THE LAW

ON SPECIAL MODALITIES FOR TAX DEBT SERVICING[1]

Article 1

This Law shall govern special modalities and procedure for tax debt servicing.

Article 2

This Law aims to alleviate the financial position of companies affected by economic crisis, to maintain current solvency, and stimulate employment.

Article 3

The tax debt servicing procedure prescribed under this Law shall be respectively subject to provisions of the laws governing tax procedure and general administrative procedure.

Article 4

(1) The terms used herein shall have the following meaning:

a)  tax debt constitutes taxpayer’s debt pertaining to taxes and surtaxes due for payment accordingly to deadlines prescribed under this Law,

b)  tax constitutes any payment obligation, the taxpayer is obliged to pay to the Budget of Republic of Srpska, to budgets of cities, municipalities, and funds, which is deemed irrecoverable, and shall include taxes, social contributions, fees, and charges,

c)  surtax constitutes any form of payment to the Budget of Republic of Srpska, municipality, city, and funds ensuing from obligation to pay tax, including tax related interest, and costs of procedure,

d)  share in ownership constitutes stocks, i.e. member’s share in a company.

(2) Other terms used in this Law shall have the same meaning as that in the Law on Tax Procedure of Republic of Srpska.

Article 5

(1) In pursuance of this Law, tax debt can be serviced as follows:

a)  byway of one-off deferral of payment of tax debt, for a period of up to one year, or for the period of up to 60 months maximum, applying equal monthly installments,

b)  byway of conversion of tax debt into share in ownership in a company, and

c)  by way of payment of the entire amount of principal debt, with interest write-off.

(2) Notwithstanding Paragraph 1, Item a) of this Article, tax debt can be serviced by way of deferral of payment of tax debt, applying equal monthly installments for the period of up to 60 months with a one-year grace period.

Article 6

(1) Deferral of payment of tax debt referred to in Article 5, Paragraph 1, Item a) of this Law can be approved to tax debtor whose debt has been established byway of tax declaration or tax decision document, given the following terms have been met:

a)  that tax debt was due for payment no later than in the year preceding the year in which deferral request is being filed in line with Article 7 of this Law,

b)  that tax debt is secured, and

c)  that individual and due obligations pertaining to retirement and disability insurance have been serviced for employees who shall become eligible to enjoy specific rights arising from retirement and disability insurance during the deferral period.

(2) One of the following means shall be used to secure tax debt:

a)  mortgage to the taxpayer’s real-estate or mortgage of a third party,

b)  lien on movable assets of a taxpayer or the lien of a third party,

c)  irrevocable bank guarantee payable upon first call, and

d)  vouch of another party, owner of property used as security for tax debt.

(3) Security referred to in Paragraph 2 of this Article shall be, at least, of the same value as the total tax debt, which, in addition to principal debt, includes the interest incurred.

Article 6a

(1) All taxpayers having sustained damages caused by May 2014 floods in Republic of Srpska can be eligible to tax debt servicing referred to in Article 5, Paragraph 2 of this Law.

(2) Damages referred to in Paragraph 1 of this Article shall mean the damages as defined under the provisions of the law governing the Solidarity Fund for Reconstruction of Republic of Srpska.

(3)Deferral of payment of tax debt refer to in Paragraphs 1 of this Article can be approved to a taxpayer for whom tax debt has been established under tax return or tax decision document, given the following criteria:

a) that tax debt was due for payment no later than by 30 June 2014,

b) that tax debt is secured accordingly to Article 6, Paragraphs 2 and 3 of this Law, no later than by expiration of grace period,

c) that individual due liabilities pertaining to pension and disability insurance have been paid for employees entitled to pension and disability insurance rights during the deferral period,

d) that taxpayer holds proof of damage sustained due to May 2014 floods in Republic of Srpska.

(4) Taxpayers referred to in Paragraph 1 of this Article are entitled to deferral of payment of tax debt, applying equal monthly installments for the period of up to 60 months, with a one-year grace period, which shall commence as of the day of delivery of a decision document approving the differed payment of tax debt.

Article 7

(1) Payment deferral procedure pertaining to tax debt referred to in Article 5, Paragraph 1, Item a), and Paragraph 2 of this Law shall be initiated by way of a payment deferral motion submitted to the Ministry of Finance (hereinafter: the Ministry), no later than 30 days as of the day of delivery of the final decision document for payment of tax liabilities to the taxpayer in reference to liabilities established under Tax Administration’s decisions document.

(2) Along with the motion referred to in Paragraph 1 of this Article, the taxpayers shall supply the following:

a)  a decision document establishing tax liabilities, or tax declarations recorded by Tax Administration of Republic of Srpska (hereinafter: the Tax Administration), if the motion filed is pertaining to tax debt established under tax declarations,

b)  proof of security provided as referred to in Article 6, Paragraph 2 of this Law,

c)  statement confirming the terms referred to in Article 6, Paragraph 1, Item d of this Law have been met,

d)  a photo-copy of financial statements for the last completed business year, and

e)  proof rendered from a competent body on damages sustained, for taxpayers referred to in Article 6a, Paragraph 1 of this Law.

(3) Notwithstanding Paragraph 2 of this Article, taxpayers referred to in Article 6a, Paragraph 1 of this Law can supply proof of having secured the debt no later than by expiration of grace period, and should they fail to do so, the Minister, i.e. Director of Tax administration shall abolish the previously approved decision document on differed payment.

(4) Minister of Finance (hereinafter: the Minister), shall prescribe the form of the tax debt payment deferral motion.

Article 8

(1) The Minister shall issue a decision document in regards to tax debt payment deferral motion.

(2) The summary administrative procedure shall apply to the motion referred to in Paragraph 1 of this Article, and it shall not exceed 30 days following the day of receipt of a proper motion.

