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CONTENTS
Introduction .................................................................................................................................. 4
Starting a business ..................................................................................................................... 17
Dealing with construction permits ........................................................................................... 26
Getting electricity ....................................................................................................................... 40
Registering property .................................................................................................................. 49
Getting credit .............................................................................................................................. 60
Protecting minority investors ................................................................................................... 66
Paying taxes ................................................................................................................................ 73
Trading across borders .............................................................................................................. 80
Enforcing contracts .................................................................................................................... 86
Resolving insolvency .................................................................................................................. 93
Labor market regulation ......................................................................................................... 101
Distance to frontier and ease of doing business ranking .................................................... 107
Resources on the Doing Business website ............................................................................ 110
Doing Business 2017 Bosnia and Herzegovina 4
INTRODUCTION
Doing Business sheds light on how easy or difficult it is comparison, it also provides data for other selected
for a local entrepreneur to open and run a small to economies (comparator economies) for each indicator.
medium-size business when complying with relevant The data in this report are current as of June 1, 2016
regulations. It measures and tracks changes in (except for the paying taxes indicators, which cover the
regulations affecting 11 areas in the life cycle of a period January–December 2015).
business: starting a business, dealing with construction
The Doing Business methodology has limitations. Other
permits, getting electricity, registering property, getting
areas important to business—such as an economy’s
credit, protecting minority investors, paying taxes,
proximity to large markets, the quality of its
trading across borders, enforcing contracts, resolving
infrastructure services (other than those related to
insolvency and labor market regulation. Doing Business
trading across borders and getting electricity), the
2017 presents the data for the labor market regulation
security of property from theft and looting, the
indicators in an annex. The report does not present
transparency of government procurement,
rankings of economies on labor market regulation
macroeconomic conditions or the underlying strength of
indicators or include the topic in the aggregate distance
institutions—are not directly studied by Doing Business.
to frontier score or ranking on the ease of doing
The indicators refer to a specific type of business,
business.
generally a local limited liability company operating in
In a series of annual reports Doing Business presents the largest business city. Because standard assumptions
quantitative indicators on business regulations and the are used in the data collection, comparisons and
protection of property rights that can be compared benchmarks are valid across economies. The data not
across 190 economies, from Afghanistan to Zimbabwe, only highlight the extent of obstacles to doing business;
over time. The data set covers 48 economies in Sub- they also help identify the source of those obstacles,
Saharan Africa, 32 in Latin America and the Caribbean, 25 supporting policy makers in designing regulatory reform.
in East Asia and the Pacific, 25 in Eastern Europe and
More information is available in the full report. Doing
Central Asia, 20 in the Middle East and North Africa and
Business 2017 presents the indicators, analyzes their
8 in South Asia, as well as 32 OECD high-income
relationship with economic outcomes and presents
economies. The indicators are used to analyze economic
business regulatory reforms. The data, along with
outcomes and identify what reforms have worked, where
information on ordering Doing Business 2017, are
and why.
available on the Doing Business website at
This economy profile presents the Doing Business http://www.doingbusiness.org.
indicators for Bosnia and Herzegovina. To allow useful
Doing Business 2017 Bosnia and Herzegovina 5
As part of a three-year update in methodology, Doing having equal evidentiary weight of women’s testimony in
Business 2017 expands further by adding postfiling court.
processes to the paying taxes indicator, including a
Also for the first time this year Doing Business collects
gender component in three of the indicators and
data on Somalia, bringing the total number of
developing a new pilot indicator on selling to the
economies covered to 190.
government. Also, for the first time this year Doing
Business collects data on Somalia, bringing the total
For more details on the changes, see the “”Old and new
number of economies covered to 190.
factors covered in Doing Business” section in the
The paying taxes indicator is expanded this year to Overview chapter starting on page 1 of the Doing
include postfiling processes – those processes that occur Business 2017 report. For more details on the data and
after a firm complies with its regular tax obligations. methodology, please see the “Data Notes” chapter
These include tax refunds, tax audits and tax appeals. In starting on page 114 of the Doing Business 2017 report.
particular, Doing Business measures the time it takes to For more details on the distance to frontier metric,
get a value added tax (VAT) refund, deal with a simple please see the “Distance to frontier and ease of doing
mistake on a corporate tax return that can potentially business ranking” chapter in this profile.
trigger an audit and good practices with administrative
appeals process.
This year’s Doing Business report presents a gender
dimension in four of the indicator sets: starting a
business, registering property, enforcing contracts and
labor market regulation. Three of these areas are
included in the distance to frontier score and in the ease
of doing business ranking, while the fourth—labor
market regulation—is not.
Doing Business has traditionally assumed that the
entrepreneurs or workers discussed in the case studies
were men. This was incomplete by not reflecting
correctly the Doing Business processes as applied to
women—which in some economies may be different
from the processes applied to men. Starting this year,
Doing Business measures the starting a business process
for two case scenarios: one where all entrepreneurs are
men and one where all entrepreneurs are women. In
economies where the processes are more onerous if the
entrepreneur is a woman, Doing Business now counts the
extra procedures applied to roughly half of the
population that is female (for example, obtaining a
husband’s consent or gender-specific requirements for
opening a personal bank account when starting a
business). Within the registering property indicators, a
gender component has been added to the quality of
land administration index. This component measures
women’s ability to use, own, and transfer property
according to the law. Finally, within the enforcing
contracts indicator set, economies will be scored on
Doing Business 2017 Bosnia and Herzegovina 6
Figure 1.2 How Bosnia and Herzegovina and comparator economies rank on the ease of doing business
Note: The rankings are benchmarked to June 2016 and based on the average of each economy’s distance to frontier (DTF) scores
for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to
regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s
distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier.
For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities.
Source: Doing Business database.
Doing Business 2017 Bosnia and Herzegovina 9
Figure 1.4 Distance to frontier scores on Doing Business topics - Bosnia and Herzegovina
(Scale: Score 0 center, Score 100 outer edge)
Figure 1.5 How far has Bosnia and Herzegovina come in the areas measured by Doing Business?
Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on
each Doing Business indicator. Getting credit, protecting minority investors and resolving insolvency had methodology changes in 2014
and thus are only comparable to 2013. Dealing with construction permits, getting electricity and trading across borders had
methodology changes in 2015 and thus are only comparable to 2014. Starting a business, registering property, paying taxes and
enforcing contracts had methodology changes in 2016 and thus are only comparable to 2015. The measure is normalized to range
between 0 and 100, with 100 representing the best performance (the frontier). See the data notes starting on page 114 of the Doing
Business 2017 report for more details on the distance to frontier score. Source: Doing Business database.
Doing Business 2017 Bosnia and Herzegovina 11
Table 1.1 Summary of Doing Business indicators for Bosnia and Herzegovina
Bosnia and Herzegovina
Montenegro DB2017
Albania DB2017
Kosovo DB2017
Croatia DB2017
Greece DB2017
Indicator
DB2017
DB2016
DB2017
Starting a Business
174 175 46 95 81 56 13 58 1 (New Zealand)
(Rank)
Procedure – Men
12.0 12.0 5.0 8.0 8.0 5.0 3.0 6.0 1.0 (New Zealand)
(number)
Time – Men (days) 65.0 67.0 5.0 7.0 9.0 13.0 6.0 10.0 0.5 (New Zealand)
Cost – Men (% of
13.5 14.1 10.1 7.3 5.7 2.2 1.1 1.5 0.0 (Slovenia)
income per capita)
Procedure – Women
12.0 12.0 5.0 8.0 8.0 5.0 3.0 6.0 1.0 (New Zealand)
(number)
Time – Women (days) 65.0 67.0 5.0 7.0 9.0 13.0 6.0 10.0 0.5 (New Zealand)
Cost – Women (% of
13.5 14.1 10.1 7.3 5.7 2.2 1.1 1.5 0.0 (Slovenia)
income per capita)
Dealing with 170 168 106 128 130 58 129 93 1 (New Zealand)
Construction Permits
Doing Business 2017 Bosnia and Herzegovina 12
Montenegro DB2017
Albania DB2017
Kosovo DB2017
Croatia DB2017
Greece DB2017
Indicator
DB2017
DB2016
DB2017
(Rank)
Dealing with
Construction Permits 52.54 51.54 67.61 63.41 62.76 73.63 63.31 68.82 87.40 (New Zealand)
(DTF Score)
Procedures (number) 15.0 15.0 16.0 19.0 21.0 17.0 15.0 8.0 7.0 (4 Economies*)
Time (days) 179.0 179.0 220.0 127.0 247.0 124.0 152.0 152.0 28.0 (Korea, Rep.)
Getting Electricity
123 120 156 68 13 52 114 167 1 (Korea, Rep.)
