New Personal Income Tax Law was adopted by the National Assembly of the Republic of Srpska and published in the Official Gazette and will come into force on 1 September 2015.
The main changes are as follows:
The Withholding Tax on dividend payments will be abolished
According to the current Personal Income Tax Law, there is Withholding Tax on dividend payments applicable to private persons at the rate of 10%. Interest income received by both private persons and legal entities and cash dividends received by legal entities will remain exempted from Withholding Tax.
Capital Gains Tax at the rate of 10% will be introduced with respect to debt securities, with the exception of the first trade with War Damage bonds issued by the Republic of Srpska
According to the current Law, capital gains realised by private persons from all debt securities are exempted from Capital Gains Tax. Capital gains from the sale of stakes in legal entities, shares and other securities are taxable at the tax rate of 10%, according to both the new and the current Law. Capital gains of legal entities are not subject to Capital Gains Tax.
Impact on investors: The Withholding Tax for cash dividends will be abolished from 1 September 2015. Capital Gains Tax for debt securities will be introduced from the same date, with the exception of the first trade with War Damage bonds.