(3) The decision document referred to in Paragraph 1 of this Article, in addition to mandatory elements prescribed under the law governing administrative procedure, shall also contain the payment schedule including interest calculated up until the final date of payment of the respective tax debt.

(4) The Ministry shall calculate the interest to the total amount of tax debt subject to a decision document referred to in Paragraph 1 of this Article, in pursuance of the law governing tax procedure.

(5) The decision document referred to in Paragraph 1 of this Article shall be regarded as definitive in an administrative procedure without right to appeal. Respectively, an administrative dispute can be initiated before the competent court.

(6) The Ministry shall deliver the decision document referred to in Paragraph 1 of this Article to Tax Administration no later than five days following the date of its issue, for the purpose of record keeping and monitoring of performance of obligation rendered under the decision document.

(7) Notwithstanding the provisions of Paragraph 1 of this Article, the Tax Administration Director shall decide upon deferral motion for tax debt not exceeding 30.000 BAM, in view of conditions and methods prescribed under this Law.

(8) Tax Administration shall calculate interest to the total amount of tax debt subject to a decision document referred to in Paragraph 7 of this Article, in pursuance of the law governing tax procedure.

(9) An appeal can be filed to the Ministry against Tax Administration Director’s decision document referred to in Paragraph 7 of this Article, within 15 days following the day of delivery of the decision document to the tax debtor.

(10) Notwithstanding Paragraphs 4 and 8 of this Article, the Ministry, i.e. Tax Administration shall not calculate interest during grace period for debt having been differed along the lines of Article 6a of this Law.

Article 9

(1) Tax Administration shall monitor the enforcement of the decision document on approval of deferral and shall inform the Ministry immediately if it establishes that the taxpayer is not adhering to the conditions and deadlines set out in the decision document.

(2) If taxpayer fails to adhere to conditions and deadlines referred to in the decision document on deferred payment of tax debt, the Minister, i.e. the Director of Tax Administration shall repeal the respective decision document ex officio, after receiving the information referred to in Paragraph 1 of this Article.

(3) In cases referred to in Paragraph 2 of this Article, the Tax Administration shall, bearing in mind the efficiency of collection, collect the unpaid tax debt byway of:

a)  means of security, or

b)  enforced collection procedure.

(4) Taxpayer for whom the decision document has been repealed as set out in Paragraph 2 of this Article, shall not be entitled to payment deferral for the same tax debt.

Article 9a

(1) Taxpayers entitled to differed payment of tax debt in line with Article 5, Paragraph 1, Item a) of this Law, and having sustained damages due to May 2014 floods in Republic of Srpska, can exercise the right to deferred payment of tax debt as prescribed under Article 5, Paragraph 2 of this Law if they file a request to have the decision document on deferred payment of tax debt abolished.

(2) In the event referred to in Paragraph 1 of this Article, the Ministry, i.e. Tax Administration shall abolish the current decision document, and further procedure shall be conducted along the lines of Articles 7 and 8 of this Law.

Article 10

Statue of limitation for tax liabilities shall stay during the tax debt payment deferral period.

Article 11

(1) All tax debtors established as companies and fulfilling the terms prescribed under this Law and the law governing the establishment and operations of companies shall be entitled to service their tax debt in line with Article 5, Paragraph 1, Item b) of this Law, namely through conversion of tax debt into share in ownership.

(2) Tax debt which was due no later than 31 December 2012 can be serviced in line with Paragraph 1 of this Article.

Article 12

(1) The procedure for servicing of tax debt byway of conversion into share in ownership shall be initiated through a motion for initiation of procedure of conversion of debt into share in ownership. The motion stating the basic information about the debtor shall be submitted to a ministry competent for the filed pertinent to the line of business of tax debtor.

(2) Along with the motion referred to in Paragraph 1 of this Article, the taxpayers shall supply the following:

a)  a Decision of the tax debtor’s competent body on intention of converting tax debt into share in ownership,

b)  competent court’s Decision on registration of tax debtor,

c)  proof of ownership structure, respectively the structure of the tax debtor’s capital,

d)  a photo-copy of the set of financial statements of the tax debtor for the last completed business year along with notes to financial statements,

e)  a photo-copy of the audit reports to financial statements for the last completed business year in case the tax debtor is subject to audit in line with regulations, and

f)  Tax Administration’s Certificate of debt of the tax debtor.

(3) Following initiation of procedure referred to in Paragraph 1 of this Article, Tax Administration shall issue an interim measure of interdiction over property of the tax debtor, only after receiving the information from the competent ministry on initiation of the procedure for conversion of tax debt into share in ownership.

Article 13

(1) The Government of Republic of Srpska (hereinafter: the Government), shall issue the Decision on approval of conversion of tax debt into share in ownership following a proposal of the ministry competent for the filed pertinent to the line of business of the tax debtor subject to the procedure of conversion of tax debt into share in company’s ownership.

(2) The Government, at the proposal of the competent ministry, shall deny the proposal to initiate the procedure for conversion of debt into share in ownership in case it finds the procedure unsupportive of the aim referred to in Article 2 of this Law, and primarily if:

a)  the founder, i.e. responsible person with the tax debtor had been convicted of crime or is subject to criminal proceedings due to evasion of taxes and contributions, and

b)  it establishes that tax debtor or its related person disposes with assets sufficient to service the tax debt without threat to its solvency and payment of employee wages.

(3) The law governing tax procedure shall serve as basis to establish the relation of the tax debtor with another person.

(4) Following the Decision referred to in Paragraph 1 of this Article, the managerial structures of the tax debtor shall organize the shareholders’, i.e. members’ assembly to issue a decision on capital increase through conversion of tax debt into share in ownership, in line with regulations governing this field.