This chapter reviews the current state of play in Bosnia and Herzegovina with respect to the draft 2025 Reform Agenda’s dedicated measures for improving business registration and licensing processes. It analyses ongoing efforts to simplify registration through the establishment of one-stop shops and the expanded use of electronic signatures. It also provides an overview of initiatives to streamline and harmonise licensing and permitting procedures, with the aim of enhancing regulatory predictability and increasing administrative efficiency.
Assessing Bosnia and Herzegovina's Reform Agenda for Private Sector Development
Abstract
Clear and transparent requirements for business registration, licensing and permitting are essential for private sector development, as they reduce administrative burdens, enhance legal certainty and foster a more business-friendly environment. Yet, in Bosnia and Herzegovina, lengthy and sometimes costly procedures, combined with the lack of mutual recognition of licenses and certificates, create obstacles for enterprises to register and operate nationwide, hindering progress towards a fully functioning single economic space.
To address these challenges, the draft Reform Agenda introduces several measures under the “Business Environment & Private Sector Development” pillar with the aim of simplifying and harmonising these obligations for registering and operating. Table 2.1 outlines two key priority areas1 for improving these processes, along with current state of implementation. Overall, Bosnia and Herzegovina has made good progress in digitalising the registration process by establishing key enabling conditions, such as digitising archives and developing the necessary software system. However, full e-registration is still not possible. Moreover, no progress has been achieved so far towards the mutual recognition of licences and certificates in priority economic sectors and activities between the entities.
Source: Draft Reform Agenda for Bosnia and Herzegovina (as of September 2025).
In addition to the measures set out in the draft Reform Agenda, this chapter examines several complementary areas not explicitly covered in this document. As outlined in Table 2.2, there are some additional reform steps proposed that merit policy attention and can be considered in the final version of the Reform Agenda of Bosnia and Herzegovina or in other strategic economic planning documents. Notably, there is still scope to further shorten and simplify the registration process by eliminating the practical need for double registration of businesses. Business registration systems should be developed in tandem with policies that ensure inactive companies are systematically deregistered. Furthermore, efforts to achieve mutual recognition should be complemented by a risk-based approach towards licenses and permits, applying them only where necessary and avoiding their use as a revenue source for public services.
Efficient and transparent business registration—featuring clear procedures, reasonable costs and a single point of contact for multiple requirements—is crucial for private sector development. By simplifying the formalisation of businesses, these measures lower entry barriers, encourage investment and foster a more dynamic and resilient private sector.
Business registrations are increasing, yet the overall levels remain below those of peers in the Western Balkans and the EU.
Bosnia and Herzegovina has experienced a steady increase in business creation in recent years. The post-pandemic period was marked by a notable rise in new businesses registrations, with the number surpassing 3 000 for the first time in 2022—a level that was sustained in 2023-24 (Figure 2.1).
Note: The data refers to all new business registrations of limited liability corporations, excluding the craft businesses which are registered under a separate category from companies or sole proprietorship.
Sources: (World Bank, 2025[1]); data for 2023-24 comes for entity-level tax administration offices and does not include Brčko District.
However, in terms of intensity, measured by the number of new business registrations per 1 000 inhabitants aged 15-64, Bosnia and Herzegovina lags behind its regional peers, highlighting untapped potential for increased entrepreneurial activity. With 1.48 new businesses per 1 000 inhabitants, the country falls significantly below both the Western Balkan average of 4.1 and the EU average of 3.8 (Figure 2.2).
New registrations per 1 000 people aged 15-64
Note: Montenegro’s most recent value is from 2020.
Source: (World Bank, 2025[2]).
Yet, accurately assessing the situation is challenging. The most recent official census dates back to 2013, and substantial emigration over the past decade makes the current population of the country difficult to estimate. Existing figures rely on estimates that may overstate the population due to a growing long-term diaspora, which could artificially lower per capita registration rates.
Nonetheless, evidence suggests that the relatively low number of new business registrations in Bosnia and Herzegovina may also be partly explained by entrepreneurs’ preference for sole proprietorships over limited liability companies (LLCs). Sole proprietorships are easier to establish, do not require VAT registration below an annual taxable turnover of BAM 100 000 (EUR 50 000) and involve fewer operational formalities. As of August 2025, out of 146 895 registered enterprises,2 sole proprietorships accounted for an estimated 57% of the total.
This pattern is arguably most closely linked to the predominance of small-scale and family-run businesses, concentrated primarily in the services sector, combined with limited incentives to formalise beyond sole proprietorships. Factors such as a small domestic market, weak legal enforcement of contracts and relatively limited credit markets reduce the advantages of operating as an LLC. Nevertheless, there may still be room to further simplify the registration process for LLCs and to provide better support to entrepreneurs in navigating these procedures, thereby encouraging greater uptake of this business form.
Business activity may be weaker than official figures indicate.
The possibility remains that the number of registered enterprises does not adequately reflect the actual business landscape and may be inflated. Although precise numbers are difficult to estimate, stakeholder discussions suggest that not all legal entities engage in real economic activity. For instance, they may be established to purchase real estate on behalf of citizens from countries otherwise restricted from registering property under current regulations.
In addition, business statistics likely include a number of inactive legal entities. For instance, in the Federation of Bosnia and Herzegovina (FBiH), the Financial Intelligence Agency’s register lists 41 820 LLCs that have submitted at least one financial report since their establishment, whereas the official statistics (based on Tax Administration data) show a total number of registered companies that is about 6% higher. Although precise data was not available to the authors at the time of writing, the enterprises that submitted a financial report in the last year(s) is estimated to be much lower.
