SARAJEVO, 5. OKTOBRA (ONASA) – Director of the Indirect Taxation Authority (ITA) of Bosnia and Herzegovina, Zoran Tegeltija, in an interview with the ONASA Agency, talks, among other things, about the key challenges of the economy in the country, about the need to pass a new law on VAT, about preventing “gray” economy, about the personnel situation in the ITA BiH,…
Interviewed by: Lamija Silajdžić
ONASA: You were a minister in the Government of Republic of Srpska, in the Council of Ministers of Bosnia and Herzegovina, and now you are the director of the Directorate for Indirect Taxation of Bosnia and Herzegovina. All functions are directly related to finance and economics. Where do you see the biggest challenges when it comes to the economy of Bosnia and Herzegovina?
TEGELTIJA: The key problems in the world economy, which are still significantly present in Bosnia and Herzegovina today, arose at the time of the corona virus pandemic, the supply chains were suspended, everyone closed their domestic market and there was simply no way or security in the market when in the matter of commodity exchange.
The global economic crisis only continued with the beginning of the war in Ukraine and that trend, unfortunately, continues even today. All of the above had a significant impact on the catastrophic changes in the prices of energy and food, as well as the issue of inflation, with which we are still struggling to this day.
Monetary stability is threatened in the most developed countries of the world, which take different steps every day that have an extremely negative impact on small economies such as the economy of Bosnia and Herzegovina. The trend of economic growth in the countries of Western Europe is the most challenging for us because we are heavily dependent on them.
The economy of Bosnia and Herzegovina is currently facing the problem of the cost of capital on the one hand, and high prices of food and energy on the other, as well as disrupted supply chains. What has not been a problem for us so far and which we have not encountered so much is the workforce. Our economy is increasingly starting to import workers for certain professions. These problems will last for another year or two, that is, until inflation is brought under control.
ONASA: Are you satisfied with the situation you found in the Directorate for Indirect Taxation of Bosnia and Herzegovina?
TEGELTIJA: The Directorate for Indirect Taxation is the largest institution at the state level and one of the most complex when it comes to jurisdiction. Many business processes are established and functioning well, but there is always room for improvement. I am primarily referring to the relationship with the business community and the introduction of new services that will make it easier for businessmen to fulfill their legally prescribed obligations. In addition to increasing the number and quality of services that the Administration should offer to the business community, work must definitely be done to strengthen legal security, so that taxpayers are fully aware of their rights and obligations.
ONASA: What will be the priorities in your work in ITA BiH?
TEGELTIJA: My goal is for the ITA to ensure the introduction of new electronic services and procedures in the coming period, because this is a reality in modern tax and customs administrations in Europe and beyond. On the one hand, this will ensure faster, easier and cheaper fulfillment of obligations to the business community, and on the other hand, the transition to electronic communication can reduce the risk of potential corrupt activities.
ONASA: What are the biggest problems faced by the Directorate for Indirect Taxation of Bosnia and Herzegovina?
TEGELTIJA: Insufficient and inadequate staffing of the Administration is certainly one of the biggest problems, extremely bad working conditions, above all in Banja Luka. In addition, better technical equipment of the entire institution is necessary in order to achieve even more significant progress in the direction of digitalization of the institution. Artificial intelligence is already widely used in many developed countries in various fields, and I am of the opinion that customs and tax administrations should use it to improve their business processes.
ONASA: How to prevent the “grey” economy in BiH, and to what extent is it represented in BiH?
TEGELTIJA: The gray economy is present in all countries, it is present in countries that are at a much higher level of economic and any other development compared to Bosnia and Herzegovina. There are no completely accurate estimates of the gray economy in Bosnia and Herzegovina, but it is the task of the ITA and other law enforcement agencies and bodies at all levels of government to try to bring all economic activities into the realm of reality. The reduction of the gray economy can be achieved when we have completely clear legal regulations, without room for different interpretations, both by the taxpayer and the control authorities, and with even better controls that will be based on a good risk analysis.
ONASA: Has the procedure for the purchase of the building (ITA BiH) been initiated and will it finally be purchased and how much will it facilitate the work of the ITA BIH?
TEGELTIJA: Preparatory activities are underway for the announcement of an advertisement for the purchase of a building for the accommodation of employees in the ITA Headquarters and the Banjaluka Regional Center. I sincerely hope that this long-standing problem that burdens the Administration will be solved soon, because the conditions in which the Administration’s employees work in Banja Luka are very bad. I think that this issue has been unnecessarily politicized, and no one has come to see the conditions under which the officials work in Banja Luka. Likewise, in the previous period, the accommodation of employees in Sarajevo, Tuzla and Mostar was resolved, so I hope that we will finally solve the problem of accommodation of employees in Banja Luka soon.
ONASA: Will there be personnel changes in the Administration, and will it be open to young and professional people from Bosnia and Herzegovina?
