Energy
Biomass business development potential in
Bosnia and Herzegovina
mr. Sanjin Avdić, dipl.ing.mas., MBA
Head of energy department
„Biomasse in Serbien und Bosnien-Herzegowina“, 21. Juni 2012, München
www.german-renewable-energy.com
INTRODUCTION
• BiH‘s legal framework/system
• Setting up a business in BiH
• Taxes in BiH
• Status and incentives for foreign investors in BiH
• Biomass feed-in-tariffs
• Co-financing opportunities (credit lines, CDM, TAM BAS
programme...)
• Association „Biomass in Bosnia and Herzegovina“ina“
Biomass business development potential in BiH
BiH LEGAL SYSTEM
Business related Laws and Regulations in BiH:
• Law on Value Added Tax of BiH
• Law on Corporate Income Tax of F BiH
• Law on Corporate Income Tax of RS
• Framework Law on Registration of Business Entities in BiH
• Law on Registration of Business Entities of FBiH
• Law on Registration of Business Entities of RS
• Customs Tariff of BiH
• Customs Policy Law of BiH
• Decision on Implemental Regulations of the Customs Policy Law of BiH
• Decision on Harmonizing and Establishing Customs Tariffs of BiH
Foreign investors related Laws and Regulations in BiH:
• Law on the Policy of Foreign Direct Investment of BiH
• Law on Foreign Investment of FBiH
• Law on Foreign Investment of RS
Biomass business development potential in BiH
SETTING UP A BUSINESS IN BiH
• According to the law in BiH a company can be organized in one of the following forms:
1. Unlimited Joint Liability Company (d.n.o.)
2. Limited partnership (k.d.)
3. Joint Stock Company (d.d.)
4. Limited liability company (d.o.o.)
Biomass business development potential in BiH
SETTING UP A BUSINESS IN BiH
• Equity capital: 2.000 KM (1.000 €)
• Registration costs: cca 1.000 KM (500 €)
• Place of registration: Municipal Court with the economic/commercial department
• Required registration time: 40 days
(theoretically)
Registration facts (FBiH)
Q: REGISTRATION PROCESS ?
Biomass business development potential in BiH
SETTING UP A BUSINESS IN BiH
Establishment
Contract (made by notary)
Payment of initial capital
Registration at the competent court
Making a company stamp
Opening a bank account in a
commercial bank
Registration of the company and staff at
Pension and Disability Funds, TAX
administration
Obtain permission for beginning of activity
Start business
Biomass business development potential in BiH
SETTING UP A BUSINESS IN BiH
Establishment
Contract (made by notary)
Payment of initial capital
Registration at the Ministry of Foreign Trade and Economic
Relations of BiH
Registration at the competent court
Making a company stamp
Opening a bank account in a
commercial bank
Registration of the company and staff at
Pension and Disability Funds, TAX
administration
Obtain permission for beginning of activity
Start business
Biomass business development potential in BiH
TAX RATES
• Corporate income tax rate: 10% (no progressive rate in function of profit)
• Dividends tax rate: 5%
• Value added tax rate: 17%
• Property tax rate: depending on the location (FBiH 8%, Ze-Do Canton 3%, RS and Brčko District 5%)
• Personal income tax: 10% in FBiH and Brčko District, 8% in RS
Biomass business development potential in BiH
TAX RATES
• Bosnia and Herzegovina has signed 32 Agreements on Avoidance of Double Taxation with the following
countries:
Albania, Austria, Belgium, Croatia, Czech,Rep.Cyprus, Denmark, Egypt, Finland, France, Germany,
Greece, Hungary, Iran, Italy, Jordan, Kuwait, Moldova, Malesya, Netherlands, Norway, Pakistan, Poland,
Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Turkey, United Arab Emirates and United Kingdom
• Initiated but not signed with:
Algeria, Belarus, Ireland, Latvia, Macedonia, Malta, Qatar, Russia, Syria and Singapore
Biomass business development potential in BiH
TAX INCENTIVE
• 3 tax exemptions way:
1. The Federation Law on the Corporate Income Tax enables the taxpayer, who in the year for which the
corporate income tax is being determined, has achieved 30% of their total revenue by export to be
exempted from the tax payment for that year.