The presence of inactive companies is partly due to the absence of provisions requiring founders to dissolve a legal entity once its activities have ceased. In the absence of such provisions, deregistration processes provide little incentive for formally closing companies, as they are neither streamlined nor digitalised. Centralised digital systems that allow business owners to submit automatic notifications to tax, social security, and registry authorities—as observed in some OECD countries such as Estonia and Denmark—are currently lacking in Bosnia and Herzegovina. In addition, liquidation and bankruptcy procedures tend to be costly and are often delayed by lengthy administrative and judicial processes, further causing inactive companies to officially exist (OECD, 2022[3]).
Ongoing efforts to simplify business registration through one-stop shops have made progress, although implementation significantly varies across the country.
One-stop shops, which consolidate a range of services for businesses in a single physical or virtual location, have become an essential tool in business registration processes. By merging various registration steps into a single, streamlined procedure, these platforms reduce administrative burdens for businesses while also enhancing cost-effectiveness. While the FBiH, Republika Srpska (RS) and the Brčko District have all made strides in implementing such systems, differences in both the scope and the level of implementation remain.3
The physical one-stop shop of RS has been in operation since 2013, overseen by the Agency for Intermediary, IT and Financial Services (APIF), which maintains a network across 11 locations.4 The introduction of the one-stop shop consolidated multiple processes that were previously handled by separate institutions. APIF now manages the submission of applications to the competent court and tax office, eliminating the need for entrepreneurs to visit these institutions themselves. This streamlined process includes assigning a tax ID and statistical number to the company. Nevertheless, the APIF remains unable to provide facilitatory services related to VAT and customs numbers. These functions are expected to become operational once the necessary technical preconditions are fulfilled.
The FBiH Government announced the establishment of a physical one-stop-shop system in 2015; however, it has not been implemented to date. The fragmented administrative structure and decentralisation of decision-making across cantonal governments have hindered the introduction of a functional, entity-wide system. In recent years, efforts have focused on pilot digital initiatives that emulate a one-stop shop, most notably the e-Registry platform (bizreg.ba), which centralises company registration through the municipal courts in two cantons, Sarajevo and Travnik, and provides access to business entity data (see the next section for more information).
In Brčko District, the Registration Court administers its own physical one-stop shop framework, which is part of a broader effort to consolidate business registration services. This system provides a centralised point for the completion of key registration steps, including the allocation of an identification number and registration with the tax authority. Although legislation permits the integration of customs and VAT number registrations under the jurisdiction of the Indirect Taxation Authority of Bosnia and Herzegovina (ITA), technical and institutional barriers continue to hinder its implementation.
Progress towards a complete electronic business registration system has been slow and uneven.
The use of digital portals alongside physical one-stop shops has increased in recent years; however, these portals do not yet offer a fully digital experience, as in-person visits are still required to complete registration procedures. The absence of fully digitalised registration systems imposes administrative burdens on businesses and makes it difficult for firms to update statutory information on their operations and governance without visiting the relevant offices in person.
In RS, the integrated system for registering entrepreneurs and businesses (http://eregistracija.vladars.rs/) was launched in 2021.5 The necessary conditions for e-registration, including the digitisation of relevant archives and the development of enabling software, are in place. However, the full implementation of e-registration is not possible due to the continued absence of e-signatures (see the next section for more details).
Similarly, the FBiH does not have an operational electronic registration system, although substantial progress has been made recently. In 2023, the FBiH adopted the necessary bylaws to enable the introduction of electronic business registration and digitise registration archives,6 while also beginning the development of a software solution to digitally link the relevant public authorities involved in the registration process. With support from the Swiss Government and the International Finance Corporation (IFC), an entity-wide e-registration portal has been developed, but it is not yet functional. As noted earlier, the BizReg digital platform in the Sarajevo and Travnik cantons represents the only prior attempt at electronic registration, allowing users to partially complete registration procedures online. However, the pilot has achieved only limited success due to missing key functionalities, leaving its continued use uncertain.
In Brčko District, electronic business registration is technically available, as the amendments to relevant legal and bylaw frameworks in 2020 allow for the use of electronic documents in official procedures. The District has since also digitised all relevant documents and case files, integrating them into the new system. While registration applications can be submitted online via the official website (http://bizreg.osbd.ba), the platform is not fully operational in practice due to the absence of e-signatures.
Bosnia and Herzegovina lacks a unified database linking the entities and Brčko District, which would enable electronic communication between courts, tax administrations and other relevant institutions. Despite limited progress at the national level, the RS business entities’ register (www.bizreg.esrpska.com) has been linked and incorporated into the Business and Financial Data Exchange (BIFIDEX) portal, a regional digital platform developed to facilitate transparent business operations within the Common Regional Market of the Western Balkans.
Business registration laws are largely harmonised across entities, with similar procedural steps required throughout the registration process.
The business registration process is governed by legislation at both the state and entity levels. Specifically, the state-level Law on the Registration of Business Entities aims to create a unified registration system across the two entities and the Brčko District, establishing the foundation for a more streamlined process. In parallel, both entities and Brčko District have enacted their own business registration laws, which are largely identical..
The alignment of the laws on registration has led to broadly harmonised registration requirements and processes, with similar documentation required across the country. Table 2.3 outlines the registration process for an LLC, the most common form of business in Bosnia and Herzegovina.
