The Institute for Youth Development KULT has been advocating for amendments to the Law on VAT for the past several years. The initiative is a result of joint work of experts and business owners from all parts of BiH. It is our unanimous opinion that small entrepreneurs should pay VAT after collecting payment and not after issuing invoices and that the deadline for paying VAT should be extended until the end of the month. The proposed amendments to the Law do not bring any significant changes that could improve or boost the BiH economy.

Experts say that this model would be justified, implementable and the fairest solution for business owners. The initiative proposing this model, substantiated by experts and signed by over 30,000 business owners in BiH, was sent by the Institute to the Indirect Taxation Authority and its Governing Committee in June 2016. The model would allow small business owners to pay their VAT after collecting payment from their customers for the goods or services provided, and would allow input tax deduction only after they pay their suppliers for the goods and services received. Also included in the initiative is the proposal to move the deadline for paying VAT from the 10th to the last day of the month.

This proposed change is aligned with the relevant EU Directive and is already being implemented in EU member states.

When we sent the initiative to the Governing Committee of the Indirect Taxation Authority, and the Council of Ministers of BiH, we got negative responses. We are aware of the importance of this topic and the need to spotlight the initiative again so that decision makers pay attention to it. We, therefore, urge them to take into consideration the opinions of business owners when considering the proposed amendments to the Law. We believe that decision makers will show willingness and commitment to align the BiH laws with EU regulations, including the VAT Law, to support and help the liquidity, growth, and development of the BiH economy.

Youth are leaving BiH in droves, and one of the reasons is the lack of an incentivizing business climate. Although new research shows that youth are becoming increasingly interested in entrepreneurship, the business climate acts as a deterrent and is, however indirectly, telling them to put their potential to use in the European Union.

In March 2018, the World Bank in BiH presented the results of their survey “Collecting evidence of inclusive growth and jobs generated in the Western Balkans: Gender prism”, discussing employment opportunities for women.

The focus was on women’s entrepreneurship. It was concluded that women in BiH face numerous obstacles on the labor market and in entrepreneurship, which is a significant economic loss for the country.

The presentation included detailed data on women’s access to funds for launching a business, based on a sample of 542 businesses surveyed between 2016 and 2017. It was noted that micro, small and medium-sized businesses run by women play a crucial role in generating jobs, while encouraging women’s participation in the economy and strengthening the inclusive growth of GDP. In BiH, women-led business are focused in low productivity sector, and smaller on average than businesses run by men.

One of the key obstacles to women’s entrepreneurship is the perception that entrepreneurship is a “man’s” activity. Women-run businesses face more obstacles in terms of access to funds. Their businesses have a harder time increasing profitability, seizing opportunities and accessing information and advice.

The event was attended by representatives of the Institute for Youth Development KULT.

More details on this research are available here: www.worldbank.org/en/events/2018/03/13/gender-in-thewestern-balkans

The Foreign Investors Council of BiH (VSI) held a presentation of the 2nd edition of the publication “Business Barometer” at City Hall, thus marking 12 years of active work on improving the business climate and environment in BiH.

The “Business Barometer» comprises results of survey conducted among members of the Council (the biggest foreign investors and many domestic companies), i.e. an overview of statistical data on the (dis)satisfaction with the business environment and condition in BiH, the obstacles and risks faced by business owners, the advantages and reasons for investing in BiH and their plans for reinvesting and generating jobs in BiH. The results will be used to improve the business environment, regulatory framework and administrative efficiency, and the position of domestic and foreign investors. The Council noted that they expect the results of the survey presented in this publications to be used as the groundwork and guidelines for making future decisions and economic policies, including tax and contribution policies, improving the rule of law, and encouraging investments in BiH, by current and potential investors.

On the occasion of their anniversary, the Council decided to donate 12,000 BAM, i.e. 4000 BAM each to the following associations: “Heart for Children with Cancer in FBiH” and “Iskra” Banja Luka (Association of parents of children with malignant illnesses) and 4,000 BAM for the purchase of 20 Mbot robots for elementary schools in BiH.

The event was attended by a representative of the Institute for Youth Development KULT.

BY: MSc Ajka Rov?anin, Institute for Youth Development KULT

Bosnia and Herzegovina got first place. But being first doesn’t always mean being the best. Case in point: the International Labour Organisation ranked BiH as number 1, thanks to the 67.5% unemployment rate for our workforce in the 15-24 age group, who are unemployed but can and want to work. ILO data allow us to compare 232 countries and their latest data is for March 2017.

Other countries in top five are, respectively, the South African country Swaziland, the South African Republic, our neighbor Macedonia and the Asian country of Oman. It’s interesting to note that Spain and Greece, who used to be at the top with us have made progress and moved down. Greece is now in 8^th place with 47.4% and Spain is 17^th with 39.8%. other neighboring countries placed significantly better: Montenegro is 22^nd with 36%, Serbia is 27th with 33,7% Albania is 28 with 33,6% and Croatia is 42^nd with 29,4%. These are approximately two times lower than BiH. As expected, some of the lowest unemployment rates are those of Western European countries, where the youth of BiH are continuously and intensively moving, probably never to come back. Sweden’s unemployment rate is 18.7%, Slovenia 15.4%, Austria 10.6%, Norway 10.4%, Switzerland 8.1% and Germany 6.1%.

We don’t know exactly how many young people have left. There are assumptions, estimates and partial data, but we don’t have a unique, systematic way to record this data. The 773,850 young people from the census in 2013 are certainly not all in BiH in 2018. We are also lacking a model or systemic solution to maintain links and communication with youth, especially those with higher education, who found jobs abroad. With this in mind, it’s no wonder the World Economic Forum placed BiH as 136^th out of 138 countries in terms of attracting and selecting highly qualified workforce from abroad (1.59 out of a total of 7 points). In this case, the worst ranked are at the bottom, not the top.

In their February progress report for BiH, the International Monetary Fund lowered their prognosis of economic growth from 3.5% to 3.2% in 2018, listing as the main reason the continuous brain drain of young and educated people in search of jobs that they can’t find here. IMF warns that “the demographic crunch in the labour market is a real threat to Bosnia’s long-term growth prospects”. This simple statement is not easily ignored or forgotten, and highlights the urgent and obvious need for an overhaul of the legislative framework concerning the economy.

Self-employment, i.e. starting your own business, is very similar to employment. This indicator allows us to compare ourselves to other countries. It was designed by the World Bank to measure ease of doing business, which they do every year. Better scores will get you a top spot in this ranking too. In 2017, BiH was 86^th out of 190 countries. It was a step back from the previous year, when it ranked 7 places higher. It’s the lowest rated country out of all the countries in the region. Macedonia is 11^th, Kosovo 40^th, Montenegro 42^nd, Serbia 43^rd, Croatia 51^st and Albania 65^th. Even some neighboring countries are very close to Western Europe when it comes to ease of doing business. Norway is 8^th, Sweden is 10^th, Germany is 20^th, Austria is 22^nd, Switzerland is 33^rd and Slovenia is 37^th.

One of the indicators in this methodology is taxes. BiH is 137^th out of 190 countries. All other countries in the region rank better – Macedonia is 29^th and Kosovo is 45^th. BiH business owners have to pay taxes 33 times a year. They pay VAT by the 10^th day of every month. If they issued an invoice to their customer, even if they don’t collect payment in months, years, or ever, they still have to pay what they owe to the state by the 10^th day of every month.