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Slobomir P University , Bijeljina , Bosnia and Herzegovina
Slobomir P University , Bijeljina , Bosnia and Herzegovina
Code of Conduct on business taxation was adopted in 1997 in order to prevent the practice of harmful tax competition within the European Union. The views of the Code is not legally binding, but states that doesn’t not apply it, have risk of suffering the political consequences. Transition countries are characterized by a number of tax breaks in order to attract foreign investors. Measures used are numerous, from the complete exemption from tax in the first year of operation, the application of reduced tax rates, allowing full repatriation of profit to the country until the individual negotiation of the amount of the tax debt. Many of these measures damage free market competition, and some of them may be considered as dangerous for functioning of free markets. These measures are certainly not in line with the Code, so all acceeding countries had to adapt their legislations. The aim of this paper is to examine how the tax ,that applies in the Republic of Srpska in accordance with the requirements of the EU or whether some of its provisions, could be brought under the harmful tax competition, and whether and which changes will be necessary in the process of joining the European family. On the other hand, if such provisions exist, the paper will analyze their effects on improving the investment climate and budget revenues in the Republic of Srpska.
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