1. Regarding Step 2, in the FBiH, the court shall immediately submit an application for entry of a subject of entry foundation to the competent tax authority at the seat of a subject of entry for assignment of a tax identification number. Along with submission of an application under paragraph, the Court shall, without delay, request the competent tax authority to submit a tax registration number within 24 hours of receipt of the application, or at the same time inform the court about the reasons for not assigning a tax identification number. In case of issuance of a tax identification number by the tax authority, the court will not require the attachment of any other evidence of the existence and/or settlement of tax debt. In RS, the registration court checks electronic compliance with conditions, namely: data related to proof of settled obligations based on direct taxes for physical persons and legal entities of the founder on the territory of the RS.
The absence of fully functional one-shop systems results in longer business registration times.
Official procedures for establishing a business in Bosnia and Herzegovina indicate that the process should take five days in the FBiH and three days in RS. In practice, however, the process is significantly longer. A survey conducted by the Foreign Investment Promotion Agency (FIPA) indicates that completing all required steps, including the procedures to be undertaken before submitting the application and the actual registration process, in the FBiH can take up to a month. Furthermore, the World Bank’s B-READY provides additional evidence that the post-registration process—the set of activities required after a new firm is registered for it to formally begin operations—is also lengthy. The report estimates that in Sarajevo canton, the average time to register and make a domestic firm operational at 79 days, rising to 88 days for foreign firms (World Bank, 2024[6]).
As previously noted, continued necessity for in-person visits to multiple institutions, primarily in the FBiH and Brčko District, extends the time needed to collect all the documents required for business registration. When there is no digital platform available for e-registration, the lack of direct online payment options for registration-related fees, which must then be processed through a commercial bank, can further slow the process.
Yet, obtaining a customs and tax identification number from the ITA remains a critical bottleneck, as the process is often slow and highly bureaucratic, with delays of several weeks frequently reported by stakeholders. Limited digitalisation means applicants must visit offices in person and submit documents physically, while extensive manual verification further prolongs waiting times. These delays are compounded by the ITA’s limited staffing and administrative capacity.
Costs associated with business registration are higher in the FBiH and Brčko District compared to RS.
Costs of business registration (i.e. the total expenses a firm must pay to legally establish a business) currently varies between entities, with firms in the FBiH and the Brčko District facing higher expenses than those in RS (Table 2.4). In RS, the introduction of the one-stop shop system significantly reduced registration costs, lowering them from approximately BAM 1 500 to around BAM 200. In contrast, registration costs can be as high as BAM 1 380 in Brčko District or BAM 1 870 in the FBiH.
A significant factor contributing to the cost discrepancy between entities is the requirement to pay founding capital. While this amount is not a forfeited cost, it constitutes an upfront financial obligation that may constrain entrepreneurial entry, particularly for smaller firms with limited resources. For example, the minimum founding capital in the FBiH is set at BAM 1 000, in contrast to the symbolic amount of BAM 1 required in RS.
Furthermore, several other procedural costs are higher in the FBiH. For example, registration request fees can reach up to BAM 500 in certain cantons within the FBiH, compared to a flat rate of BAM 35 in RS. Additionally, unlike RS and Brčko District, the FBiH does not waive the publishing fee for a company’s initial registration in the Official Gazette.
Although a one-time registration in either entity or the Brčko District is formally recognised throughout the entire country, in practice, businesses often establish separate legal entities or branch offices in the other entity to ensure smooth operations. As a result, firms aiming to operate nationwide face duplicated registration costs, creating more administrative burden for businesses.
Note: Registration cost by cantons in FBiH: Sarajevo Canton – BAM 45; Zenica-Doboj Canton – BAM 400; Bosnian-Podrinje Canton – BAM 120; Tuzla Canton – BAM 170; Una-Sana Canton – BAM 400; Herzegovina-Neretva Canton – BAM 190; Posavina Canton – BAM 500; Canton 10 – BAM 400; Central Bosnia Canton – BAM 260; and West Herzegovina Canton – BAM 500.
Sources: (Foreign Investment Promotion Agency of Bosnia and Herzegovina, 2022[7]), inputs from Brčko District’s Department for European Integrations and International Cooperation.
Way forward
Finalise development and operationalisation of digital one-stop-shops for business registration. Despite the existence of centralised portals that act as digital one-stop-shops, none currently provide a seamless, end-to-end online registration experience. Technical shortcomings, notably the lack of e-signatures, and partial institutional integration hinder their effectiveness. The BiH authorities should ensure regulatory alignment to enable the secure exchange of data across tax, customs, statistical and judicial institutions, as well as invest in modern, interoperable digital infrastructure. Enabling full online payment of all fees on these portals would further simplify the processes. The OECD Recommendation on Human-Centred Public Administrative Services can offer insights on the development and implementation of digital one-stop-shops with people’s needs as the principal consideration in their design and delivery (OECD, 2024[8]).
Revisit physical one-stop-shops with a view to serving the least digitally savvy groups. OECD experience shows that although digital portals are increasingly becoming the primary interaction channel with businesses, including for registrations, they do not fully eliminate the need for physical counters (OECD, 2020[9]). Those with limited digital connectivity or skills, often in rural areas and among those establishing sole proprietorships, may still prefer in-person services to register and obtain related information. Entities are therefore encouraged to assess the needs of entrepreneurs and maintain physical services, albeit in a scaled-down form to lower expenses associated with the purchase or lease of buildings and the training of frontline staff.
Set clear time limits for issuing VAT tax numbers. Given the ITA’s slow process for issuing customs and tax identification numbers, a legal deadline for issuing tax numbers should be introduced, along with a monitoring system to ensure compliance. Establishing such a deadline would also create additional incentives to digitalise procedures and strengthen the administrative capacity of the ITA.