(Rank)
Procedures (number) 8.0 8.0 6.0 5.0 4.0 6.0 7.0 7.0 3.0 (15 Economies*)
Time (days) 125.0 125.0 134.0 65.0 68.0 51.0 36.0 142.0 18.0 (Korea, Rep.*)
Registering Property
99 97 106 62 31 141 33 78 1 (New Zealand)
(Rank)
Registering Property
61.54 61.52 58.77 69.77 79.68 49.67 78.11 65.82 94.46 (New Zealand)
(DTF Score)
Procedures (number) 7.0 7.0 6.0 5.0 4.0 10.0 6.0 6.0 1.0 (4 Economies*)
Doing Business 2017 Bosnia and Herzegovina 13
Montenegro DB2017
Albania DB2017
Kosovo DB2017
Croatia DB2017
Greece DB2017
Indicator
DB2017
DB2016
DB2017
Time (days) 24.0 24.0 19.0 62.0 28.0 20.0 27.0 69.0 1.0 (3 Economies*)
Cost (% of property
5.2 5.2 9.9 5.0 4.0 4.8 0.3 3.1 0.0 (Saudi Arabia)
value)
Depth of credit
6.0 6.0 6.0 6.0 7.0 7.0 6.0 5.0 8.0 (30 Economies*)
information index (0-8)
Protecting Minority
81 78 19 27 53 42 63 42 1 (New Zealand*)
Investors (Rank)
Protecting Minority
55.00 55.00 71.67 66.67 60.00 63.33 58.33 63.33 83.33 (New Zealand*)
Investors (DTF Score)
Strength of minority
investor protection 5.5 5.5 7.2 6.7 6.0 6.3 5.8 6.3 8.3 (New Zealand*)
index (0-10)
Extent of conflict of
interest regulation 4.7 4.7 7.7 5.7 5.3 5.3 5.3 6.3 9.3 (New Zealand*)
index (0-10)
Extent of shareholder 6.3 6.3 6.7 7.7 6.7 7.3 6.3 6.3 8.3 (Norway)
governance index (0-
Doing Business 2017 Bosnia and Herzegovina 14
Montenegro DB2017
Albania DB2017
Kosovo DB2017
Croatia DB2017
Greece DB2017
Indicator
DB2017
DB2016
DB2017
10)
1 (United Arab
Paying Taxes (Rank) 133 151 97 49 53 64 43 57
Emirates)
Time (hours per year) 411.0 420.0 261.0 206.0 234.0 193.0 155.0 300.0 55.0 (Luxembourg)
Postfiling index (0-100) 47.9 47.9 83.0 97.9 94.3 79.3 61.0 85.5 98.5 (Estonia)
Time to export:
Documentary 4 4 6 1 1 1 38 5 1 (25 Economies*)
compliance (hours)
Cost to export:
Documentary 92 92 10 0 0 30 127 67 0 (19 Economies*)
compliance (USD)
Montenegro DB2017
Albania DB2017
Kosovo DB2017
Croatia DB2017
Greece DB2017
Indicator
DB2017
DB2016
DB2017
Cost to import: Border
109 109 77 0 0 0 83 306 0 (28 Economies*)
compliance (USD)
Time to import:
Documentary 8 8 8 1 1 1 6 10 1 (29 Economies*)
compliance (hours)
Cost to import:
Documentary 97 97 10 0 0 0 42 100 0 (30 Economies*)
compliance (USD)
Enforcing Contracts
64 63 116 7 68 133 44 41 1 (Korea, Rep.)
(Rank)
Enforcing Contracts
60.60 60.60 53.66 75.87 60.36 50.19 65.66 66.75 84.15 (Korea, Rep.)
(DTF Score)
Time (days) 595.0 595.0 525.0 572.0 611.0 1580.0 330.0 545.0 164.0 (Singapore)
Cost (% of claim) 36.0 36.0 34.9 16.7 33.0 14.4 34.4 25.7 9.0 (Iceland)
Quality of judicial
11.0 11.0 6.0 15.0 10.5 12.0 9.5 11.5 15.5 (Australia)
processes index (0-18)
Resolving Insolvency
41 40 43 54 26 52 163 40 1 (Finland)
(Rank)
Resolving Insolvency
66.93 66.42 64.96 55.62 76.42 56.66 20.88 68.37 93.89 (Finland)
(DTF Score)
Time (years) 3.3 3.3 2.0 3.1 2.1 3.5 2.0 1.4 0.4 (22 Economies*)
Cost (% of estate) 9.0 9.0 10.0 14.5 17.0 9.0 15.0 8.0 1.0 (22 Economies*)
Strength of insolvency
15.0 15.0 13.5 12.0 13.0 12.0 0.0 13.5 15.0 (6 Economies*)
framework index (0-16)
time recorded among all economies in the DB2017 sample that levy the 3 major taxes: profit tax, labor taxes and mandatory
contributions, and VAT or sales tax. If an economy has no laws or regulations covering a specific area—for example, insolvency—it
receives a “no practice” mark. Similarly, an economy receives a “no practice” mark if regulation exists but is never used in practice or if a
competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the
relevant indicator. * Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name
indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business
website (http://www.doingbusiness.org).
Doing Business 2017 Bosnia and Herzegovina 17
STARTING A BUSINESS
Formal registration of companies has many WHAT THE STARTING A BUSINESS
immediate benefits for the companies and for
business owners and employees. Legal entities can INDICATORS MEASURE
outlive their founders. Resources are pooled as
several shareholders join forces to start a company. Procedures to legally start and operate a
Formally registered companies have access to company (number)
services and institutions from courts to banks as well
Preregistration (for example, name
as to new markets. And their employees can benefit
verification or reservation, notarization)
from protections provided by the law. An additional
benefit comes with limited liability companies. These Registration in the economy’s largest
limit the financial liability of company owners to their business city
1
Is 100% domestically owned and has five owners, Does not qualify for investment incentives or
none of whom is a legal entity. any special benefits.
Has start-up capital of 10 times income per Has at least 10 and up to 50 employees one
capita month after the commencement of
operations, all of them domestic nationals.
Performs general industrial or commercial
activities, such as the production or sale to the Has a turnover of at least 100 times income per
public of products or services. The business does capita.
not perform foreign trade activities and does not Has a company deed 10 pages long
handle products subject to a special tax regime,
for example, liquor or tobacco. It is not using The owners:
heavily polluting production processes. Have reached the legal age of majority and are
Leases the commercial plant or offices and is not capable of making decisions as an adult. If
a proprietor of real estate. there is no legal age of majority, they are
assumed to be 30 years old.
The amount of the annual lease for the office
space is equivalent to 1 times income per capita. Are sane, competent, in good health and have
no criminal record.
Are married, the marriage is monogamous and
registered with the authorities.
Where the answer differs according to the legal
system applicable to the woman or man in
question (as may be the case in economies
where there is legal plurality), the answer used
will be the one that applies to the majority of
the population.
Doing Business 2017 Bosnia and Herzegovina 19
STARTING A BUSINESS
Where does the economy stand today?
What does it take to start a business in Bosnia and both men and women. Most indicator sets refer to a case
Herzegovina? According to data collected by Doing scenario in the largest business city of an economy,
Business, starting a business there requires 12.0 except for 11 economies for which the data are a
procedures , takes 65.0 days, costs 13.5% of income per population-weighted average of the 2 largest business
capita for men, and requires 12.0 procedures , takes 65.0 cities. See the chapter on distance to frontier and ease of
days, costs 13.5% of income per capita for women. A doing business ranking at the end of this profile for more
requirement of paid-in minimum capital of 13.4% of details.
income per capita (figure 2.1) is legally mandatory for
STARTING A BUSINESS
Globally, Bosnia and Herzegovina stands at 174 in the other useful information for assessing how easy it is for
ranking of 190 economies on the ease of starting a an entrepreneur in Bosnia and Herzegovina to start a
business (figure 2.2). The rankings for comparator business.
economies and the regional average ranking provide
Figure 2.2 How Bosnia and Herzegovina and comparator economies rank on the ease of
starting a business
STARTING A BUSINESS
Economies around the world have taken steps making it they often are part of a larger regulatory reform
easier to start a business—streamlining procedures by program. Among the benefits have been greater firm
setting up a one-stop shop, making procedures simpler satisfaction and savings and more registered businesses,
or faster by introducing technology and reducing or financial resources and job opportunities.
eliminating minimum capital requirements. Many have
What business registration reforms has Doing Business
undertaken business registration reforms in stages—and
recorded in Bosnia and Herzegovina (table 2.1)?
Table 2.1 How has Bosnia and Herzegovina made starting a business easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
STARTING A BUSINESS
What are the details?
Underlying the indicators shown in this chapter for
STANDARDIZED COMPANY
Bosnia and Herzegovina is a set of specific
procedures—the bureaucratic and legal steps that an
entrepreneur must complete to incorporate and Legal form: Limited Liability Company
register a new firm. These are identified by Doing
Business through collaboration with relevant local Paid-in minimum capital requirement: BAM
professionals and the study of laws, regulations and 1,000
publicly available information on business entry in City: Sarajevo
that economy. Following is a detailed summary of
those procedures, along with the associated time and Start-up Capital: 10 times GNI per capita
cost. These procedures are those that apply to a
company matching the standard assumptions (the
“standardized company”) used by Doing Business in
collecting the data (see the section in this chapter on
what the indicators measure).
Table 2.2 Summary of time, cost and procedures for starting a business in Bosnia and Herzegovina
Time to
No. Procedure Cost to complete
complete
Stipulate a founding act and have it notarized by a notary
Time to
No. Procedure Cost to complete
complete
Obtain a statement from commercial bank that full amount of the
capital has been paid in; pay the registration fee to the budget
account of the cantonal court
Time to
No. Procedure Cost to complete
complete
Obtain the Certificate of the business premises
The Company founder goes to the municipality, fills out a request form
and attaches all required documents (proof of company's court
registration, statement confirming that all business premises fulfill 10 days BAM 10
6
conditions mandated by the law, and notification about the date when
the company will start with operations) and the proof of payment of the
administrative fee. Then, the time necessary to obtain the resolution on
intended activities takes about 10 days.
Agency: Municipalities
Time to
No. Procedure Cost to complete
complete
respective court and tax administration initiate tax registration by
mutual official correspondence and legal entities are only obliged to
submit required documents (copy of court registry, 2 copies of
application form including company's stamp, and copies of ID cards)
after the court registration is completed. This Rulebook does not
require submission of following documents (as previously requested: 1)
contract on the lease of the business premises and 2) resolution of the
competent municipality on the intended activities.
VAT registration
Per article 57 of the Bosnia and Herzegovina Law on Value Added Tax,
VAT registration is obligatory for companies with the annual profit over
BAM 50.000. It is necessary to submit the Request for registration into
the competent VAT registry. The request is accompanied by the
following documents:
It is also necessary to pay the following taxes: Tax on the request for
VAT registration in the amount of BAM 10; tax for issuing the Decision
on registration in the VAT register in the amount of BAM 10; tax for
issuing the Certificate on registration in the VAT register in the amount
of BAM 20.
Doing Business 2017 Bosnia and Herzegovina 26
Time to
No. Procedure Cost to complete
complete
Agency: Indirect Taxation Authority
Doing Business records all procedures required for a Obtaining utility connections for water and
business in the construction industry to build a sewerage
warehouse along with the time and cost to complete Registering and selling the warehouse after its
each procedure. In addition, the building quality completion
control index evaluates the quality of building
Time required to complete each procedure
regulations, the strength of quality control and safety
(calendar days)
mechanisms, liability and insurance regimes, and
professional certification requirements. Does not include time spent gathering
information
The ranking of economies on the ease of dealing with
construction permits is determined by sorting their Each procedure starts on a separate day—
though procedures that can be fully
distance to frontier scores for dealing with
completed online are an exception to this rule
construction permits. These scores are the simple
average of the distance to frontier scores for each of Procedure considered completed once final
the component indicators. document is received
To make the data comparable across economies, No prior contact with officials
several assumptions about the construction Cost required to complete each procedure (%
company, the warehouse project and the utility of warehouse value)
connections are used.
