Tax System in Bosnia and Herzegovina
The paper deals with taxes and the tax system in Bosnia and Herzegovina. Modern tax systems are based on taxation of income and consumption. For developing countries like Bosnia and Herzegovina, the taxation of consumption is more dominant than the taxation of income. This means that in such countries the participation of indirect taxes concerning direct taxes is higher. The basic taxation categories in Bosnia and Herzegovina are corporate income tax, personal income tax, value-added tax, social security contributions, and excises. The taxation system in Bosnia and Herzegovina is characterized by low tax rates. Personal income tax is paid at the rate of 10% which means that we have proportional tax rates. But social security rates are high as follows (employee’s share): 17% for pension insurance, 12,5% for health insurance and 1,5% for health insurance. We need some fiscal reforms within fiscal policy if we want to have higher salaries and standard of living.