Reduce or eliminate founding capital requirements in the FBiH and Brčko District. Lowering the minimum capital threshold for LLCs in the FBiH and Brčko District could help to lower barriers to entry and consequently encourage entrepreneurship. Given that RS has already set a symbolic requirement of BAM 1, aligning policies across the country could also help to streamline the business environment and enhance legal consistency. Alternatively, the paid-in minimum capital requirement could also be eliminated across the country, requiring founders only to demonstrate sufficient equity in their financial plans, as is done in many OECD countries.
Improve inter-entity co-ordination to reduce double registration. If a company operates physically or hires staff in the other entity, it is common to register branch offices, even though the legal business name is mutually recognised. Better co-ordination on tax, social security and business licensing matters could help prevent the need for duplicate registrations. Examples from Belgium and Switzerland, both of which have decentralised governance systems, may offer insights on implementing flexible yet harmonised approaches to business registration (Box 2.1).
Belgium
Belgium’s Accredited Business Counters provide a streamlined model for business registration that could inform efforts to simplify the establishment of companies in Bosnia and Herzegovina. Despite Belgium’s decentralised governance structure, businesses can register seamlessly through a network of eight accredited organisations operating approximately 156 offices nationwide.
These business counters function as a one-stop shop, enabling entrepreneurs to complete the mandatory registration of their businesses with the Crossroads Bank for Enterprises, Belgium’s central business registry. Regardless of their physical location, businesses can choose any counter to complete their registration, reducing administrative complexity. Some counters also facilitate related formalities, such as securing activity-specific permits or activating a VAT number.
Belgium’s business counters support both domestic and foreign entrepreneurs, ensuring accessibility by offering services in multiple languages (Dutch, French, German and English). Certain counters, such as Securex and Partena, also allow for online registration, enhancing efficiency and reducing the need for in-person visits.
Switzerland
The Swiss Commercial Register enables businesses to register only once, regardless of their location of operations, with their details accessible nationwide. Each of the country’s 26 cantons manages its own register but must comply with federal standards set by the Swiss Federal Law on the Commercial Register. This ensures uniformity and co-ordination across the cantons, while the central storage and processing of data improves efficiency.
Moreover, cantons serve as the primary points of contact for business registration. Businesses can visit representative offices in each canton for support services. These offices typically assist with providing information on the registration process and legal requirements and can help prepare and submit the necessary documents for inclusion in the commercial register. This approach, which strikes a balance between decentralisation and federal oversight, could serve as an effective model for Bosnia and Herzegovina to better align its business registration processes across the two entities and Brčko District
Note: The Swiss commercial register is an official database managed by the cantons (member states of Swiss Confederation): www.zefix.ch. It contains the main information on registered companies
Update and enhance guidance on the required steps and costs to register a business, using this as an opportunity to simplify and transform the process. Currently, information on registration documents and fees is fragmented, provided separately by the entities and cantons. Comprehensive nationwide resources are limited,7 making it difficult, especially for foreign investors, to navigate the country’s complex administrative system. RS authorities have indicated that the ongoing update of the RS Point of Single Contact8 will also include information on related procedures at other levels of government. This is a positive step that could serve as a model for similar initiatives in other parts of the country.
Relevant public authorities are encouraged to collaborate to develop a comprehensive guide covering all necessary steps for entrepreneurs and investors. In doing so, they should adopt a “life event” approach,9 mapping the full experience of individuals in registration and ensuring that all relevant authorities are involved based on a whole-of-government perspective. This approach would also help to reduce the complexity and administrative burden of the registration process (OECD, 2024[8]).
Establish a unified business registry that connects the individual registries of the entities and the Brčko District, thereby encompassing all enterprises in Bosnia and Herzegovina. Enhanced digitalisation and improved interoperability between entity-level systems would pave the way for such a registry without infringing on entity-level competences. This would boost the transparency, accessibility and availability of accurate, up-to-date business statistics. Such an approach would also strengthen the functioning of a single internal market, reducing administrative fragmentation for businesses.
Electronic signatures enable businesses to conduct legal and administrative transactions digitally, thereby lowering transaction costs, improving operational efficiency and strengthening regulatory compliance. Moreover, they can support Bosnia and Herzegovina’s integration into the EU market through secure, legally recognised cross-border digital transactions.
Electronic signatures for businesses remain unavailable due to ongoing legal and institutional challenges.
Despite some progress in recent years, the implementation of electronic signatures in Bosnia and Herzegovina has proceeded slowly. The legal foundation originally came from the adoption of the state-level Law on Electronic Signatures in 2006, which establishes the framework for digital authentication in the country. For years, the law's effectiveness remained relatively limited due to its lack of alignment with the EU’s eIDAS regulation.10 However, a new Law on Electronic Identification and Other Trust Services of Bosnia and Herzegovina, which fully complies with the eIDAS directive, has been prepared, although its adoption is currently stalled due to a lack of support by the government of RS (Government of Bosnia and Herzegovina, 2024[13]).
Given the prolonged absence of updates to the 2006 Law, the entities both have pursued separate regulatory approaches. In the FBiH, a Law on Electronic Signatures was adopted in 2020, aligned with the eIDAS directive. However, its full implementation still requires amendments to key legislation, notably the Law on Registration of Business Entities and the Law on Electronic Documents. Similarly, RS has enacted its own laws on electronic signatures in 2008 and electronic documents in 2015. The Ministry of Scientific and Technological Development, Higher Education and Information Society maintains the "Register of Qualifying Certification Bodies," which lists certification bodies authorised to issue qualified electronic certificates (Government of Republika Srpska, 2025[14]).
