina, specifically for creating a better financial environment for CSOs (public direct and indirect support) and a financial environment for civil society supported by donors, business, individuals/philanthropy, taxation. Also, the participating CSOs decided to be part of a joint initiative on advocacy for a better VAT policy for the CSOs in Bosnia and Herzegovina.