Official costs only, no bribes
Assumptions about the construction company
Building quality control index (0-15)
The construction company (BuildCo):
Sum of the scores of six component indices:
Is a limited liability company (or its legal
Quality of building regulations (0-2)
equivalent).
Quality control before construction (0-1)
Operates in the economy’s largest business city.
For 11 economies the data are also collected for Quality control during construction (0-3)
the second largest business city. Quality control after construction (0-3)
Is 100% domestically and privately owned. Liability and insurance regimes (0-2)
Has five owners, none of whom is a legal entity. Professional certifications (0-4)
Is fully licensed and insured to carry out
construction projects, such as building
warehouses.
Has 60 builders and other employees, all of them
nationals with the technical expertise and
Doing Business 2017 Bosnia and Herzegovina 28
Figure 3.1 What it takes to comply with formalities to build a warehouse in Bosnia and Herzegovina
Figure 3.2 How Bosnia and Herzegovina and comparator economies rank on the ease of dealing with construction
permits
Table 3.1 How has Bosnia and Herzegovina made dealing with construction permits easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
Time to
No. Procedure Cost to complete
complete
proposal or program sketch)
• General schemes for power installations, heating installations,
fire prevention and security systems, water supply and sewage
systems
• Excerpt from the cadastre plan, showing right to build and
ownership of plot (not older than 6 months)
• Excerpt from the land registry book, showing proper
registration
• Environmental consent, if requested
• Other data, if requested
• For insurance purposes, consent for fire and explosion
protection, issued by a competent company
• Consent for the heating installations, issued by a competent
company
Time to
No. Procedure Cost to complete
complete
Municipality.
Once the fees are paid, the company must submit a request to
the Urban Planning Department with the following documents:
• Valid urban planning consent
• Cadastre excerpt: land plot and proof of right to build
• Proof of payment for purchase of the construction land
• Proof of rent payments for the paid rent compensation
• Consents obtained during the issuing of the urban planning
permit
8 • Consent for stated building; any other enclosures as requested 30 days no charge
by the authorities
• Verified development project (two copies) and consents for the
project documentations (Project Books 1 and 2, including the
preliminary verifications applied for in Procedures 4 to 7)
The request for marking out the land plot must be submitted to
the Municipality's Urban Planning Department with the
construction permit and the urban planning consent. The
municipal authorities mark out the land plot. The request fee 7 days BAM 15
9
depends on the annual municipal pricing decisions and on the
on-site assessment. An average price is BAM 15.00.
Once the marking out of the land plot is complete, BuildCo must
10 notify the Municipality's Urban Planning Department of the start 1 day no charge
of construction no later than 8 days before work begins.
Agency: Municipality
Doing Business 2017 Bosnia and Herzegovina 35
Time to
No. Procedure Cost to complete
complete
After the technical review of completed construction, BuildCo 30 days BAM 7,804
13
must submit a request for the occupancy permit and include the
following documents:
• Building permit (copy)
Doing Business 2017 Bosnia and Herzegovina 36
Time to
No. Procedure Cost to complete
complete
• Cadastre plan (copy), including an exact plan of the marked
final building position
• Written statements from each contractor, stating the work has
been properly performed according to the project design and
future maintenance plans
• A written report (by the construction supervisor) that all
materials were of standard quality (certified as such by the
suppliers)
Time to
No. Procedure Cost to complete
complete
The building quality control index is the sum of the The index ranges from 0 to 15, with higher values
scores on the quality of building regulations, quality indicating better quality control and safety mechanisms in
control before construction, quality control during the construction permitting system.
construction, quality control after construction,
The indicator is based on the same case study
liability and insurance regimes, and professional
assumptions as the measures of efficiency.
certifications indices.
Table 3.3 Summary of quality control and safety mechanisms in Bosnia and Herzegovina
Answer Score
Building quality control index (0-15) 13.0
List of required
Which requirements for obtaining a building permit are clearly
documents; Fees to be
specified in the building regulations or on any accessible website, 1.0
paid; Required
brochure or pamphlet? (0-1)
preapprovals.
What types of inspections (if any) are required by law to be Inspections by in-house
1.0
carried out during construction? (0-2) engineer.
Mandatory inspections
Do legally mandated inspections occur in practice during
are always done in 1.0
construction? (0-1)
practice.
Which parties (if any) are held liable by law for structural flaws or
Architect or engineer;
problems in the building once it is in use (Latent Defect Liability 1.0
Construction company.
or Decennial Liability)? (0-1)
Doing Business 2017 Bosnia and Herzegovina 39
Answer Score
Which parties (if any) are required by law to obtain an insurance
No party is required by
policy to cover possible structural flaws or problems in the
law to obtain insurance 0.0
building once it is in use (Latent Defect Liability Insurance or
.
Decennial Insurance)? (0-1)
Minimum number of
years of experience;
What are the qualification requirements for the professional
University degree in
responsible for verifying that the architectural plans or drawings 2.0
architecture or
are in compliance with existing building regulations? (0-2)
engineering; Passing a
certification exam.
Minimum number of
years of experience;
University degree in
What are the qualification requirements for the professional who engineering,
2.0
supervises the construction on the ground? (0-2) construction or
construction
management; Passing a
certification exam.
Source: Doing Business database.
Doing Business 2017 Bosnia and Herzegovina 40
GETTING ELECTRICITY
Access to reliable and affordable electricity is vital for WHAT THE GETTING ELECTRICITY
businesses. To counter weak electricity supply, many
firms in developing economies have to rely on self- INDICATORS MEASURE
supply, often at a prohibitively high cost. Whether
electricity is reliably available or not, the first step for Procedures to obtain an electricity connection
a customer is always to gain access by obtaining a (number)
connection.
Submitting all relevant documents and
What do the indicators cover? obtaining all necessary clearances and permits
Doing Business records all procedures required for a Completing all required notifications and
local business to obtain a permanent electricity receiving all necessary inspections
connection and supply for a standardized warehouse, Obtaining external installation works and
as well as the time and cost to complete them. These possibly purchasing material for these works
procedures include applications and contracts with
Concluding any necessary supply contract and
electricity utilities, clearances from other agencies
obtaining final supply
and the external and final connection works. In
addition, Doing Business also measures the reliability Time required to complete each procedure
of supply and transparency of tariffs index (included (calendar days)
in the aggregate distance to frontier score and Is at least 1 calendar day
ranking on the ease of doing business) and the price
Each procedure starts on a separate day
of electricity (omitted from these aggregate
measures). The ranking of economies on the ease of Does not include time spent gathering
getting electricity is determined by sorting their information
distance to frontier scores for getting electricity. Reflects the time spent in practice, with little
These scores are the simple average of the distance follow-up and no prior contact with officials
to frontier scores for each of the component Cost required to complete each procedure (%
indicators. To make the data comparable across of income per capita)
economies, several assumptions are used.
Official costs only, no bribes
Assumptions about the warehouse
Excludes value added tax
The warehouse: The reliability of supply and transparency of
Is owned by a local entrepreneur. tariffs index
Is located in the economy’s largest business city. Sum of the scores of six component indices:
For 11 economies the data are also collected for Duration and frequency of outages
the second largest business city.
Tools to monitor power outages
Is located in an area where similar warehouses Tools to restore power supply
are typically located. In this area a new electricity
connection is not eligible for a special investment Regulatory monitoring of utilities’ performance
promotion regime (offering special subsidization Financial deterrents aimed at limiting outages
or faster service, for example).
Transparency and accessibility of tariffs
Is located in an area with no physical constraints.
Price of electricity (cents per kilowatt-hour)*
For example, the property is not near a railway.
Price based on monthly bill for commercial
Is a new construction and is being connected to warehouse in case study
electricity for the first time.
*Price of electricity is not included in the
calculation of distance to frontier nor ease of
doing business ranking
Doing Business 2017 Bosnia and Herzegovina 41
GETTING ELECTRICITY
Where does the economy stand today?
What does it take to obtain a new electricity connection Most indicator sets refer to a case scenario in the largest
in Bosnia and Herzegovina? According to data collected business city of an economy, except for 11 economies for
by Doing Business, getting electricity there requires 8.0 which the data are a population-weighted average of the
procedures, takes 125.0 days and costs 400.2% of 2 largest business cities. See the chapter on distance to
income per capita (figure 4.1). frontier and ease of doing business ranking at the end of
this profile for more details.
Figure 4.1 What it takes to obtain an electricity connection in Bosnia and Herzegovina
GETTING ELECTRICITY
Globally, Bosnia and Herzegovina stands at 123 in the another perspective in assessing how easy it is for an
ranking of 190 economies on the ease of getting entrepreneur in Bosnia and Herzegovina to connect a
electricity (figure 4.2). The rankings for comparator warehouse to electricity.
economies and the regional average ranking provide
Figure 4.2 How Bosnia and Herzegovina and comparator economies rank on the ease of getting electricity
GETTING ELECTRICITY
What are the details?
The indicators reported here for Bosnia and Herzegovina
OBTAINING AN ELECTRICITY CONNECTION*
are based on a set of specific procedures—the steps that
an entrepreneur must complete to get a warehouse
connected to electricity by the local distribution utility— Name of utility: JP Elektroprivreda BiH
identified by Doing Business. Data are collected from the
distribution utility, then completed and verified by
Price of electricity
electricity regulatory agencies and independent (US cents per kWh): 11.8
professionals such as electrical engineers, electrical
contractors and construction companies. The electricity
City: Sarajevo
distribution utility surveyed is the one serving the area
(or areas) in which warehouses are located. If there is a *Price is calculated as a monthly consumption of 26,880 kWh
choice of distribution utilities, the one serving the largest for business customers, based on a standardized case study
number of customers is selected. adopted by the getting electricity methodology. Doing Business
measures the price of electricity but does not include these
The procedures are those that apply to a warehouse and data when calculating the distance to frontier score for getting
electricity connection matching the standard electricity or the ranking on the ease of getting electricity.
assumptions used by Doing Business in collecting the
data (see the section in this chapter on what the
indicators cover). The procedures, along with the
associated time and cost, are summarized below.