In addition to legal and regulatory challenges, technical and institutional gaps have also hindered the implementation of digital signatures. It was only in 2024 that the Agency for Identification Documents, Registers, and Data Exchange (IDDEEA) developed the necessary capabilities to operationalise these signatures. A Memorandum of Understanding signed with GIZ in 2024, aimed at creating a digital identification platform, also contributed to this progress (IDDEEA, 2025[15]). As of July 2024, IDDEEA began issuing qualified electronic signatures, supported by the establishment of a Public Key Infrastructure (PKI). The agency’s services have been certified for compliance with eIDAS standards, following audits in 2021 and recertification in 2023, ensuring recognition within the EU (IDDEEA, 2024[16]). It can currently issue qualified certificates only to natural persons, not to legal entities. Among the other three bodies currently accredited, the ITA issues digital signatures for businesses; however, these signatures are presently usable only within the ITA’s own systems, such as for electronic VAT and customs filings.
The lack of mutual recognition of electronic signatures between the entities poses additional burden for enterprises.
Due to the existence of separate regulatory frameworks and accreditation institutions between entities and the state level, companies from one entity must provide additional documentation to use electronic signatures in the other, complicating and delaying operations. Furthermore, this fragmented approach hampers the country’s integration with the EU’s electronic signature framework, which recognises only one single national accreditation authority. Indeed, the rollout of electronic signatures by IDDEEA has been affected by tensions between state and entity-level authorities. Namely, the RS Ministry of Interior raised concerns over jurisdictional authority and the legal competence of IDDEEA, prompting ongoing discussions regarding the governance and oversight of electronic signature issuance (IDDEEA, 2024[16]).
Way forward
Adopt the new Law on Electronic Identification and Other Trust Services at the state level to align with the EU’s eIDAS directive. This will require the support of both entities to pave the way for nationwide use of e-signatures. Moreover, the entities should also have the proper legal foundation for electronic signatures. For example, in the FBiH, legislation such as the Law on Registration of Business Entities and the Law on Electronic Documents should be amended to enable digital transactions.
Establish a single national accreditation authority to meet EU requirements. The good practice from Estonia demonstrates the value of consolidating certification oversight under a single, independent national authority (Box 2.2). Moreover, establishing an interoperable, secure infrastructure for issuing and validating electronic signatures, particularly for legal persons, could significantly reduce administrative burdens, promote cashless transactions and facilitate EU integration. Full alignment with eIDAS, paired with harmonised entity and state-level legislation, would help Bosnia and Herzegovina realise the full potential of digital signatures for both businesses and government services.
Estonia's advanced digital identity and electronic signature infrastructure offers a relevant model for Bosnia and Herzegovina to follow, as it successfully operationalised and harmonised an existing patchwork of electronic signature regulations. Estonia has thoroughly integrated electronic signatures into the public and private sectors and made digital authentication a standard part of routine administrative and commercial transactions.
Estonia’s system is built around the national digital ID, issued to all citizens and residents, which serves as a secure and legally sound electronic authentication and signature tool. Enabled by a robust legal foundation fully aligned with the EU's eIDAS Regulation, the Estonian electronic signature is accepted throughout the EU and enables seamless cross-border transactions. Resident can authenticate documents, receive services, file tax returns, and conduct business with government institutions, remotely and paperless, using their e-ID card, mobile ID, or Smart-ID app.
Crucially, Estonia boasts a single national accrediting and supervisory body, the Information System Authority (RIA), which ensures consistency, conformity, and reliability of all certifiers and service providers. This central governance structure has eliminated jurisdictional conflicts and duplications, prevalent with Bosnia and Herzegovina's issues today. Estonia also benefits from strong inter-agency interoperability and secure infrastructure such as the X-Road platform, supporting real-time sharing of data by institutions and an enriched user experience.
Source: (E-Estonia, n.d.[17]).
When licensing and permitting procedures are clear, transparent and accessible, businesses face fewer bureaucratic obstacles, leading to reduced processing times and lower compliance costs, which in turn can facilitate the growth and dynamism of the broader business environment.
Ongoing reforms aim to improve the efficiency and ease of licensing and permitting systems.
The licensing and permitting process in Bosnia and Herzegovina is complex, compounded by the large volume of regulations that entrepreneurs and enterprises must navigate. In a recent survey, more than one-third of businesses in the country identified business licenses and permits as a major or moderate obstacle to their growth (RCC, 2024[18]).
Licenses and permits may be issued at the entity, cantonal or municipal level, with certain cases requiring approval or consent from all three in the FBiH. Although recent data are lacking, a previous study identified that companies must deal with over 1 000 permits and licenses across the different levels of government, including more than 100 at the state level, 350 in the FBiH, 300 in RS, 160 at cantonal levels and 90 at the municipal level (Sahovic, Tetyora and Radaslic, 2015[19]).
The process of streamlining these procedures has been underway for several years. In RS, a significant step was taken in 2021 with the launch of the “Optimisation of Administrative Procedures and Formalities” project. This initiative began with a detailed analysis of administrative procedures, including permits, approvals and licenses, collected in a single register of formalities. The findings have been used as a foundation for current efforts to propose how to best simplify some of these processes (Government of Bosnia and Herzegovina, 2024[13]). Furthermore, RS adopted an action plan in 2021 aimed at simplifying or abolishing certain formalities. Of the total formalities examined, 42 (4.4%) were proposed for abolition, whereas another 243 (25.5%) were proposed for simplification.
Brčko District has also taken steps to streamline procedures. Efforts to reduce the number of required permits and simplify administrative processes are ongoing and closely tied to the adoption of the new Law on Business Entities of Brčko District. As part of this reform, advances have been made in digitalising documentation and publishing procedural guidelines on the website of the Department for Economic Development, Sport and Culture.
Despite some advances toward digitalising licensing and permitting, implementation remains incomplete.
