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6.4. Reserves and Provisions

Provisions in relation to following future costs are tax deductible subject to certain conditions in FBiH:

  • 30% of taxable income (before provision) for environment protection, provided the taxpayer is required to undertake steps for environment protection; and
  • 4% of annual turnover relating to products subject to guarantee in tax period.

Provisions in relation bad debts are tax deductible subject to certain conditions in RS / BD:

In case a receivable is not collected within 12 months from the due date, subject to certain other conditions, such bad debt is considered as an allowable deduction.

There are sector specific reserves created namely applicable to banks, insurance companies, etc. which are deductible, subject to fulfillment of specified conditions in RS / BD.