The government announces a salary increase plan – Emploi et RH

Bosnia and Herzegovina: Government announces salary increase plan

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Amendments to the RS Labor Law were published in the Official Gazette of Republika Srpska on December 29, 2021, while previously announced amendments to the Income Tax Law and Contributions Law are entered into force on January 1.

The RS government clarified that the reduction in contributions was intended to directly increase the individual wages of employees after the reduction of the income tax rate and the changes applied to the model for calculating wages, the base of the income tax and labor laws.

The concept of gross salary has been modified since it now represents the basic salary, the increases prescribed by the labor law, the collective agreement and the employment contract, income tax and contributions. The cumulative contribution rate has been reduced from the current rate of 32.8% to 31%, with only the health insurance contribution rate being reduced from 12% to 10.2%.

The law also stipulates that the minimum wage is increased according to seniority (0.3% for each year of service); the minimum wage for 2022 will be 590 BAM.

In addition, the personal income tax rate was reduced from 10% to 8%, with a 10% rate remaining only for the payment of self-employment income tax. Income from copyright, capital, capital gains and other income is subject to an income tax rate of 13% while the annual personal deduction has been increased from 8,400 KM to 12,000 KM.

The budget proposal adopted by the Republika Srpska for 2022 increased the salaries of budget users; for salaries up to 1,000 KM, the increase will be 5%, and 3% for salaries above 1,000 KM.

The government estimates that the implementation of these measures will result in a loss of revenue of BAM 80 million, from contributions, while at the same time, the amendment of the income tax law will increase the total amount of contributions. revenues of approximately BAM 34.5 million per year from income tax.

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