Across the administrations of Bosnia and Herzegovina, authorities have taken some initial steps to improve the licensing and permitting processes through digitalisation in centralising information and enhancing accessibility. However, the ability to apply for permits and licenses online remains extremely limited, with only a few isolated pilot cases in operation. Moreover, the system’s decentralised nature requires businesses to navigate multiple levels of government to obtain the necessary information, which can sometimes lead to conflicting guidance from different sources (Foreign Investment Promotion Agency of Bosnia and Herzegovina, n.d.[20]).
In RS, the designated portal, the Single Point of Contact for Businesses (https://pscsrpska.vladars.net/sr), provides comprehensive information on the permits and licenses required for legal operation. It also offers guidelines for obtaining these permits, including details on the responsible institutions, fees, and necessary documents. Banja Luka and Gradiška serve as good practice examples by allowing applications for construction permits to be submitted through the one-stop shop system, although these applications cannot yet be completed digitally.
Conversely, businesses in most parts of the FBiH and Brčko District must obtain information by contacting the relevant department or consulting individual departmental websites.11 In 2018, the FBiH Government adopted a Decision on e-Administration, which mandated the creation of a register of all administrative procedures. However, this initiative has not been fully realised, and the designated website (www.eupravafbih.gov.ba) remains inaccessible. More positively, at the cantonal level, some progress has been made. Notably, Sarajevo Canton and Tuzla Canton have each developed online platforms to improve access to information on administrative procedures. Zenica-Doboj Canton has also launched an online registry detailing procedures by ministry and agency. However, for the remaining cantons in FBiH, no publicly available registries currently exist. In Brčko District, there is also no centralised platform listing all licences and permits by activity.
While digitalisation of general licensing and permitting processes remains at an early stage across the country, some sector-specific efforts have begun to emerge, particularly in areas such as construction and environmental permits (Box 2.3). In both entities, initiatives have been launched to streamline procedures, improve transparency and partially digitalise certain steps of the process.
Construction permits
The introduction of an e-construction permitting system by USAID in 2022 aimed to automate the entire permitting process in the FBiH by managing legal steps, document submission, and inter-institutional communication online - from submission to approval (Nextsense, 2022[21]). The first pilot was launched in Sarajevo in May 2023, starting with the municipalities of Tešanj and Centar Sarajevo, later expanding to the City of Bihać and the Municipality of Žepče. In 2024, Una-Sana Canton took further steps by amending legislation to allow for the use of the e-construction permit system, cutting approval times in half. Despite these promising developments, unresolved issues related to the use of electronic signatures continue to hinder the full implementation of the e-construction permitting system.
In 2024, the USAID conducted a holistic performance evaluation of the project’s progress, including key next steps to drive the project forward (USAID, 2024[22]). The review deemed that implementation efforts have demonstrated promising results, particularly where legal reforms and institutional buy-in supported adoption. USAID has also outlined a series of recommendations aimed at scaling impact and improving ongoing implementation. Central to these efforts is the plan to expand e-construction permitting to additional municipalities and cantons in the FBiH, alongside targeted technical support for cantonal-level public procurement bodies (CPBs) looking to adopt the e-CPP platform. Future interventions will also prioritise the deployment of an improved inspection software, designed to reduce corruption.
In parallel, USAID encourages a sustainable approach for participating entities, through the implementation of sector-specific corruption risk assessments prior to software deployment. Furthermore, the project has the ambition to launch cybersecurity evaluations for partner institutions, and to prepare a comprehensive inventory of all existing IT systems in the FBiH. To support system integrity and continuity, institutions will be urged to replace outdated equipment and enter cost-sharing arrangements during the initial intervention phase.
In RS, the amendments to the Law on Spatial Planning and Construction in 2019 introduced the possibility of issuing construction permits through a one-stop shop and electronic procedures. The Law also provides the legal basis for a decree to regulate the electronic exchange and processing of documents when issuing location requirements, construction, and use permits, including fee calculation and data management. However, this decree has not yet been drafted, as its implementation requires technical prerequisites such as software development, hardware provision, inter-institutional connectivity and full deployment of electronic signatures.
Environmental permits
Although some digital tools exist in both RS and the FBiH, businesses are still unable to complete the entire environmental permitting process online. In RS, digital tools are already being used to streamline parts of the environmental permitting procedure, demonstrating a growing commitment to simplifying administrative requirements for businesses. While full online submission is not yet available, existing systems lay a solid foundation for future digital integration. Meanwhile, in the FBiH, none of the necessary permits, approvals, or notifications (particularly those related to renewable energy installations) are offered online, meaning that all steps must be completed in person or via postal submission.
Recognising these limitations, the FBiH Government amended the Law on Spatial Planning and Land Use in 2024 to enable online permitting for construction, which could include renewable energy projects. This reform paves the way for reducing administrative inefficiencies and the need for in-person visits, offering a more streamlined approach to environmental permits.
Lack of mutual recognition of licenses and certificates between the entities poses a threat to the single economic space.
Due to the lack of mutual recognition, companies in Bosnia and Herzegovina are often required to re-apply for licenses and certifications in order to operate nationwide, increasing administrative costs and delaying market access. Given the country’s constitutional arrangements and the local nature of certain economic activities, mutual recognition of all business-related licenses and certificates may not be a realistic expectation. However, there is a clear need for mutual recognition in sectors, particularly those of a cross-border nature, where licenses and certifications are subject to EU-level regulation or where compliance with EU rules will become increasingly important as Bosnia and Herzegovina progresses on its path toward EU integration.