2. Taxpayer who in the period of five consequent years invests into production in the value of minimum
20 million KM, on the territory of the Federation of Bosnia and Herzegovina, is being exempted from
the payment of corporate income tax for the period of five years beginning from the first investment
year, in which minimum 4 million KM must be invested.
3. In the Federation of BiH, the taxpayer who employs more than 50% of disabled persons and persons
with special needs longer than one year is being exempted from the payment of corporate income tax
for the year in which more than 50% disabled persons and persons with special needs were employed.
Biomass business development potential in BiH
SOCIAL SECURITY CONTRIBUTIONS
• In the BiH there are contributions paid by the employer and those paid by the employee (on gross wage
amount in addition to contributions and taxes).
Employee’s Share:
• FBiH: 17% for pension insurance, 12.5% for health insurance, 1.5% for unemployment insurance
(in total: 31% on gross wage)
• RS: 17% for pension insurance, 11,5% for health insurance, 0,7% for unemployment insurance, 1,4% for
child protection
(in total: 30,6 % on gross wage)
• Brčko District: 17% for pension insurance, 12% for health insurance
(total: 29% on gross wage)
Employer’s Share:
• FBiH: 6% for pension insurance, 4% for health insurance, 0.50% for unemployment insurance
(in total: 10.50% on gross wage)
• Brčko District: Brčko District: 6% for pension insurance
(in total: 6% on gross wage for employers who apply FBiH Law).
• In RS no such contributions are paid
Biomass business development potential in BiH
SOCIAL SECURITY CONTRIBUTIONS
• In the BiH there are contributions paid by the employer and those paid by the employee (on gross wage
amount in addition to contributions and taxes).
0%
5%
10%
15%
20%
25%
30%
35%
FBiH RS Brčko D.
child protection
unemployment insurance
health insurance
pension insurance
0%
2%
4%
6%
8%
10%
12%
FBiH RS Brčko D.
Employer’s Share Employee’s Share
Biomass business development potential in BiH
STATUS AND INCENTIVES FOR FOREIGN INVESTORS
• 2 basic facts:
1. Company with foreign investment enjoys equal legal status and carries on its business under equal
conditions and in an equal manner as do domestic companies
2. Foreign citizens in BiH exercise the same rights and freedoms as citizens of BiH exercise in the
country of the foreign citizen
Biomass business development potential in BiH
STATUS AND INCENTIVES FOR FOREIGN INVESTORS
• One of the incentives is the Foreign Investor Support Fund, provided by the Government of BiH (projects in
production, research and development sectors) - 2 million KM annualy
• Central Bank of Bosnia and Herzegovina maintains monetary stability by issuing domestic currency according to
the Currency Board arrangement - 1 KM: 0.51129 EUR
• Bosnia and Herzegovina has ratified/signed 39 Agreements on Promotion and Protection of Investments with
the following countries:
Albania Austria Belgium and Luxembourg Belarus China Croatia Czech Republic Denmark Egypt Finland France
Germany Greece Hungary India Iran Italy Jordan Kuwait Lithuania Macedonia Malaysia Moldova Netherlands
OPEC Fund Pakistan Portugal Qatar Romania Serbia Slovakia Slovenia Spain Switzerland Sweden Turkey
Ukraine United Kingdom USA (OPIC)
• Risk insurance is guaranteed by:
- European Union Investment Guarantee Trust Fund for Bosnia and Herzegovina
- US Overseas Private Investment Corporation (OPIC)
Biomass business development potential in BiH
FOREIGN TRADE
• Bosnia and Herzegovina signed the Central European Free Trade Agreement (CEFTA) with the
following countries:
Albania, Serbia, Moldova, Montenegro, Croatia, Macedonia, UNMIK/Kosovo.
• Free Trade Agreement with Turkey.
• BiH has preferential export regimes with:
all EU countries, Australia, Canada, Japan, New Zealand, Norway, Russia, Switzerland, USA and Iran
• BiH is a member of the WIPO Convention
Biomass business development potential in BiH
• Guaranteed purchase price for biomass generated electricity (feed
into the national grid)!