Table 4.2 Summary of time, cost and procedures for getting electricity in Bosnia and Herzegovina
Time to
No. Procedure Cost to complete
complete
Obtain initial electric power permit from Elektroprivreda BiH
The customer has to go to the utility and request the issuance of initial
electric power permit which are basic technical conditions to check if the
requested capacity is available and if there is a possible collision with
1 existing users. Documents required are: cadastre extract, urban planning 30 calendar days BAM 30
consent in certified copies and a rough design.
Time to
No. Procedure Cost to complete
complete
Receive external site inspection by Elektroprivreda BiH
The utility is planning and executing the external connection works. Once
the works are completed, the utility will energize the connection and
install the meter. The utility needs to request an excavation permit from 31 calendar days BAM 27,300
5
the municipality to execute the external works.
Time to
No. Procedure Cost to complete
complete
surveying works produced by the private land surveying company. The
customer should be present during this visit.
Agency: Municipality
Once the works are completed and after the site visit of the commission
of the municipality, an authorized person from the utility will come and
energize the connection. At the same time, the meter installed by the
8 private electrical contractor hired by the utility, will also be inspected and 3 calendar days BAM 0
sealed.
GETTING ELECTRICITY
Reliability of supply and transparency of tariffs index
The reliability of supply and transparency of tariffs Doing Business uses the system average interruption
index encompasses quantitative data on the duration duration index (SAIDI) and the system average
and frequency of power outages as well as interruption frequency index (SAIFI) to measure the
qualitative information on the mechanisms put in duration and frequency of power outages in the largest
place by the utility for monitoring power outages business city of each economy (for 11 economies the data
and restoring power supply, the reporting are also collected for the second largest business city).
relationship between the utility and the regulator for SAIDI is the average total duration of outages over the
power outages, the transparency and accessibility of course of a year for each customer served, while SAIFI is
tariffs and whether the utility faces a financial the average number of service interruptions experienced
deterrent aimed at limiting outages (such as a by a customer in a year. Annual data (covering the
requirement to compensate customers or pay fines calendar year) are collected from distribution utility
when outages exceed a certain cap). companies and national regulators on SAIDI and SAIFI.
Both SAIDI and SAIFI estimates include load shedding.
The index ranges from 0 to 8, with higher values
indicating greater reliability of electricity supply and
greater transparency of tariffs.
Table 4.3 Reliability of Supply and Transparency of Tariff Index in Bosnia and Herzegovina
Answer Score
Reliability of supply and transparency of tariff index (0-8) 6.0
Total duration and frequency of outages per customer a year (0-3) 2.0
Does the distribution utility use automated tools to monitor outages? Yes
Does the distribution utility use automated tools to restore service? Yes
Answer Score
oprivreda.ba/eng
/page/calculator
Are customers notified of a change in tariff ahead of the billing cycle? Yes
Answer
Price of electricity (US cents per kWh) 11.8
REGISTERING PROPERTY
Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY
Effective administration of land is part of that. If
INDICATORS MEASURE
formal property transfer is too costly or
complicated, formal titles might go informal again.
And where property is informal or poorly Procedures to legally transfer title on
administered, it has little chance of being accepted immovable property (number)
as collateral for loans—limiting access to finance. Preregistration (for example, checking for liens,
notarizing sales agreement, paying property
What do the indicators cover?
transfer taxes)
Doing Business records the full sequence of Registration in the economy’s largest business
procedures necessary for a business to purchase city
property from another business and transfer the
property title to the buyer’s name. The transaction is Postregistration (for example, filing title with
the municipality)
considered complete when it is opposable to third
parties and when the buyer can use the property, Time required to complete each procedure
use it as collateral for a bank loan or resell it. In (calendar days)
addition, Doing Business also measures quality of
Does not include time spent gathering
the land administration system in each economy. information
The ranking of economies on the ease of registering
property is determined by sorting their distance to Each procedure starts on a separate day—
frontier scores for registering property. These scores though procedures that can be fully completed
online are an exception to this rule
are the simple average of the distance to frontier
scores for each of the component indicators. To Procedure considered completed once final
make the data comparable across economies, document is received
several assumptions about the parties to the No prior contact with officials
transaction, the property and the procedures are
used. Cost required to complete each procedure
(% of property value)
The parties (buyer and seller):
Official costs only, no bribes
Are limited liability companies, 100%
domestically and privately owned and perform No value added or capital gains taxes included
general commercial activities in the economy’s Quality of land administration index (0-30)
largest business city.
Have 50 employees each, all of whom are
Has no mortgages attached, has been under the
nationals.
same ownership for the past 10 years.
The property (fully owned by the seller):
Consists of 557.4 square meters (6,000 square feet)
Has a value of 50 times income per capita. The of land and a 10-year-old, 2-story warehouse of 929
sale price equals the value and entire property square meters (10,000 square feet). The warehouse is
will be transferred. in good condition and complies with all safety
Is registered in the land registry or cadastre, or standards, building codes and legal requirements.
both, and is free of title disputes. There is no heating system.
REGISTERING PROPERTY
Where does the economy stand today?
What does it take to complete a property transfer in Most indicator sets refer to a case scenario in the largest
Bosnia and Herzegovina? According to data collected by business city of an economy, except for 11 economies for
Doing Business, registering property there requires 7.0 which the data are a population-weighted average of the
procedures, takes 24.0 days and costs 5.2% of the 2 largest business cities. See the chapter on distance to
property value (figure 5.1). The score on the quality of frontier and ease of doing business ranking at the end of
land administration index is 12.5 this profile for more details.
REGISTERING PROPERTY
Globally, Bosnia and Herzegovina stands at 99 in the other useful information for assessing how easy it is for
ranking of 190 economies on the ease of registering an entrepreneur in Bosnia and Herzegovina to transfer
property (figure 5.2). The rankings for comparator property.
economies and the regional average ranking provide
Figure 5.2 How Bosnia and Herzegovina and comparator economies rank on the ease of
registering property
REGISTERING PROPERTY
Economies worldwide have been making it easier for the time required substantially—enabling buyers to use
entrepreneurs to register and transfer property—such as or mortgage their property earlier. What property
by computerizing land registries, introducing time limits registration reforms has Doing Business recorded in
for procedures and setting low fixed fees. Many have cut Bosnia and Herzegovina (table 5.1)?
Table 5.1 How has Bosnia and Herzegovina made registering property easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
REGISTERING PROPERTY
What are the details?
The indicators reported here are based on a set of
STANDARD PROPERTY TRANSFER
specific procedures—the steps that a buyer and seller
must complete to transfer the property to the buyer’s
name—identified by Doing Business through
information collected from local property lawyers, Property value: BAM 373,935
notaries and property registries. These procedures
are those that apply to a transaction matching the City: Sarajevo
standard assumptions used by Doing Business in
collecting the data (see the section in this chapter on
what the indicators cover). The procedures, along
with the associated time and cost, are summarized
below.
Table 5.2 Summary of time, cost and procedures for registering property in Bosnia and Herzegovina
Time to
No. Procedure Cost to complete
complete
Obtain the land registry extract as proof of ownership
The seller requests and obtains the land registry excerpt from a
competent court land registry office as the proof of ownership and to
check the property against encumbrances. In practice, the excerpt must 1 day
be obtained by the seller before starting the transaction formally. This (simultaneous BAM 5
1
information need to be obtained in hard copy and be sealed to have
with Procedure 2)
legal validity. The seller may hire a lawyer to perform this task.
Both the seller and the buyer submit the request for obtaining the court
extract certifying the person authorized to act on behalf of each BAM 5 (each
company to the court that keeps the Registry of Commercial Companies. 5 days request) + BAM 10
*2 They may hire a lawyer to perform this task. The parties have to provide (simultaneous per page (Court
the set of registration documents, which prove that the person who will with Procedure 1) Extract, about 4-5
sign on behalf of the company is authorized to do it. pages each)
The law on Notary of the Federal Republic of Bosnia & Herzegovina that
3 passed in 2002 and became applicable in May 2007 prescribes notaries 1 day 500 BAM
as the competent authority in the process of transferring a real estate or
acquiring the ownership rights over the same or other real rights.
According to the law, the purchase agreement of the real estate must be
Doing Business 2017 Bosnia and Herzegovina 54
Time to
No. Procedure Cost to complete
complete
prepared as a notary deed. The cost of the procedure of notarization of
the sale-purchase agreement depends on the value of the real estate at
the time of purchase. Parties provide the notary with the land registry
excerpt (obtained in Procedure 1) and well as with a court excerpt
(obtained in Procedure 2). The presence of both parties is necessary at
the notary's office or verification of the signatures should be based on a
special power of notary. The notary needs to be provided with the
following documents:
(1) The land registry excerpt as well as the copy of the cadastre plan
proving the ownership over the property;
(2) The extract from the company’s court registry certifying the person is
authorized to act on behalf on the company and to sign the purchase
agreement;
(3) The approval of the founder (i.e. the General Assembly or Supervisory
Board if applicable) for selling the property in case that the value of the
property exceeds the amount of 1/3 of the company’s book value.
New Notary Tariff has been passed on July 2013 (and replace previous
one No. 71/07) and the same effected to the decresing of cost of
notarization of sale-purchase agreement
New Tariff of Notary Fees and Compensations has been passed on July
24, 2013 and published in Official Gazzete of FB&H No. 57/13 and the
same in general decresed the notary fees and compensations. Thus, the
notary fee depends on the value of the property and will be calculated as
follows:
Agency: Notary
Parties file the request for the evaluation of the real estate regarding the
4 payment of the tax for the transfer of the ownership on real estates at 1 day no cost
the competent municipal Tax Authority. The deadline for filing the
request is 15 days from the verification of signatures on the sale
agreement. This Procedure can be done by a lawyer or by the buyer
and/or the seller. The documentation shall include a copy of sale
Doing Business 2017 Bosnia and Herzegovina 55
Time to
No. Procedure Cost to complete
complete
contract (obtained after Procedure 3).
