At the beginning of the month, IA Law Firm Bosnia analyzed the statement issued by the Tax Administration of the Federation of Bosnia and Herzegovina (FBiH), and the key findings are presented in the following text.
After the increase in the minimum wage to BAM 1,000 in FBiH, the Tax Administration of the Federation of Bosnia and Herzegovina issued a statement warning employers that it will intensify regular and targeted inspections to prevent any misuse of tax regulations in the calculation of wages and meal allowances.
“All employers who attempt to use the minimum wage increase to conceal previous practices of tax evasion will face strict inspections and sanctions. The FBiH Tax Administration will not tolerate manipulations that harm workers and the budget,” said Admir Omerbašić, Director of the FBiH Tax Administration. “Inspections will be carried out not only ex officio but also based on citizen reports to ensure strict compliance with the law,” the statement from the Tax Administration further states.
“According to field reports, there are indications that some employers who previously paid a salary of BAM 700 plus an additional BAM 300 for a meal allowance now present the full BAM 1,000 as the minimum wage, omitting the meal allowance. Although this practice may not initially seem like a violation, the FBiH Tax Administration warns that if it is determined that previous meal allowance amounts were actually part of the salary and were used to evade taxes and contributions, this could constitute a criminal offense of tax evasion,” the Tax Administration states.
More details about the statement from the Tax Administration can be found at: Poreska uprava FBiH upozorila poslodavce u vezi minimalca: Nećemo tolerisati malverzacije s toplim obrokom
Is There a Legal Basis for This Statement?
Meal allowance during work hours, as well as transportation reimbursement, is regulated by employment contracts, work regulations, collective agreements, or employer decisions, as it is not a worker’s right established by law.
Therefore, the meal allowance in FBiH is not a legal category. Consequently, paying a meal allowance is not a legal obligation for employers. How and why the Tax Administration has taken the position that something not regulated by law constitutes not only an offense but also a criminal act of tax evasion is a question that does not have a single answer.
Legal Uncertainty
Although every rule-of-law state is based on the principle that no one can be held accountable for an act not defined by law, in Bosnia and Herzegovina, authorities responsible for law enforcement have a different stance. Even though there is no legal obligation to pay a meal allowance, the administrative body creates its own interpretation, contrary to the principles of the rule of law. A large number of violation notices have already been issued to employers who previously paid a meal allowance but discontinued the practice after the minimum wage increase.
Whether the courts will act as an adequate corrective force and guarantee the existence of the rule of law remains to be seen. While the Tax Administration may argue that the court should consider the best interests of workers and that previous payment of a meal allowance established a de facto acquired right that cannot now be revoked to the detriment of workers, the court should not go beyond the fundamental assumption of the rule of law – no one can be held accountable for something that is not legally mandated.
Recommendations for Employers
Many employers may conclude from the above that it is sufficient to simply stop paying the meal allowance since there is no legal obligation to do so. However, the situation is not that simple. Before making such a decision, it is necessary to analyze employment contracts and internal regulations to determine whether there is another legal basis for the obligation outside of the law. If such a basis exists, unilaterally ceasing payments is not possible, and legal consultation is required for the next steps. Ensure transparent communication with employees and timely adaptation of internal policies to new economic conditions to avoid potential misunderstandings and legal complications.
Recommendations for Workers
Review your employment contract and your employer’s internal policies. If your employer asks you to sign statements waiving acquired rights, it is advisable to seek legal counsel to review contractual relations and ensure fair and clearly defined conditions in line with current laws and economic realities.
Whether you are an employer or a worker, hiring a legal advisor in a situation where all market participants are still trying to understand the effects of a minimum wage increase—introduced without prior systemic legal and economic analysis—is essential.
More about IA Law Firm Bosnia’s labor law services can be found at: Labor Law | IA Lawfirm