Gc = Rc x C
• Gc - Guaranteed purchase price
• Rc – reference price (for 2011. – 12,26 pf/kWh)
• C – tariff coeficient (depending on installed capacity and biomass
source)
• Increase for biomass within the last legistlation update (about 7%)
Biomass feed-in-tariffs in FBiH
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 18/33
Biomass business development potential in BiH
Biomass feed-in-tariffs in FBiH
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 19/33
Gc = Rc x C
C - tariff coeficient
Gc = 16,79 pf/kWh – 18,02 pf/kWh
Solid biomass from
forestry and
agriculture
Solid biomass from
wood-processing
industry
Micro (1kw – 150 kW) 1,47 1,43
Mini (>150 kW - 1MW) 1,45 1,41
Small (>1 MW – 10 MW) 1,43 1,39
Large (>10MW) 1,41 1,37
Biomass business development potential in BiH
Biomass feed-in-tariffs in Republica Srpska
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 20/33
Two prices:
• Guaranteed purchase price for biomass generated electricity (feed into the
national grid)
• Premium price
Biomass business development potential in BiH
Biomass feed-in-tariffs in Republica Srpska
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 21/33
Biomass generated electricity Guaranteed
price
[KM/kWh]
Refernt price
[KM/kWh]
Premium price
[KM/kWh]
1 MW 0,1988 0,0541 0,1447
1 MW – 10 MW 0,1730 0,0541 0,1189
Company needs to qualify for the premium price!
Biomass business development potential in BiH
Co-financing opportunities
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 22/33
EE/RES credit lines
CDM projects (emission trading)
Other possibilities
Biomass business development potential in BiH
Co-financing opportunities
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 23/33
EE/RES credit lines
Raiffeisen Bank d.d. Bosna i Hercegovina (via EBRD)
NLB Razvojna a.d. Banja Luka (FiM GGF)
Biomass business development potential in BiH
Co-financing opportunities
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 24/33
CDM projects (emission trading)
Kyoto protocol financing mechanism
Developed
countries
BiH
(transition
country) Investing in projects
CER
Biomass business development potential in BiH
Co-financing opportunities
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 25/33
CDM projects (emission trading)
BiH is a non-Annex 1 country
No obligations for emission reduction
DNA in BiH (since december 2010.)
1 tCO2 = 1 CER (grid emission factor of BiH 0,70 tCO2/MWh -
conservative)
Biomass business development potential in BiH
CDM projects (emission trading)
- CO2
- 40 GWh/godišnje
- EF = 0.7 t CO2/MWh
- sedmogodišnji ugovor
n CER = n MWh * EF t CO2/MWh n CER = 40,000 MWh * 0.7 t CO2/MWh
28,000 t CO2/a
1 CER = 3,55 €
= 28,000 CER/a
Co-financing opportunities
Biomass business development potential in BiH
CDM projects (emission trading)
• Market volatility
• 20 €/CER (2008.)
• 12€/CER (midd2011.)
• 3,55 €/CER (25.05.2012.)
Biomass business development potential in BiH
Co-financing opportunities
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 28/33
Other possibilities
EBRD TAM-BAS (private company, 51% domestic ownership)
Development Bank of FBiH and RS (4% interest rate, 1 year grace period)
International development organisations and institutions
Biomass business development potential in BiH
Association „Biomass in Bosnia and Herzegovina“
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 29/33
Supported by UNDP GEF in BiH
22 founders of which 18 legal entities
State level
Members:
Equipment producers, energy carrier producers, ESCO companies, consulting
companies, Thermal energy and electricity producers, project developers,
private persons
Biomass business development potential in BiH
Association „Biomass in Bosnia and Herzegovina“
“Pouke za prelazak na privredu s manjom emisijom ugljika,, Sarajevo – Hotel Europa 30/33
Contact information:
Udruzenje Biomasa u BiH
Vilsonovo setaliste 9.
71000 Sarajevo
Bosnia and Herzegovina
Association Secretary - Mrs. Dragana Ristić
00387 33 613 193
www.biomass-association.ba
Biomass business development potential in BiH
CONCLUSION
31/33
BiH‘s legal framework/system
Tax exemptions
Biomass feed-in-tariffs
Co-financing opportunities (credit lines, CDM, TAM BAS programme...)
Association „Biomass in Bosnia and Herzegovina“
Biomass business development potential in BiH
THANK YOU FOR YOUR ATTENTION! mr. Sanjin Avdić, dipl.ing.maš, MBA
Voditelj odjela energije/ Head of energy department
CETEOR d.o.o. Sarajevo TEL: +387 33 563 587
MOB: +387 62 558 598 [email protected]
www.ceteor.ba
Biomass business development potential in BiH
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