Parties submit the application and other documentation for the transfer
of the ownership to the competent court land registry office. The
registration of the transfer of ownership is handled by the authorized
court officer. Time length of the Procedure is not prescribed by the law.
However, the Procedure can last less than indicated above in case the
party sends the urgency letter, especially in case of larger investments,
explaining the grounds for such urgency, which happens often in
practice. Computerization efforts at the Municipal Court in the past years
have significantly sped up the process of registration. Registry is now BAM 30
7 3-9 days
completely computerized and all data on companies are now stored in
electronic form, so issuing of the court extract requires only printing of
already stored data on concrete company. The land registry will forward
information to the Cadastre.
The documentation shall include:
(1) Purchase agreement
(2) Certificate of tax payment
Time to
No. Procedure Cost to complete
complete
REGISTERING PROPERTY
Quality of land administration
The quality of land administration index is the sum of If private sector entities were unable to register property
the scores on the reliability of infrastructure, transfers in an economy between June 2015 and June
transparency of information, geographic coverage, 2016, the economy receives a “no practice” mark on the
land dispute resolution and equal access to property procedures, time and cost indicators. A “no practice”
rights indices. economy receives a score of 0 on the quality of land
administration index even if its legal framework includes
The index ranges from 0 to 30, with higher values
provisions related to land administration.
indicating better quality of the land administration
system.
Table 5.3 Summary of quality of land administration in Bosnia and Herzegovina
Answer Score
Quality of the land administration index (0-30) 12.5
Municipal Court
What is the institution in charge of immovable property registration? Sarajevo-Land
Registry Office
In what format are the majority of title or deed records kept in the
Computer/Scann
largest business city—in a paper format or in a computerized format 1.0
ed
(scanned or fully digital)?
In what format are the majority of maps of land plots kept in the
Computer/Scann
largest business city—in a paper format or in a computerized format 1.0
ed
(scanned or fully digital)?
Who is able to obtain information on land ownership at the agency in Freely accessible
1.0
charge of immovable property registration in the largest business city? by anyone
Is the list of documents that are required to complete any type of Yes, on public
0.5
property transaction made publicly available–and if so, how? boards
Doing Business 2017 Bosnia and Herzegovina 58
Answer Score
Link for online access:
Freely accessible
Who is able to consult maps of land plots in the largest business city? 0.5
by anyone
Is the applicable fee schedule for accessing maps of land plots made
Yes, online 0.5
publicly available—and if so, how?
http://www.fgu.co
Link for online access:
m.ba/sr/492.html
Are all privately held land plots in the economy formally registered at
No 0.0
the immovable property registry?
Are all privately held land plots in the largest business city formally
No 0.0
registered at the immovable property registry?
Are all privately held land plots in the economy mapped? No 0.0
Are all privately held land plots in the largest business city mapped? No 0.0
Answer Score
Does the law require that all property sale transactions be registered at
the immovable property registry to make them opposable to third Yes 1.5
parties?
Registrar; Notary;
If yes, who is responsible for checking the legality of the documents?
Lawyer.
Does the legal system require verification of the identity of the parties
Yes 0.5
to a property transaction?
If yes, who is responsible for verifying the identity of the parties? Registrar; Notary.
For a standard land dispute between two local businesses over tenure
rights of a property worth 50 times gross national income (GNI) per The Municipal
capita and located in the largest business city, what court would be in Court in Sarajevo
charge of the case in the first instance?
How long does it take on average to obtain a decision from the first- Between 1 and 2
2.0
instance court for such a case (without appeal)? years
Are there any statistics on the number of land disputes in the first
No 0.0
instance?
GETTING CREDIT
Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS
credit and improve its allocation: credit information
MEASURE
systems and borrowers and lenders in collateral and
bankruptcy laws. Credit information systems enable
lenders to view and consider a potential borrower’s Strength of legal rights index (0–12)
financial history (positive or negative) when assessing Rights of borrowers and lenders through
risk and they allow borrowers to establish a good collateral laws
credit history that will facilitate their access to credit. Protection of secured creditors’ rights through
Sound collateral laws enable businesses to use their bankruptcy laws
assets, especially movable property, as security to
generate capital—while strong creditors’ rights have Depth of credit information index (0–8)
been associated with higher ratios of private sector Scope and accessibility of credit information
credit to GDP. distributed by credit bureaus and credit
registries
What do the indicators cover?
Credit bureau coverage (% of adults)
Doing Business assesses the sharing of credit
information and the legal rights of borrowers and Number of individuals and firms listed in largest
lenders with respect to secured transactions through credit bureau as percentage of adult population
2 sets of indicators. The depth of credit information Credit registry coverage (% of adults)
index measures rules and practices affecting the
coverage, scope and accessibility of credit Number of individuals and firms listed in credit
registry as percentage of adult population
information available through a credit registry or a
credit bureau. The strength of legal rights index
measures whether certain features that facilitate
lending exist within the applicable collateral and
bankruptcy laws. Doing Business uses two case
scenarios, Case A and Case B, to determine the scope
Has up to 50 employees.
of the secured transactions system, involving a
secured borrower and a secured lender and Is 100% domestically owned, as is the lender.
examining legal restrictions on the use of movable
The ranking of economies on the ease of getting credit
collateral (for more details on each case, see the Data
is determined by sorting their distance to frontier scores
Notes section of the Doing Business 2017 report).
for getting credit. These scores are the distance to
These scenarios assume that the borrower:
frontier score for the strength of legal rights index and
Is a domestic limited liability company. the depth of credit information index.
Has its headquarters and only base of operations in
the largest business city. For the 11 economies with a
population of more than 100 million, data for a
second city have been added.
Doing Business 2017 Bosnia and Herzegovina 61
GETTING CREDIT
Where does the economy stand today?
How well do the credit information system and collateral Globally, Bosnia and Herzegovina stands at 44 in the
and bankruptcy laws in Bosnia and Herzegovina facilitate ranking of 190 economies on the ease of getting credit
access to credit? The economy has a score of 6.0 on the (figure 6.1). The rankings for comparator economies
depth of credit information index and a score of 7.0 on provide other useful information for assessing how well
the strength of legal rights index (see the summary of regulations and institutions in Bosnia and Herzegovina
scoring at the end of this chapter for details). Higher support lending and borrowing.
scores indicate more credit information and stronger
legal rights for borrowers and lenders.
Figure 6.1 How Bosnia and Herzegovina and comparator economies rank on the ease of getting credit
GETTING CREDIT
One way to put an economy’s score on the getting credit rights index for Bosnia and Herzegovina and shows the
indicators into context is to see where the economy scores for comparator economies as well as the regional
stands in the distribution of scores across economies. average score. Figure 6.3 shows the same for the depth
Figure 6.2 highlights the score on the strength of legal of credit information index.
Figure 6.2 How strong are legal rights for borrowers Figure 6.3 How much credit information is shared—
and lenders? and how widely?
Economy scores on strength of legal rights index Economy scores on depth of credit information index
GETTING CREDIT
When economies strengthen the legal rights of lenders information, they can increase entrepreneurs’ access to
and borrowers under collateral and bankruptcy laws, and credit. What credit reforms has Doing Business recorded
increase the scope, coverage and accessibility of credit in Bosnia and Herzegovina (table 6.1)?
Table 6.1 How has Bosnia and Herzegovina made getting credit easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
GETTING CREDIT
What are the details?
The getting credit indicators reported here for Bosnia The data on the legal rights of borrowers and lenders are
and Herzegovina are based on detailed information gathered through a survey of financial lawyers and
collected in that economy. The data on credit verified through analysis of laws and regulations as well
information sharing are collected through a survey of a as public sources of information on collateral and
credit registry and/or credit bureau (if one exists). To bankruptcy laws. For the strength of legal rights index, a
construct the depth of credit information index, a score score of 1 is assigned for each of 10 aspects related to
of 1 is assigned for each of 8 features of the credit legal rights in collateral law and 2 aspects in bankruptcy
registry or credit bureau (see summary of scoring below). law.
Does an integrated or unified legal framework for secured transactions that extends to the
creation, publicity and enforcement of functional equivalents to security interests in movable 1
assets exist in the economy?
Does the law allow businesses to grant a non possessory security right in a single category of
1
movable assets, without requiring a specific description of collateral?
Does the law allow businesses to grant a non possessory security right in substantially all of its
1
assets, without requiring a specific description of collateral?
May a security right extend to future or after-acquired assets, and may it extend automatically to
0
the products, proceeds or replacements of the original assets?
Is a general description of debts and obligations permitted in collateral agreements; can all types
of debts and obligations be secured between parties; and can the collateral agreement include a 1
maximum amount for which the assets are encumbered?
Is a collateral registry in operation for both incorporated and non-incorporated entities, that is
1
unified geographically and by asset type, with an electronic database indexed by debtor's name?
Does a notice-based collateral registry exist in which all functional equivalents can be registered? 1
Does a modern collateral registry exist in which registrations, amendments, cancellations and
1
searches can be performed online by any interested third party?
Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor
0
defaults outside an insolvency procedure?
Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is
0
liquidated?
Are secured creditors subject to an automatic stay on enforcement when a debtor enters a
court-supervised reorganization procedure? Does the law protect secured creditors’ rights by 0
providing clear grounds for relief from the stay and/or sets a time limit for it?
Does the law allow parties to agree on out of court enforcement at the time a security interest is
created? Does the law allow the secured creditor to sell the collateral through public auction and 0
private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?
