The tax system is based on self-assessment. However, many large-sized companies are under continuous audit by the tax authorities.
In the new Tax Procedures Law 2020, the Republika Srpska (RS) introduced provisions for indirect determination of the tax base in the following cases:
- A taxpayer has not filed a tax return;
- The business records of a taxpayer are not available or not complete or do not enable an accurate determination of the tax base; or
- There is evidence of assets, liabilities, or expenses that cannot be explained in relation to the income declared by a taxpayer.
In the aforesaid cases, the tax authority may, at its own discretion, determine the methods to be used in estimating the tax base and making an assessment, with the burden of proof falling on the tax authority.