TEGELTIJA: One of the biggest problems we are currently facing is the age structure of employees in the ITA. In the next four years, about 500 officials are to retire. Another problem is the lack of a specific profile of personnel, and the third is the time required to introduce these people to work. What I will propose to the Council of Ministers of BiH and the Parliament of BiH is to receive at least a hundred young staff, the best students, interns, people who will come to ITA BiH with their knowledge. My next request will be the establishment of an ITA school center where people can learn and prepare for work in the field of tax and customs regulations in BiH.
ONASA: What is the cooperation of ITA BiH with EU countries?
TEGELTIJA: There is an established international cooperation of the ITA with tax and customs administrations with countries in the surrounding area and with member states of the European Union. It is based on signed international agreements between Bosnia and Herzegovina and other countries, as well as on memorandums of understanding that the Administration has signed with other administrations. Certain acts and information are exchanged almost on a daily basis, which is really good in the prevention of any illegalities. It is precisely for this reason that my goal is to try to improve international cooperation in the coming period.
ONASA: Will work be done on the technical equipment of the Administration in the near future and thus shorten the waiting time at the borders?
TEGELTIJA: ITA started a series of activities to speed up the flow of capital, goods and passengers across border crossings. We are in negotiations with the World Bank regarding the integration of all institutions within BiH into the “single window” program in order to provide a one-stop system for the wider business community. In this direction, the ITA signed an agreement with UNCTAD for five years on support in the implementation of the “single window” program.
When it comes to accelerating the flow of goods in the coming period, we must provide everything necessary for joining the international NCTS Convention, from all the necessary technical equipment to increasing the bandwidth of communication links. It is an international traffic where all documents are submitted exclusively electronically.
In the coming year, we expect the upgrade of the customs information subsystem, the development and implementation of an import and export control system harmonized with the EU system, the development and integration of additional services for the electronic exchange of data necessary in the customs clearance procedure, and the introduction of fully digital customs, which is an obligation according to EU directives from 2025.
ONASA: What do you think about the introduction of a differentiated VAT rate in Bosnia and Herzegovina?
TEGELTIJA: The introduction of a differentiated/reduced rate is a practice that existed and still exists in Europe, and no one who introduced the VAT system except Denmark introduced a unique system for us. The most common explanation for why BiH introduced such a rate is due to the simplicity of applying the VAT Law, and that makes some sense. On the other hand, introducing a differentiated VAT rate at a time when you have a shortfall in income somehow makes sense. But introducing a differentiated rate when you have excess income makes no sense. The collected income should then be directed to those who need it. The benefit of the differentiated rate will essentially be those who are the richest, because they have the most and spend the most. That’s why I think that allocating more money for socially vulnerable categories of society and helping those who need it the most is the best solution. The ITA of BiH will implement any decision of the parliament, one rate, two or three rates, however they decide, with the fact that we must be clear that the costs of implementing a differentiated rate are very high and that they bring a large cost to the public authorities, but little benefits to the citizens. All that will be lost somewhere in the relationship between the trader, importer and producer. Only a minimal part of the space will reach the end consumers. Here is an example, when we introduced a single rate of 17 percent, we had a general rate of 20 percent until then. Nothing became cheaper then, neither cars, nor cigarettes, nor alcohol, because those three percent were lost on the mentioned route.
ONASA: You said that a new VAT law is needed in Bosnia and Herzegovina. How much is it possible to change anything in BiH regarding VAT?
TEGELTIJA: I think that the VAT system in Bosnia and Herzegovina works quite well and that none of us should have any serious objections to VAT. The fact is that the Law on VAT was adopted a long time ago, that it is subject to amendments, primarily by implementing certain EU directives. For many years, there has been no readiness to correct the VAT Law, because everything here boils down to how to enable people not to enter the VAT system on the one hand, and on the other hand a constant game with VAT rates. Namely, those who exercise power often see it as an opportunity to compensate for the lack of certain incomes. The opposition behaves very easily and proposes reducing the VAT rate, abolishing the VAT rate on certain products and the like. The essence of the VAT Law is not the VAT rate, but how to ensure fiscal stability in this country. I am an advocate that the business community in BiH, together with experts and the ITA of BiH, should prepare a Draft Law on VAT and have it adopted by the Parliament of BiH. Any fiddling with VAT rates would lead to financial instability in Bosnia and Herzegovina, which we do not need.
ONASA: What do you think about the role and importance of independent journalism in BiH and how important it is for the development of a democratic society?
TEGELTIJA: Free media and independent reporting are one of the basic pillars of democracy in any society. In this sense, media independence is extremely important, be it political, economic, or any other, because only in this way can a media completely objectively report on all topics important to a society. I am of the opinion that the media should take on a greater educational role in society, especially when it comes to the area of taxes, income and finances in general.