Entering the VAT System in BiH 2026: Threshold, Voluntary Registration and Process

When you must register for VAT (100,000 BAM threshold), when voluntary registration pays off, and how registration with the ITA works. A practical 2026 guide for entrepreneurs in BiH.

Many owners of sole trader businesses (obrt) and d.o.o. companies (LLCs) in BiH avoid VAT for years because they think it is just paperwork that does not pay off. Then, in a single month, they exceed the threshold, fail to register in time, and receive a decision with retroactively assessed VAT and a penalty. Entering the VAT system in BiH is actually not complicated if you know three things: what the threshold is, when it pays to register voluntarily and how the procedure works. This guide for 2026 explains everything, in line with the current regulations of the Indirect Taxation Authority (ITA).

When you must enter the VAT system (100,000 BAM threshold)

The obligation to enter the VAT system arises when your taxable turnover over 12 consecutive months exceeds 100,000 BAM. The threshold was raised in 2023 from the previous 50,000 BAM, so if you have read the old amount somewhere, it no longer applies.

Three things entrepreneurs most often misunderstand:

The threshold applies to turnover (total taxable revenue), not profit. You can operate with minimal profit and still be required to register for VAT.
What counts is the current 12 months in the calendar year. As soon as total turnover exceeds 100,000 BAM, the obligation arises.
As soon as you exceed the threshold, you must submit a registration application to the ITA within the statutory deadline. Waiting means retroactive VAT assessment and misdemeanour penalties.

A practical example: suppose your turnover from January to September is 95,000 BAM, and in October you issue invoices for an additional 8,000 BAM. You have thereby exceeded 100,000 BAM within 12 months and must start the registration process, regardless of how much profit you make. It is precisely because of situations like this that it is important to monitor turnover in advance, not just at the end of the year.

If you are still checking who actually has to be in the system, also read our guide what VAT is and who must be in the system.

Voluntary VAT registration: when it pays off

Companies below the 100,000 BAM threshold can also enter the VAT system voluntarily. This is a strategic decision, not a formality, because voluntary registration obliges you to remain in the system for at least 5 years. That is why the decision should be based on the numbers, not on gut feeling.

Voluntary registration most often pays off when:

Your customers are mostly VAT payers (you operate B2B). For them, your VAT is not a cost because they deduct it, and you gain the right to deduct input VAT.
You have large purchase invoices with VAT (equipment, goods, services). By deducting input VAT, you directly reduce your purchasing costs.
You export goods or services. Exports are taxed at a 0% rate, so you are regularly entitled to a VAT refund.
You are planning rapid growth and want to avoid a sudden, unplanned crossing of the threshold mid-year.

Voluntary registration usually does not pay off if you sell to end consumers (B2C, individuals who do not deduct VAT) and have low input costs. In that case, VAT simply makes your prices higher or reduces your margin, and on top of that you take on a five-year commitment and additional administration. Before deciding, always compare how much input VAT you could deduct against how much output VAT you would have to charge your customers.

How to register for VAT, step by step

The registration procedure is handled by the ITA and in practice looks like this:

Monitor your turnover. Keep a record of the current 12 months in the calendar year so that you know when you are approaching the threshold, rather than being caught by surprise.
Submit a registration application to the competent ITA regional centre as soon as you exceed the threshold (or when you decide to register voluntarily).
Attach the documentation: the company registration decision, JIB (unique identification number), and details of the registered office, bank accounts and responsible persons.
The ITA issues a registration decision and assigns you a VAT number (identification number for indirect taxes).
From the date of registration, you start charging VAT on your sales invoices, keeping the prescribed records and filing VAT returns.

For most small companies, the hardest part is not the application itself but what comes afterwards, so many entrust the whole process and the ongoing obligations to an agency. Our VAT returns and records service covers both registration and all monthly obligations.

VAT number and new obligations after registration

After registration, you receive a VAT number, which from then on you state on all your sales invoices. It comes with new obligations:

The VAT rate is 17% (a single rate in BiH). A 0% rate applies to exports of goods and services.
You must keep a KUF (book of incoming invoices) and KIF (book of outgoing invoices). These are the prescribed VAT records, which must be accurate and reconciled with the books of account.
You file a VAT return electronically with the ITA for each tax period (month), by the 10th of the month for the previous period, which is also when the VAT is paid.
You acquire the right to deduct input VAT on purchases you use for taxable supplies, which is the main financial advantage of VAT payer status.

If in a given tax period you have more input VAT than output VAT (for example, due to a larger investment or exports), the difference is carried forward to the next period or you request a VAT refund from the ITA. This is why entering the system is particularly beneficial for exporters and companies investing in equipment.

Properly kept KUF and KIF records directly affect how much input VAT you can deduct, so this part is closely tied to high-quality bookkeeping.

How to check whether a company is in the VAT system

VAT payer status is public information. The ITA maintains a register of VAT payers, so you can check whether someone is a VAT payer by company name or VAT number. In practice, every VAT payer is required to state its VAT number on its invoices, which is the first sign that it operates within the system.

This check is useful before you issue a larger invoice or sign a contract, because your partner's status determines how VAT is calculated, the right to deduction and what the invoice itself looks like.

Most common mistakes when entering the VAT system

Registering late after exceeding the threshold. The most expensive mistake: VAT is assessed retroactively, with interest and a penalty.
Confusing turnover with profit. The threshold is linked to turnover, so companies with low profit think they are safe, but they are not.
Voluntary registration without doing the numbers. Registering because of one large customer, followed by 5 years of obligations and administration for a business that is essentially B2C.
Disorganised KUF/KIF records. An incorrectly booked purchase invoice means a lost deduction and a higher VAT liability.
Incorrectly prepared invoices. A VAT payer's invoice must contain the prescribed elements and the VAT number, otherwise the customer loses the right to deduct.

For more on the tax itself, the rates and the returns, see the guide VAT in BiH: everything you need to know.

Frequently asked questions about entering the VAT system

What is the threshold for entering the VAT system in BiH? Taxable turnover above 100,000 BAM over 12 consecutive months. The threshold was raised in 2023 from 50,000 to 100,000 BAM.

Can I register for VAT voluntarily below the threshold? Yes. Voluntary registration is possible before reaching the threshold, but it obliges you to remain a VAT payer for at least 5 years.

How do I check whether a company is in the VAT system? Through the register of VAT payers maintained by the ITA, by company name or VAT number. Every VAT payer is required to state its VAT number on its invoices.

What is the VAT rate in BiH? The single rate is 17%. A 0% rate applies to exports of goods and services.

Conclusion: one step today

Entering the VAT system is not something to be afraid of, but it is something you must not miss, because delay always costs money. If your turnover is growing towards 100,000 BAM or you are considering voluntary registration, the smartest move is to do a simple calculation before deciding whether VAT status pays off for you.

At ENS d.o.o., we handle the entire process: we monitor the threshold, submit the application to the ITA, set up KUF/KIF records and take over your monthly VAT returns. Contact us on +387 61 158 271 or at info@ens.ba for a free assessment of whether and when you should enter the VAT system.