Located at the heart of the Balkan peninsula in south east Europe, Bosnia and Herzegovina is a middle income country with a small population of just under 4 million. The country split from Yugoslavia in 1992, but the war in the region didn’t end until three years later with the signing of the Dayton Peace Agreement.
2015 saw UK exports to Bosnia and Herzegovina reach the £59 million mark, up almost two-thirds (63%) on 2014, and the top UK exports are:
- Industrial lubrication, motor oil and mineral fuels,
- Plastic products and components of plastic materials
- Pharmaceutical products
- Machines and mechanical components for machinery
- Electrical machinery and equipment
Bosnia and Herzegovina’s application to join the EU is still under review, even so, there are several benefits for UK businesses exporting there, including:
- access to a market of 60 million people through Central European Free Trade Agreement (CEFTA)
- in receipt of EU pre-accession funds (IPA) and funding from international financial institutions
- preferential export regimes with a number of markets
- import-dependent economy
So if the Balkan nation looks like a good business opportunity, here’s everything you need to know about exporting to Bosnia and Herzegovina…
The pros and cons of exporting to Bosnia and Herzegovina
If you’re looking to export to Bosnia and Herzegovina, there are several strengths of the market, such as:
- stable currency arrangement fixing local currency to euro
- reformed banking sector dominated by foreign banks
- skilled workforce
- abundance of natural resources
- guaranteed free transfer of capital and free profit repatriation to foreign investors
- good internet access
It’s not without its challenges though, most notably:
- bureaucracy
- high taxation
- complex legal and regulatory framework and weak judicial structures
- lack of transparency in business procedures
- enforcing contracts can take 595 days, according to the World Bank’s Doing Business report for Bosnia and Herzegovina
- ranks 72 out of 175 in the Corruption Perception Index
- inadequate transport network
- frequent policy changes
- risk of natural disasters (flooding, earthquake)
It’s also worth considering Bosnia and Herzegovina is made up of:
- Republic of Srpska
- Federation of Bosnia and Herzegovina
- Brcko District
And there is limited economic integration between the 3 entities, which can create difficulties for UK companies conducting business countrywide.
Although English is widely spoken in the business community, it’s worth considering there are three languages officially spoken in Bosnia and Herzegovina – Bosnian, Croatian, and Serbian – and you should use the local language for introductory correspondence.
And it’s worth setting up a conference call facility if you’re going to be doing business in the region, so here’s How to set up a conference call between the UK and Bosnia and Herzegovina
Tax and customs in Bosnia and Herzegovina
Tax
The UK and Yugoslavia previously signed a double taxation convention which is still in effect in Bosnia and Herzegovina. VAT is charged at a fixed rate of 17% and is applied to all goods and services, while excise duty is applied to beverages including beer, coffee and wine, tobacco, and oil derivatives.
Corporation tax and personal income tax are both set at a rate of 10%.
Customs
The Indirect Taxation Authority of Bosnia and Herzegovina has responsibility for customs, and import tariffs have been eliminated for 23,000 products from the EU. This will change if Bosnia and Herzegovina successfully becomes part of the EU.
If you want to claim for any preferential duty rates, you’ll need to support your claim with an EUR1 Movement Certificate.
Image from Pablo by Buffer.