In general, framework laws and legislation at the state or entity level are harmonised; however, bylaws often differ substantially, resulting in inconsistent procedures and requirements. Furthermore, the uneven pace of alignment with the EU acquis has contributed to diverging sectoral requirements for conducting operations in each entity. Stakeholder consultations revealed that activities in sectors of particular economic importance across both entities, such as construction, are especially affected. For example, building and engineering contractors are often required to obtain licences in both entities to carry out their work.
In contrast, the movement of goods remains relatively unaffected, as documents from conformity assessment bodies are mutually recognised. Challenges remain, however, for certain products regulated by special laws or regulations. For example, in the chemical sector, the sale of identical products may be subject to different regulatory requirements depending on the entity, with some products allowed in one entity but prohibited in the other (Box 2.4).
Between 2016 and 2020, RS adopted new regulations concerning the regulation of chemicals and biocidal products, aligning them with the EU acquis. These regulations introduced stricter market authorisation criteria, effectively prohibiting the sale of chemical products from the FBiH in RS unless the products were re-authorised under RS’s framework. As a result, many products legally sold in the FBiH were removed from store shelves in RS.
This situation persisted for four years due to the absence of harmonised product standards across the entities. However, in 2020, the FBiH updated its regulatory framework to incorporate EU-aligned standards, enabling mutual recognition of product authorisations and restoring cross-entity market access.
This example underscores the importance of regulatory harmonisation and mutual recognition for fostering a unified internal market. There is a need for official mechanisms that improve automatic acceptance of licenses and product authorisations across entities, particularly when aligned with EU standards. Such reforms would facilitate trade, reduce compliance burdens and promote economic integration.
Source: OECD stakeholder consultations with private sector representatives, conducted during the preparation of this report.
Para-fiscal charges, including license and permit fees, are considered costly.
Businesses in Bosnia and Herzegovina have identified parafiscal charges, including license and permit fees, as a key challenge, reporting that non-tax levies are “high, dysfunctional, non-transparent and frequently collected” (Tomaš, 2021[25]). The cumulative effect contributes to the cost of doing business in the economy.
Parafiscal charges play an important role in financing the Bosnia and Herzegovina’s large public sector, making comprehensive reform of the system challenging. The decentralised structure grants fiscal authority to all levels of government (state, entity, cantonal), allowing them to independently impose various non-tax charges, fees and penalties. In fact, employee compensation accounted for 25.8% of government expenditures in Bosnia and Herzegovina, compared to an average of 20.6% in OECD countries and 20.3% in EU member states (OECD, 2025[26]; CEIC, 2024[27]). This creates little incentive for public authorities to relinquish revenue streams derived from parafiscal charges, presenting additional difficulties for mutual recognition of licences and permits. Some entity-level legislation offers partial definitions of non-tax revenues, yet these typically lack clarity regarding the intended use of the collected funds. Nevertheless, reliance on these levies to finance public activities, particularly through business licensing, is widely seen as inefficient when compared to broader-based taxation systems (World Bank, 2010[28]).
Despite the challenges, businesses are increasingly questioning certain para-fiscal charges. For example, in the FBiH, the non-tax fee for displaying a company’s name (e.g. on signs of business premises) is currently being contested, with ongoing court procedures aimed at abolishing it. In contrast, this fee was abolished in RS in 2022. Additionally, there are concerns regarding uniform fees applied to all businesses, such as forestry and tourism fees, where firms argue that only those operating within the relevant sectors should be liable for these charges.
The existing registers provide some clarity on the parafiscal obligations, aiming to address uncertainty for businesses.
The fragmented system has resulted in an extensive, uncoordinated landscape of parafiscal obligations, which remains poorly mapped and inadequately monitored. The OECD estimates that more than 2 000 distinct non-tax obligations are imposed by various levels of government.
Some efforts have been made to improve transparency through the creation of registers cataloguing fiscal and non-fiscal payments. In RS, the Register of Tax and Non-Tax Payments lists 594 items: 15 tax-related and 579 non-tax obligations, including 5 contributions, 2 membership fees, 206 taxes and 366 fees. The Fiscal Register for Brčko District records 252 payments, of which 234 are non-tax12 (Plahonjić, Bugari and Kozadra, 2023[29]). In the FBiH, a parafiscal register is available on the webpage of Ministry of Finance of FBiH (https://tin.fmf.gov.ba/). In 2024, the register contained 1 040 non-tax payments and 159 non-tax payments by the type of revenue, covering all federal, cantonal and municipal non-tax payments.13
Despite the existence of these registers, there is limited evidence that they are regularly updated and fully comprehensive. A notable concern is that the FBiH register largely omits detailed information on actual expenses and does not clearly specify whether charges are fixed amounts or calculated as a percentage of turnover or earnings.
Way forward
Apply the OECD’s “Best Practice Principles for Licensing and Permitting.” These principles can offer good guidance to the authorities of Bosnia and Herzegovina, as they offer twenty sub-principles to ensure that licenses and permits are meaningful, effective and efficient regulatory tools that can support growth and competition (OECD, 2024[30]). Some of the sub-principles that would especially be helpful are summarised below:
Limit the use of licenses and permits based on risk. They should be used only when strictly necessary, particularly for high-risk activities where ex ante conditions and safeguards are essential for risk mitigation. Licenses and permits should not serve as a source of revenue. Funding for public services should come from other channels.
Do not digitalise without simplifying first. The greatest barriers to efficiency in licensing and permitting are typically found in legal or procedural complexities, the lack of institutional co-ordination and the use of overly technical and complex language. These barriers will not disappear merely by digitalising processes, which may instead result in increased bureaucracy and greater barriers to compliance.