Doing Business 2017 Bosnia and Herzegovina 65
Depth of credit information index (0–8) Credit bureau Credit registry Index score: 6.0
Figure 7.1 How Bosnia and Herzegovina and comparator economies perform on the strength of minority investor
protection index
Table 7.2 Summary of scoring for the protecting minority investors indicators in Bosnia and Herzegovina
Answer Score
Strength of minority investor protection index (0-10) 5.5
Extent of conflict of interest regulation index (0-10) 4.7
Extent of disclosure index (0-10) 3.0
Which corporate body is legally sufficient to approve the Board of directors excluding
2.0
Buyer-Seller transaction? (0-3) interested members
Must Mr. James disclose his conflict of interest to the board Existence of a conflict without any
1.0
of directors? (0-2) specifics
Must Buyer disclose the transaction in published periodic
No disclosure obligation 0.0
filings (annual reports)? (0-2)
Must Buyer immediately disclose the transaction to the
No disclosure obligation 0.0
public and/or shareholders? (0-2)
Must an external body review the terms of the transaction
No 0.0
before it takes place? (0-1)
Extent of director liability index (0-10) 6.0
Can shareholders representing 10% of Buyer's share capital
sue directly or derivatively for the damage the transaction No 0.0
caused to Buyer? (0-1)
Can shareholders hold the interested director liable for the
Liable if negligent 1.0
damage the transaction caused to Buyer? (0-2)
Can shareholders hold the other directors liable for the
Liable if unfair or prejudicial 2.0
damage the transaction caused to Buyer (0-2)
Must Mr. James pay damages for the harm caused to Buyer
Yes 1.0
upon a successful claim by shareholders? (0-1)
Must Mr. James repay profits made from the transaction
Yes 1.0
upon a successful claim by shareholders? (0-1)
Is Mr. James disqualifed or fined and imprisoned upon a
Yes 1.0
successful claim by shareholders? (0-1)
Can a court void the transaction upon a successful claim by
Only in case of fraud or bad faith 0.0
shareholders? (0-2)
Ease of shareholder suits index (0-10) 5.0
Before suing can shareholders representing 10% of Buyer's
Yes 1.0
share capital inspect the transaction documents? (0-1)
Can the plaintiff obtain any documents from the defendant Documents that the defendant
1.0
and witnesses at trial? (0-3) relied on
Can the plaintiff request categories of documents from the No 0.0
Doing Business 2017 Bosnia and Herzegovina 71
PAYING TAXES
Taxes are essential. The level of tax rates needs to be
WHAT THE PAYING TAXES INDICATORS
carefully chosen—and needless complexity in tax
rules avoided. Firms in economies that rank better MEASURE
on the ease of paying taxes in the Doing Business
study tend to perceive both tax rates and tax Tax payments for a manufacturing company
administration as less of an obstacle to business in 2015 (number per year adjusted for
according to the World Bank Enterprise Survey electronic and joint filing and payment)
research.
Total number of taxes and contributions paid,
What do the indicators cover? including consumption taxes (value added tax,
sales tax or goods and service tax)
Using a case scenario, Doing Business records the
taxes and mandatory contributions that a medium- Method and frequency of filing and payment
size company must pay in a given year as well as Time required to comply with 3 major taxes
measures of the administrative burden of paying (hours per year)
taxes and contributions and dealing with postfiling
processes. This case scenario uses a set of financial Collecting information and computing the tax
payable
statements and assumptions about transactions
made over the year. Information is also compiled on Completing tax return forms, filing with
the frequency of filing and payments, time taken to proper agencies
comply with tax laws, time taken to comply with the Arranging payment or withholding
requirements of postfiling processes and time
waiting for these processes to be completed. The Preparing separate tax accounting books, if
required
ranking of economies on the ease of paying taxes is
determined by sorting their distance to frontier Total tax rate (% of profit before all taxes)
scores on the ease of paying taxes. These scores are
Profit or corporate income tax
the simple average of the distance to frontier scores
for each of the four component indicators – number Social contributions and labor taxes paid by
of tax payments. time, total tax rate and postfiling the employer
index – with a threshold and a nonlinear Property and property transfer taxes
transformation applied to one of the component
1 Dividend, capital gains and financial
indicators, the total tax rate . If both VAT (or GST)
transactions taxes
and corporate income tax apply, the postfiling index
is the simple average of the distance to frontier Waste collection, vehicle, road and other taxes
scores for each of the four components: the time to Postfiling Index
comply with a VAT or GST refund, the time to obtain
The time to comply with a VAT or GST refund
a VAT or GST refund, the time to comply with a
corporate income tax audit and the time to complete The time to receive a VAT or GST refund
a corporate income tax audit. If only VAT (or GST) or The time to comply with a corporate income
corporate income tax If onapplies, the postfiling tax audit
index is the simple average of the scores for only the The time to complete a corporate income tax
two components pertaining to the applicable tax. If audit
neither VAT (or GST) nor corporate income tax
The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8.
1
The threshold is defined as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis up
to and including Doing Business 2015, which is 26.1%. All economies with a total tax rate below this threshold receive the same
score as the economy at the threshold.
Doing Business 2017 Bosnia and Herzegovina 74
PAYING TAXES
Where does the economy stand today?
What is the administrative burden of complying with tax table 8.3 the end of this chapter for details). Most
obligations and postfiling processes in Bosnia and indicator sets refer to a case scenario in the largest
Herzegovina—and how much do firms pay in taxes? business city of an economy, except for 11 economies for
Globally, Bosnia and Herzegovina stands at 133 in the which the data are a population-weighted average of the
ranking of 190 economies on the ease of paying taxes 2 largest business cities. See the chapter on distance to
(figure 8.1). The rankings for comparator economies and frontier and ease of doing business ranking at the end of
the regional average ranking provide other useful this profile for more details.
information for assessing the tax compliance burden for
.
businesses in Bosnia and Herzegovina (see table 8.2 and
Figure 8.1 How Bosnia and Herzegovina and comparator economies rank on the ease of paying taxes
PAYING TAXES
Economies around the world have made paying taxes and exemptions. Many have lowered tax rates. Changes
faster, easier and less costly for businesses—such as by have brought concrete results. Some economies
consolidating payments and filings of taxes, offering simplifying tax payment and reducing rates have seen
electronic systems for filing and payment, establishing tax revenue rise. What tax reforms has Doing Business
taxpayer service centers or allowing for more deductions recorded in Bosnia and Herzegovina (table 8.1)?
Table 8.1 How has Bosnia and Herzegovina made paying taxes easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
PAYING TAXES
What are the details?
The indicators reported here for Bosnia and
LOCATION OF STANDARDIZED COMPANY
Herzegovina are based on the taxes and
contributions that would be paid by a standardized
case study company used by Doing Business in City: Sarajevo
collecting the data (see the section in this chapter on
what the indicators cover). Tax practitioners are asked
to review a set of financial statements as well as a
standardized list of assumptions and transactions
The taxes and contributions paid are listed in table 8.2,
that the company completed during its 2nd year of
along with the associated number of payments, time
operation. Respondents are asked how much taxes
and tax rate.
and mandatory contributions the business must pay,
how these taxes are filed and paid, how much time The postfiling index is based on four components—the
taxpayers spend preparing, filing and paying three time to comply with a VAT or GST refund, the time to
major taxes (profit taxes, labor taxes including obtain a VAT or GST refund, the time to comply with a
mandatory contributions and consumption taxes) and corporate income tax audit and the time to complete a
how much time taxpayers spend complying with corporate income tax audit (table 8.3). These
postfiling processes and waiting for these processes components are based on expanded case study
to be completed. assumptions. If only VAT (or GST) or corporate income
tax applies for an economy, the postfiling index is the
simple average of the scores for only the two
components pertaining to the applicable tax. If neither
VAT (or GST) nor corporate income tax applies, the
postfiling index is not included in the ranking of the
ease of paying taxes.
Does a VAT/GST refund process exist per the case study? Yes
Time to comply with a corporate income tax audit (hours) 30.5 46.8
Doing Business 2017 Bosnia and Herzegovina 79
Answer Score
Time to complete a corporate income tax audit (weeks) 14.9 53.6
in printed
Source of appeal guidelines publication/in person at
tax office
Note:
The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to
comply with a corporate income tax audit and time to complete a corporate income tax audit.
N/A = Not applicable.
Doing Business 2017 Bosnia and Herzegovina 80
Assumptions of the case study If government fees are determined by the value of the
shipment, the value is assumed to be $50,000.
For each of the 190 economies covered by
Doing Business, it is assumed that a shipment The product is new, not secondhand or used
travels from a warehouse in the largest merchandise.
business city of the exporting economy to a
The exporting firm is responsible for hiring and paying
warehouse in the largest business city of the
for a freight forwarder or customs broker (or both)
importing economy. For 11 economies the
and pays for all costs related to international shipping,
data are also collected, under the same case
domestic transport, clearance and mandatory
study assumptions, for the second largest
inspections by customs and other government
business city.
agencies, port or border handling, documentary
The import and export case studies assume compliance fees and the like for exports. The
different traded products. It is assumed that importing firm is responsible for the above costs for
each economy imports a standardized imports.
shipment of 15 metric tons of containerized
The mode of transport is the one most widely used for
auto parts (HS 8708) from its natural import
the chosen export or import product and the trading
partner—the economy from which it imports
partner, as is the seaport, airport or land border
the largest value (price times quantity) of auto
crossing.
parts. It is assumed that each economy exports
the product of its comparative advantage All electronic submissions of information requested by
(defined by the largest export value) to its any government agency in connection with the
natural export partner—the economy that is shipment are considered to be documents obtained,
the largest purchaser of this product. Special prepared and submitted during the export or import
products, such as precious metal and gems, process.
live animals and pharmaceuticals are excluded A port or border is defined as a place (seaport, airport
from the list of possible export products,
or land border crossing) where merchandise can enter
however, and the second largest product
or leave an economy.
category is considered as needed.
Government agencies considered relevant are
A shipment is a unit of trade. Export shipments agencies such as customs, port authorities, road
do not necessarily need to be containerized, police, border guards, standardization agencies,
while import shipments of auto parts are ministries or departments of agriculture or industry,
assumed to be containerized. national security agencies and any other government
authorities.
