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13.2. Thin-capitalization and other Restrictions to Interest Deduction

Under the thin-capitalization rule in FBiH, interest expenses on loans received from related parties are allowed as a deduction for corporate income tax purposes, provided the ratio between the total debt from related parties and the company’s registered equity does not exceed 4:1. In case the debt/equity ratio exceeds 4:1, then the interest expenses on loans from related parties are not deductible.

However, the thin-capitalization rule does not apply to

  • Banks;
  • insurance companies; and
  • leasing companies (effective 16 January 2020).

There are no thin-capitalization rules in RS / BD.