Co-ordinate across government: Efficient co-ordination requires the participation of different actors involved in licensing and permitting, from high-level strategy makers to operational roles, and across every level of government. Co-ordination efficiency could be improved through the collective adoption of a life event approach, which would help map and illustrate the various licensing and permitting procedures, measures and information obligations required for a business to achieve its intended goals (e.g. zoning permits).
Advance on digitalising the business licensing and permitting processes. While both entities maintain centralised licensing registers, businesses must still apply in person to the relevant institutions. Similarly, existing e-permitting registries are not fully digitalised, requiring businesses to submit applications either in person or by post. As such, introducing digital application processes would save time, reduce compliance costs, and enhance access for smaller firms located far from administrative offices. A key prerequisite for a more comprehensive reform is the implementation of electronic signatures, enabling businesses to complete the process entirely online, and develop all other requirements for online processes.
Identify licenses and certificates related to priority economic sectors and activities, and work towards harmonising secondary legislation. Entities would benefit from conducting a comprehensive review to analyse and identify the licenses for which mutual recognition would be most beneficial to businesses and make the greatest economic sense. Subsequently, the existing bylaws related to these licenses could be reviewed to identify inconsistencies, and guidelines or templates for drafting bylaws that promote the harmonisation of priority licenses across all levels of government could be developed. To support this process, inter-entity working groups could be established, focusing on key sectors such as construction.
If full harmonisation is not feasible in the foreseeable future, consider introducing Mutual Recognition Agreements (MRAs) as a one-off, short-term solution to allow entities to accept each other’s licences and certifications in select economic sectors and activities. Such an approach, if politically feasible, would reduce administrative burdens on firms operating across entity lines until the regulations concerning priority licenses and certificates are harmonised. These agreements should also apply to ex post checks, including regulatory enforcement and inspections (OECD, 2024[30]).
Prioritise the reduction or elimination of unnecessary parafiscal charges. Where registers exist, governments should use them to conduct fiscal burden analyses to identify and remove unjustified, redundant or excessively high charges. This would support a more transparent and cost-effective regulatory environment, in line with international best practices. Regular reviews can ensure that remaining charges are proportionate to the services provided and do not place an undue burden on businesses, particularly small- and medium-sized enterprises (SMEs). Croatia offers a good example, having made notable progress in streamlining and discontinuing such charges (Box 2.5).
Croatia has taken some strides toward reducing and abolishing non-tax and parafiscal charges, which once exceeded 250, to further strengthen its business environment. Efforts date back a decade, to 2013, when the government of Croatia really intensified its efforts, abolishing or significantly reducing non-tax revenue by more than EUR 7 million over a two-year period. In 2015, the government also created a new Registry of non-tax payments, which not only aimed to help businesses stay compliant by providing a clear overview of non-tax fees they are required to pay but also sought to increase transparency and trust.
In 2020, Croatia went one step further with the adoption of its first Action Plan for the Reduction of Non-tax and Parafiscal Charges. This plan contained a total of 50 relief measures, of which 33 were related to the abolition or reduction of selected non-tax and parafiscal charges. By the first quarter of 2022, all 50 planned measures had been implemented, resulting in a total relief of around EUR 70.6 million. A new Action Plan was adopted in December 2023, featuring an additional 73 relief measures totalling EUR 132.8 million.
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← 1. The original draft Reform Agenda included a third priority area related to the establishment and operationalisation of a New Computerised Transit System (NCTS) at an international level. However, this area was excluded due to its lack of relevance within the scope of this report.
← 2. In RS, as of August 2025, the total number of registered LLCs was 18 342, while the number of sole proprietorships stood at 26 370. In FBiH, the total number of registered active LLCs was 44 381, and the total number of registered sole proprietors was 57 802.
← 3. Interoperability across entities has yet to be achieved. A central feature of a functioning digital framework is seamless electronic communication between courts, tax administrations, and other institutions in both entities. Such a system would allow for electronic submission of applications through dynamic PDF forms accessible via public portals. This functionality will then be supported by a legal framework that outlines the parameters of the electronic registry system and governs data exchange between relevant institutions.
← 4. The one-stop shop business registration system is operational in Banja Luka, Bijeljina, Doboj, East Sarajevo, Foca, Gradiska, Modrica, Prijedor, Sokolac, Trebinje and Zvornik.
← 5. At the time of writing, the website remained largely inaccessible outside Bosnia and Herzegovina, preventing OECD authors from conducting a more in-depth analysis.
← 6. The digitisation process involves scanning approximately 17 million paper documents from business entity registers, with 90% of courts having completed scanning and now indexing the documents.
← 7. FIPA’s “Starting and Operating a Business” guide, though not exhaustive, attempts to address this gap.
← 8. The Point of Single Contact can be accessed here: https://pscsrpska.vladars.net/sr.
← 9. According to the OECD Recommendation on Human-Centred Public Administrative Services, life event refers to a change in the circumstances of a user which creates a need to use a public administrative service or services, and that may require co-ordination and integration between different service providers.
← 10. The eIDAS regulation supports secure cross-border transactions by providing a framework for digital identity and authentication, fostering trust in electronic interactions and enhancing the delivery of digital services across the EU. For more, see: https://digital-strategy.ec.europa.eu/en/policies/eidas-regulation.
← 11. This information came from written inputs from representatives from the Department for Economic Development, Sport, and Culture in the Government of Brčko District.
← 12. The non-tax fees include 16 contributions, 29 administrative fees, 3 court charges, 130 communal fees and 56 fines.
← 13. The OECD authors could not verify this information, as the webpage was not accessible at the time of writing. This information was reported by the FBiH authorities during the report’s preparation.