Doing Business 2017 Bosnia and Herzegovina 82
Figure 9.1 How Bosnia and Herzegovina and comparator economies rank on the ease of trading across borders
Table 9.2 Summary of export and import time and cost for trading across borders in Bosnia and Herzegovina
Bosnia and Herzegovina Europe & Central Asia
Table 9.3 Summary of trading details, transport time and documents for trading across borders in Bosnia and
Herzegovina
Export Import
HS 94 : Furniture; bedding,
mattresses, mattress supports,
cushions and similar stuffed
furnishings; lamps and
HS 8708: Parts and accessories
Product lighting fittings, not elsewhere
of motor vehicles
specified or included;
illuminated signs, illuminated
name-plates and the like;
prefabricated buildings
Trade partner Germany Germany
Slavonski Brod border
Border Slavonski Brod border crossing
crossing
Doing Business 2017 Bosnia and Herzegovina 84
Export Import
Documents to export
Commercial invoice
Packing list
Export License
Documents to import
Commercial invoice
Certificate of quality
Packing list
Figure 9.2 Summary of Bosnia and Herzegovina on the ease of trading across borders
Export Import
ENFORCING CONTRACTS
WHAT THE ENFORCING CONTRACTS
Effective commercial dispute resolution has many
benefits. Courts are essential for entrepreneurs INDICATORS MEASURE
because they interpret the rules of the market and
protect economic rights. Efficient and transparent Time required to enforce a contract through
courts encourage new business relationships because the courts (calendar days)
businesses know they can rely on the courts if a new
customer fails to pay. Speedy trials are essential for Time to file and serve the case
small enterprises, which may lack the resources to Time for trial and to obtain the judgment
stay in business while awaiting the outcome of a long
Time to enforce the judgment
court dispute.
Cost required to enforce a contract through
What do the indicators cover? the courts (% of claim)
Doing Business measures the time and cost for Attorney fees
resolving a standardized commercial dispute through
a local first-instance court. In addition, Doing Court fees
Business measures the quality of judicial processes Enforcement fees
index, evaluating whether each economy has
Quality of judicial processes index (0-18)
adopted a series of good practices that promote
quality and efficiency in the court system. The Court structure and proceedings (0-5)
ranking of economies on the ease of enforcing Case management (0-6)
contracts is determined by sorting their distance to
frontier scores. These scores are the simple average Court automation (0-4)
of the distance to frontier scores for each of the Alternative dispute resolution (0-3)
component indicators.
The dispute in the case study involves the breach of a
sales contract between 2 domestic businesses. The The seller sues the buyer before the court with
case study assumes that the court hears an expert on jurisdiction over commercial cases worth 200% of
the quality of the goods in dispute. This distinguishes income per capita or $5,000.
the case from simple debt enforcement. To make the
The seller requests a pretrial attachment to secure
data comparable across economies, Doing Business
the claim.
uses several assumptions about the case:
The dispute on the quality of the goods requires an
expert opinion.
The dispute concerns a lawful transaction
The judge decides in favor of the seller; there is no
between two businesses (Seller and Buyer), both
appeal.
located in the economy’s largest business city.
For 11 economies the data are also collected for The seller enforces the judgment through a public
the second largest business city. sale of the buyer’s movable assets.
The buyer orders custom-made goods, then fails
to pay.
The value of the dispute is 200% of the income
per capita or the equivalent in local currency of
USD 5,000, whichever is greater.
Doing Business 2017 Bosnia and Herzegovina 87
ENFORCING CONTRACTS
Where does the economy stand today?
How efficient is the process of resolving a commercial on distance to frontier and ease of doing business
dispute through the courts in Bosnia and Herzegovina? ranking at the end of this profile for more details.
According to data collected by Doing Business, contract
Globally, Bosnia and Herzegovina stands at 64 in the
enforcement takes 595.0 days and costs 36.0% of the
ranking of 190 economies on the ease of enforcing
value of the claim. Most indicator sets refer to the
contracts (figure 10.1). The rankings for comparator
largest business city of an economy, except for 11
economies and the regional average provide other useful
economies for which the data are a population-weighted
benchmarks for assessing the efficiency of contract
average of the 2 largest business cities. See the chapter
enforcement in Bosnia and Herzegovina.
Figure 10.1 How Bosnia and Herzegovina and comparator economies rank on the ease of enforcing contracts
ENFORCING CONTRACTS
What are the details?
The data on time and cost reported here for Bosnia
ECONOMY DETAILS
and Herzegovina are built by following the step-by-
step evolution of a commercial sale dispute within
the court, under the assumptions about the case Claim value: BAM 14,309
described above (figure 10.2). The time and cost of
resolving the standardized dispute are identified
Sarajevo Municipal Court,
through study of the codes of civil procedure and Court name:
Commercial Division
other court regulations, as well as through
questionnaires completed by local litigation lawyers
City: Sarajevo
(and, in a quarter of the economies covered by
Doing Business, by judges as well).
Figure 10.2 Time and cost of contract enforcement in Bosnia and Herzegovina and comparator economies
Table 10.2 Details on time and cost for enforcing contracts in Bosnia and Herzegovina
ENFORCING CONTRACTS
Quality of judicial processes index
The quality of judicial processes index measures The scores reported here show which of these good
whether each economy has adopted a series of good practices are available in Bosnia and Herzegovina (figure
practices in its court system in four areas: court 10.3).
structure and proceedings, case management, court
This methodology was initially developed by Djankov and
automation and alternative dispute resolution. The
others (2003) and is adopted here with several changes.
score on the quality of judicial processes index is the
The quality of judicial processes index was introduced in
sum of the scores on these 4 sub-components. The
Doing Business 2016. The good practices tested in this
index ranges from 0 to 18, with higher values
index were developed on the basis of internationally
indicating more efficient judicial processes.
recognized good practices promoting judicial efficiency.
Figure 10.3 Quality of judicial processes index in Bosnia and Herzegovina and comparator economies
Doing Business 2017 Bosnia and Herzegovina 91
Table 10.3 Details of the quality of judicial processes index in Bosnia and Herzegovina
Answer Score
Quality of judicial processes index (0-18) 11.0
1.a. Are there laws setting overall time standards for key court events in
Yes
a civil case?
1.b. If yes, are the time standards set for at least three court events? Yes
1.c. Are these time standards respected in more than 50% of cases? No
2. Adjournments 0.0
2.a. Does the law regulate the maximum number of adjournments that
No
can be granted?
2.c. If rules on adjournments exist, are they respected in more than 50%
No
of cases?
5. Are there any electronic case management tools in place within the
Yes 1.0
competent court for use by judges?
Doing Business 2017 Bosnia and Herzegovina 92
Answer Score
6. Are there any electronic case management tools in place within the
Yes 1.0
competent court for use by lawyers?
3. Can court fees be paid electronically within the competent court? No 0.0
1. Arbitration 1.5
1.b. Are there any commercial disputes—aside from those that deal
with public order or public policy—that cannot be submitted to No
arbitration?
2. Mediation/Conciliation 1.0
RESOLVING INSOLVENCY
A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY
ensuring the survival of economically efficient
companies and reallocating the resources of INDICATORS MEASURE
inefficient ones. Fast and cheap insolvency
proceedings result in the speedy return of businesses Time required to recover debt (years)
to normal operation and increase returns to
Measured in calendar years
creditors. By clarifying the expectations of creditors
and debtors about the outcome of insolvency Appeals and requests for extension are
proceedings, well-functioning insolvency systems can included
facilitate access to finance, save more viable Cost required to recover debt (% of debtor’s
businesses and sustainably grow the economy. estate)
What do the indicators cover? Measured as percentage of estate value
Doing Business studies the time, cost and outcome of Court fees
insolvency proceedings involving domestic legal Fees of insolvency administrators
entities. These variables are used to calculate the Lawyers’ fees
recovery rate, which is recorded as cents on the Assessors’ and auctioneers’ fees
dollar recovered by secured creditors through Other related fees
reorganization, liquidation or debt enforcement
Outcome
(foreclosure or receivership) proceedings. To
determine the present value of the amount Whether business continues operating as a
recovered by creditors, Doing Business uses the going concern or business assets are sold
lending rates from the International Monetary Fund, piecemeal
supplemented with data from central banks and the Recovery rate for creditors
Economist Intelligence Unit.
Measures the cents on the dollar recovered
To make the data on the time, cost and outcome by secured creditors
comparable across economies, several assumptions
Outcome for the business (survival or not)
about the business and the case are used:
determines the maximum value that can be
A hotel located in the largest city (or cities) has recovered
201 employees and 50 suppliers. The hotel Official costs of the insolvency proceedings
experiences financial difficulties. are deducted
The value of the hotel is 100% of the income per Depreciation of furniture is taken into
capita or the equivalent in local currency of USD account
200,000, whichever is greater.
Present value of debt recovered
The hotel has a loan from a domestic bank,
Strength of insolvency framework index (0-
secured by a mortgage over the hotel’s real
16)
estate. The hotel cannot pay back the loan, but
makes enough money to operate otherwise. Sum of the scores of four component indices:
Commencement of proceedings index (0-3)
In addition, Doing Business evaluates the adequacy
and integrity of the existing legal framework Management of debtor’s assets index (0-6)
applicable to liquidation and reorganization Reorganization proceedings index (0-3)
proceedings through the strength of insolvency Creditor participation index (0-4)
framework index. The index tests whether economies
adopted internationally accepted good practices in management of debtor’s assets, reorganization
four areas: commencement of proceedings, proceedings and creditor participation.
Doing Business 2017 Bosnia and Herzegovina 94
RESOLVING INSOLVENCY
Where does the economy stand today?
Globally, Bosnia and Herzegovina stands at 41 in the indicator does not measure insolvency proceedings of
ranking of 190 economies on the ease of resolving individuals and financial institutions. The data are derived
insolvency (figure 11.1). The ranking of economies on the from questionnaire responses by local insolvency
ease of resolving insolvency is determined by sorting practitioners and verified through a study of laws and
their distance to frontier scores for resolving insolvency. regulations as well as public information on bankruptcy
These scores are the simple average of the distance to systems.
frontier scores for the recovery rate and the strength of
insolvency framework index. The resolving insolvency
Figure 11.1 How Bosnia and Herzegovina and comparator economies rank on the ease of resolving insolvency
RESOLVING INSOLVENCY
Recovery of debt in insolvency
Data on the time, cost and outcome refer to the most average recovery rate is 37.3 cents on the dollar. Most
likely in-court insolvency procedure applicable under indicator sets refer to a case scenario in the largest
specific case study assumptions. business city of an economy, except for 11 economies for
which the data are a population-weighted average of the
According to data collected by Doing Business, resolving
2 largest business cities.
insolvency takes 3.3 years on average and costs 9.0% of
the debtor’s estate, with the most likely outcome being
that the company will be sold as piecemeal sale. The
Figure 11.2 Efficiency of proceedings - time, cost and recovery rate in Bosnia and Herzegovina and comparator
economies.
