Leaving the VAT system in BiH: deregistration with UIO, stock and equipment

A registered VAT payer cannot leave the VAT system on its own. The business must file a request with the Indirect Taxation Authority of BiH (Uprava za indirektno oporezivanje, UIO), and UIO issues a decision ending the registration. This concerns small producers, households offering accommodation and caterers that registered for VAT for any reason and are now below the threshold or closing down.

In short

• The threshold is 100,000 KM of turnover in the previous calendar year (Article 57(1) of the VAT Law, raised from 50,000 KM by an amendment in force since 2 December 2023). Taxable turnover and exempt turnover with a right to deduct both count, and the turnover of connected companies and other entities under common control is added.
• Approval is not automatic: the law says UIO "may" issue the decision. If the taxpayer stops doing business, UIO issues the decision on its own initiative (ex officio).
• Before the decision, the taxpayer corrects the input VAT deducted on capital goods (equipment and buildings), counts its stock and pays VAT on it as if taking it for its own use, pays VAT on goods it keeps on which it deducted input VAT, and files a last VAT return.
• The request must include proof of two fees of 10 KM each (one for the request, one for the decision), stock inventory lists and proof that all indirect tax obligations are settled.
• Voluntary registrants must stay registered for at least 60 months (Article 44(7)), and those voluntarily registered under Article 61 (renting out premises, farming land) for at least two calendar years (Article 61(5)).

Who it applies to

The registration rulebook lists four cases in which a taxpayer may file a request:

1. Turnover in the previous calendar year did not exceed the Article 57(1) threshold (100,000 KM). The turnover of connected companies and other entities under common control is added.
2. The business has ceased: it was sold or transferred, or bankruptcy or liquidation has ended.
3. The business changed its activity and now supplies only VAT-exempt goods or services without a right to deduct.
4. The business no longer meets the conditions for a separately registered business unit.

Voluntary registrants (Article 44(6), for example a farmer who registered without having to) cannot leave before the 60-month period ends. Once it ends, they can request deregistration. A farmer whose household's total cadastral income is under 15,000 KM is not a taxpayer by law (Article 44(3)). Once registered, however, such a farmer leaves through the same procedure as everyone else.

What to do

1. Calculate VAT on stock and remaining goods. Count all goods in stock. VAT on them is calculated as if you took them for your own use (Article 62(4) of the Law, Article 38(3) of the Rulebook). For goods you keep after ending the activity or filing the request, and on which you deducted input VAT in full or in part, you calculate and pay VAT (Article 38(2) of the Rulebook).
2. Correct the deduction on equipment and buildings. The Rulebook requires you to correct the input VAT deducted on all capital goods by the day you notify UIO (Article 38(1)) and to attach an inventory list of capital goods as at the day you file the request (Article 38(4)). Under Article 36 of the Law, the correction covers equipment for five years counted from the calendar year in which it was first used, and buildings for ten years from first use. Equipment means a depreciable fixed asset with a purchase price above 10,000 KM. No correction is made if it is less than five percent of the deduction.
3. Settle all indirect tax obligations and prepare proof of it (Rulebook, Article 38(4)). Ask the UIO regional centre in what form it accepts this proof.
4. Pay two fees of 10 KM each to the accounts listed on the UIO website: one for the request (revenue type 722801) and one for issuing the decision (722802). The budget organisation code is 2403003, Regional Centre Mostar. Take the account numbers and the municipality code from the UIO website, not from an intermediary.
5. File the request with the support group (Grupa za podršku) of the tax department of Regional Centre Mostar. There is no set form. The request must contain the full business name, exact address, identification number, phone number and a detailed reason. Attach the original registration certificate, proof that obligations are settled, inventory lists, proof of fee payment and, where relevant, the competent authority's decision on closure, completed bankruptcy or liquidation (a photocopy shown together with the original, or a certified copy no more than 60 days old).
6. File the last VAT return (Rulebook, Article 38(3)). The decision is issued by the support section of the tax sector at the UIO head office (Središnji ured) in Banja Luka, and only after all obligations are settled (Article 62(5) of the Law). Before that, UIO as a rule sends the file for a tax audit (Rulebook, Article 39), so the procedure takes longer than a few days. Deregistration takes effect with the last tax period covered by the audit or the last period for which a VAT return was filed.

After the decision you may not show VAT on invoices or deduct input VAT (Article 44(5)). If your turnover again passes 100,000 KM, you must apply for registration by the 20th of the month following the month in which the threshold was exceeded (Rulebook, Article 29). That procedure is described in the article "VAT registration with the BiH Indirect Taxation Authority: ZR1, documents, Mostar".

Deadlines and amounts

• Fee for the request: 10 KM. Fee for the decision: 10 KM.
• The VAT calculation, inventory lists and proof of settled obligations are submitted with the request (Rulebook, Article 38(4), as amended in 2016). If UIO starts the procedure itself, the deadline is 15 days from notice.
• The standard VAT rate is 17%.

Where to go

• All municipalities of East Herzegovina (Trebinje, Bileća, Gacko, Ljubinje, Nevesinje, Berkovići) belong to the UIO Regional Centre Mostar, according to the municipality list on the UIO website. For deregistration, UIO gives the Mostar numbers 036/356-797, 036/356-795 and 036/356-793.
• Procedure description: UIO, Prestanak registracije obveznika
• Before filing, check your own case with UIO or a licensed accountant, for example what counts as a remaining good and what counts as a capital good.

Laws and sources

• Zakon o porezu na dodatu vrijednost, original 2005 text, Articles 36, 44, 61, 62 (Art. 57(1) was amended, see next link)
• Amendment to the VAT Law (Official Gazette of BiH 80/23): threshold 100,000 KM
• Pravilnik o registraciji i upisu u Jedinstveni registar obveznika indirektnih poreza (Official Gazette of BiH 51/12), Articles 29 and 33 to 39
• Amendments to that Rulebook (Official Gazette of BiH 68/16)