Favorable Tax Policy and Support on State and Local Level – What Else Attracts Investors from the Region to Republika Srpska?

Several local communities in Republika Srpska, having recognized the advantages of their locations and new possibilities, either launched the activities or expressed an interest in the forming of free zones, such as Trebinje, Bratunac, Gradiska, Zvornik, Sokolac, Samac, etc. Some of them are already in the latter phases of the preparations for the submission of requests for the founding of these zones, such as Trebinje and Bratunac.

The advantages of doing business in RS have also been recognized by companies from Serbia, among which is Ekonomik Group from Belgrade, which already has a facility for the production of containers in Srebrenica. At the recently held event Days of Republika Srpska in Serbia, this company signed the Memorandum of Understanding with the head of the municipality of Bratunac, whereby it showed an interest in expanding its operations in RS, more precisely, in the future free zone Bratunac.

The economist Sasa Grahovac of the RS Association of Economists SWOT, believes that, in addition to the favorable tax policy and state- and local-level support, one of the main motives for investing in RS is local-patriotism.

– Companies from the neighboring countries have an interest in investing in business zones in RS, because they are primarily connected with their parent companies in Serbia, Croatia… hence it is easier to organize the business, and the transportation costs are lower too. Of course, some business people have an additional motive, which has to do with many of them originating in these areas, so they also have the local-patriotic motive. The third thing is that the language is the same and that the regulations, not pertaining strictly to the functioning of free zones, but to business operations in general, are similar. All these are elements which, in a way, make RS a more favorable place for investments in business zones than some other destinations which are quite different from ours in terms of territory, language and regulations – Grahovac explains for eKapija.



That the economic relations between RS and Serbia are increasingly strong and that the interest of business people in joint operations is growing, has also been confirmed for eKapija by the head of the Representation of Republika Srpska in Serbia, Mladjan Cicovic.

– In addition to trade, business people are expressing an increasing interest in establishing higher forms of economic cooperation through investments and the establishment of joint production and joint ventures in third markets, in order to more easily create quality products and withstand the pressure of the competition. The planned infrastructure projects that are financed by the Government of the Republic of Serbia, where companies from Serbia and RS could be the main contractors, also provide a great opportunity for cooperation between companies.

The fact that shows us that RS has recognized the importance of free zones and that there are increasingly intensive efforts toward their establishment is the adoption of the new Law on Free Zones of RS in early 2021, and then also the accompanying bylaws. The aim of the new law is for the field of free zones to be specified, innovated and upgraded, and the intention was also for this economic policy instrument to be additionally promoted.

Sasa Grahovac of RS SWOT says that RS can attract investors with a low corporate tax, relatively moderate income taxes and contributions and other exemptions.

– There’s also the good geostrategic position, especially in the northern part of RS, the part that stretches along the Sava and the Drina, which is close to the EU market and traffic corridors, which is attractive to investors – our interviewee points out.

In the past period, RS has enabled the creation of a favorable business environment and given considerable exemptions to foreign investors. Incentives for investments are given on the republic and the local levels. On the republic level, these are incentives by the Ministry of Economy and Entrepreneurship, that is, incentives for salary raises for workers employed in business entities, incentives for direct investments, and then incentives of the Employment Institute, as well as tax and other incentives.

When it comes to incentives on the local level, they differ between various towns and municipalities, and all the information can be found at the portal regpodsticaja.vladars.net, as well as on the official web pages of local self-government units.

Slobodana Subara

Ministry of Economy and Entrepreneurship of RS

RS Association of Economists SWOT

RS Representation in Serbia

Ekonomik Group Belgrade

Bojan Rankić

Saša Grahovac

Mlađan Cicović

Law on Free Zones of RS

fee zones

investment in free zones

establishment of free zones

business people from Serbia

investments of business people from Serbia in RS

tax exemptions

exemptions for investors

incentives for investors

corporate taxes

income taxes and contributions