Table 11.1 Details of data on efficiency of insolvency proceedings in Bosnia and Herzegovina
Indicator Answer Explanation
It is very likely that, based on information provided in case study assumptions,
BizBank will initiate foreclosure, as Mirage can neither obtain a new loan from
any other financial institution nor renegotiate its current loan with BizBank.
Additionally, Mirage expects to have negative net worth and operating losses
Proceeding foreclosure
in both following years. Having these facts in mind, it is unlikely that any
reorganization plan could be approved by the court. Therefore, the
proceedings will be continued as foreclosure which will result with the sale of
the hotel.
If BizBank initiates foreclosure, the hotel will be sold in order to settle the
Outcome piecemeal sale
Mirages obligation toward BizBank.
Cost (% of
9.0 Most of the expenses will be used to pay attorneys' fees.
estate)
RESOLVING INSOLVENCY
Strength of resolving insolvency index
The strength of insolvency framework index is the with higher values indicating insolvency legislation that is
sum of the scores on the commencement of better designed for rehabilitating viable firms and
proceedings index, management of debtor’s assets liquidating nonviable ones. Bosnia and Herzegovina’s
index, reorganization proceedings index and creditor score on the strength of insolvency framework index is
participation index. The index ranges from 0 to 16, 15.0 out of 16. Data on provisions applicable to judicial
liquidation and reorganization is based on the current law
governing insolvency proceedings in each economy.
Figure 11.3 Strength of insolvency framework index (0-16) in Bosnia and Herzegovina and comparator economies
reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome
indicators are recorded as “no practice”.
Doing Business 2017 Bosnia and Herzegovina 99
Table 11.2 Summary of data for the strength of insolvency framework index in Bosnia and Herzegovina
Answer Score
Strength of insolvency framework index (0-16) 15.0
(a) Debtor is
What basis for commencement of the insolvency proceedings is allowed generally unable
1.0
under the insolvency framework? to pay its debts
as they mature
Does the insolvency framework allow the rejection by the debtor of overly
Yes 1.0
burdensome contracts?
Does the insolvency framework provide for the possibility of the debtor
Yes 1.0
obtaining credit after commencement of insolvency proceedings?
Answer Score
Are the creditors devided into classes for the purposes of voting on the
reorganization plan, does each class vote separately and are creditors in Yes 1.0
the same class treated equally?
Does the insolvency framework require approval by the creditors for sale
Yes 1.0
of substantial assets of the debtor?
Does the insolvency framework provide that a creditor has the right to
No 0.0
request information from the insolvency representative?
Does the insolvency framework provide that a creditor has the right to
Yes 1.0
object to decisions accepting or rejecting creditors' claims?
Source: Doing Business database.
Doing Business 2017 Bosnia and Herzegovina 101
The worker:
Is a cashier in a supermarket or grocery store,
age 19, with one year of work experience.
Is a full-time employee.
Is not a member of the labor union, unless
membership is mandatory.
The business:
Is a limited liability company (or the equivalent
in the economy).
Operates a supermarket or grocery store in the
economy’s largest business city. For 11
economies the data are also collected for the
second largest business city.
Has 60 employees.
Is subject to collective bargaining agreements if
such agreements cover more than 50% of the
Doing Business 2017 Bosnia and Herzegovina 102
Hiring
Data on hiring cover five areas: (i) whether fixed-term minimum wage to the average value added per worker
contracts are prohibited for permanent tasks; (ii) the (the ratio of an economy’s GNI per capita to the
maximum cumulative duration of fixed-term contracts; working-age population as a percentage of the total
(iii) the minimum wage for a cashier, age 19, with one population).
year of work experience; and (iv) the ratio of the
Hiring Data
Fixed-term contracts prohibited for permanent tasks? No
Maximum length of a single fixed-term contract (months) 24 months (Art. 19, Labor Law of FBiH)
Maximum length of fixed-term contracts, including renewals (months) 24.0
Minimum wage applicable to the worker assumed in the case study
353.6
(US$/month)
Ratio of minimum wage to value added per worker 0.6
Source: Doing Business database.
Doing Business 2017 Bosnia and Herzegovina 103
Paid annual leave for a worker with 1 year of tenure (working days) 18.0
Paid annual leave for a worker with 5 years of tenure (working days) 18.0
Paid annual leave for a worker with 10 years of tenure (working days) 18.0
Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in 18.0
working days)
Source: Doing Business database.
Doing Business 2017 Bosnia and Herzegovina 104
Data on redundancy cover nine areas: (i) the length of whether the employer needs approval from a third party
the maximum probationary period (in months) for to terminate one redundant worker; (vi) whether the
permanent employees; (ii) whether redundancy is employer needs approval from a third party to terminate
allowed as a basis for terminating workers; (iii) whether a group of nine redundant workers; (vii) whether the law
the employer needs to notify a third party (such as a requires the employer to reassign or retrain a worker
government agency) to terminate one redundant worker; before making the worker redundant; (viii) whether
(iv) whether the employer needs to notify a third party to priority rules apply for redundancies; and (ix) whether
terminate a group of nine redundant workers; (v) priority rules apply for reemployment.
Redundancy cost measures the cost of advance notice severance payments applicable to a worker with 1 year of
requirements and severance payments due when tenure, a worker with 5 years and a worker with 10 years
terminating a redundant worker, expressed in weeks of is considered. One month is recorded as 4 and 1/3
salary. The average value of notice requirements and weeks.
Notice period for redundancy dismissal for a worker with 1 year of tenure 2.0
Notice period for redundancy dismissal for a worker with 5 years of tenure 2.0
Notice period for redundancy dismissal for a worker with 10 years of tenure 2.0
Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years 2.0
of tenure)
Severance pay for redundancy dismissal for a worker with 1 year of tenure 0.0
Severance pay for redundancy dismissal for a worker with 5 years of tenure 7.2
Severance pay for redundancy dismissal for a worker with 10 years of tenure 14.4
Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years 7.2
of tenure)
Source: Doing Business database.
Doing Business 2017 Bosnia and Herzegovina 106
Job quality
Doing Business introduced new data on job quality in leave receive 100% of wages; (vi) the availability of five
2015. Doing Business 2017 covers eight questions on job fully paid days of sick leave a year; (vii) whether a worker
quality (i) whether the law mandates equal remuneration is eligible for an unemployment protection scheme after
for work of equal value; (ii) whether the law mandates one year of service; and (viii) the minimum duration of
nondiscrimination based on gender in hiring; (iii) the contribution period (in months) required for
whether the law mandates paid or unpaid maternity unemployment protection.
leave; (iv) the minimum length of paid maternity leave (in .
calendar days); (v) whether employees on maternity
identical to the simple average used by Doing Business . The nonlinear transformation is not based on any
2
Thus Doing Business uses the simplest method: economic theory of an “optimal tax rate” that minimizes
weighting all topics equally and, within each topic, giving distortions or maximizes efficiency in an economy’s
equal weight to each of the topic components . overall tax system. Instead, it is mainly empirical in
3
2
See Djankov, Manraj and others (2005). Principal components and
unobserved components methods yield a ranking nearly identical to
that from the simple average method because both these methods
assign roughly equal weights to the topics, since the pairwise
correlations among indicators do not differ much. An alternative to the
simple average method is to give different weights to the topics,
depending on which are considered of more or less importance in the
context of a specific economy.
3
For getting credit, indicators are weighted proportionally, according
to their contribution to the total score, with a weight of 60% assigned
to the strength of legal rights index and 40% to the depth of credit
information index. Indicators for all other topics are assigned equal
weights
Doing Business 2017 Bosnia and Herzegovina 109
Table 13.1 Weights used in calculating the distance to the most. First, it selects the economies that in 2015/16
frontier scores for economies with 2 cities covered implemented regulatory reforms making it easier to do
business in 3 or more of the 10 topics included in this
Economy City Weight (%)
year’s aggregate distance to frontier score. Twenty-nine
Dhaka 78
Bangladesh economies meet this criterion: Algeria; Azerbaijan;
Chittagong 22
São Paulo 61 Bahrain; Belarus; Brazil; Brunei Darussalam; Burkina Faso;
Brazil
Rio de Janeiro 39 Côte d’Ivoire; Georgia; India; Indonesia; Kazakhstan;
Shanghai 55 Kenya; Madagascar; Mali; Mauritania; Morocco; Niger;
China
Beijing 45 Pakistan; Poland; Senegal; Serbia; Singapore; Thailand;
Mumbai 47 Togo; Uganda; the United Arab Emirates; Uzbekistan and
India
Delhi 53
Vanuatu. Second, Doing Business sorts these economies
Jakarta 78
Indonesia on the increase in their distance to frontier score from
Surabaya 22
Tokyo 65
the previous year using comparable data.
Japan
Osaka 35
Mexico City 83 Selecting the economies that implemented regulatory
Mexico
Monterrey 17 reforms in at least three topics and had the biggest
Lagos 77 improvements in their distance to frontier scores is
Nigeria
Kano 23 intended to highlight economies with ongoing, broad-
Karachi 65 based reform programs. The improvement in the
Pakistan
Lahore 35 distance to frontier score is used to identify the top
Moscow 70
Russian Federation improvers because this allows a focus on the absolute
St. Petersburg 30
improvement—in contrast with the relative improvement
New York 60
United States
Los Angeles 40
shown by a change in rankings—that economies have
made in their regulatory environment for business.
Source: United Nations, Department of Economic and Social
Affairs, Population Division, World Urbanization Prospects,
2014 Revision. http://esa.un.org/unpd/wup/CD-
ROM/Default.aspx.
Ease of Doing Business ranking
The ease of doing business ranking ranges from 1 to 190.
Economies that improved the most across 3 or more
The ranking of economies is determined by sorting the
Doing Business topics in 2015/16
aggregate distance to frontier scores, rounded to 2
Doing Business 2017 uses a simple method to calculate decimals.
which economies improved the ease of doing business
Doing Business 2017 Bosnia and Herzegovina 110
Historical data
Customized data sets since DB2004
http://www.doingbusiness.org/custom-query
Doing Business 2017 Bosnia and Herzegovina 111