FBiH Taxpayers Owe 1.5 Billion KM

According to data from the Commission for Establishing the Unpaid Tax Obligations at the FBiH Parliament, the biggest chunk of debt worth 688.6 million KM belongs to 246 firms which are mainly in the ownership of state.

Midhat Arifović, director of the Federation of Bosnia and Herzegovina Tax Authority (PU FBiH), doubts that this institution will manage to collect the accumulated debt of 1.5 billion KM incurred by 54,948 taxpayers in the past years. The debt, recorded at the end of last year, represents unpaid taxes on revenue, assets, salaries and contributions for pension and health insurance of workers.

He told the Center for Investigative Reporting in Sarajevo (CIN) that the biggest debtors are companies with majority state capital, firms in bankruptcy, firms in liquidation or those which have stopped operating, while their assets are most often burdened with mortgages for bank loans.

According to data from the Commission for Establishing the Unpaid Tax Obligations at the FBiH Parliament, the biggest chunk of debt worth 688.6 million KM belongs to 246 firms which are mainly in the ownership of state. Another 7,546 firms which stopped operating have around 145 million KM of debt, while 193 firms in bankruptcy owe 82.5 million KM. Another 301 firms in liquidation owe almost 20 million KM in debt, while 46,662 active taxpayers owe 595,3 million KM.

The FBiH tax officials explain that the biggest cause of million KM worth of debts is changes in the way of doing business, where the state-owned companies have lost the market, as well as the state subsidies. They use revenue to pay salaries, without paying benefits. In most cases, companies manage to pay between 300 and 500 KM per a worker. “The failure to pay benefits in this way culminates in debts over the years,” says assistant director Jasminka Mehović.

The FBiH has forfeited 603.5 million KM in debt from the firms. To that end, the firms’ accounts were frozen, their property sold and agreements made for delayed payment or payments in installments.

According to the report, it is not possible to cash in debts without assistance from the FBiH government which would have to set up a commission to solve this issue. That commission would then recommend either the reorganization of a company or bankruptcy.

Mehović said taxpayers who default should go into bankruptcy. “It’s just the question when a taxpayer will decide to submit a bankruptcy proposal to a court that has jurisdiction,” said Mehović.