Tag: Bosnia and Herzegovina

Bosnia and Herzegovina Tax Collections Plunge

Photo: Frank Parker
Income from excise taxes on domestic tobacco and tobacco products in Bosnia and Herzegovina (BiH) has decreased one hundredfold in six years, reports The Sarajevo Times, citing data from the BiH Indirect Taxation Administration (ITA).
According to the data, during the last year, BiH received about BAM2 million ($1.13 million) from excise taxes on tobacco and tobacco products compared to hundreds of millions in previous years.
“Thus, in 2009, based on these excise taxes, BAM171 million was earned; in 2010, BAM216 million; in 2011, BAM240 million; in 2012, BAM231 million; in 2013, BAM207 million; in 2014, BAM203 million; in 2015, BAM233 million; in 2016, BAM207 million; in 2017, BAM190 million,” the ITA data states.
The shutdown of tobacco factories in Banja Luka, Sarajevo and Mostar contributed most to the decrease.
Tobacco cultivation has slowly declined. “My wish is to maintain tobacco production, to gradually, in agreement with the relevant ministry and local self-government, try to return that production to some values that were in previous years,” said Svetozar Mihajlovic, owner of Duvan, one of the few remaining companies purchasing leaf.
“So, we see that domestic industry is practically shut down, and that is the best explanation of this indicator,” said economist Slavisa Rakovic. “If domestic industry had been maintained, not only would we have revenues from excise taxes at a much higher level, but the level of added value through processing would have been much higher, and taxes and contributions from employees’ salaries would have been significant. But what can be done …. It can be expected that with such policies, we will wait for the day when it is not worth doing anything here but to deal with politics.”
April 24, 2023
Black Market Thrives in Bosnia and Herzegovina

Image: butenkow | Adobe Stock
About 49 percent of citizens in Bosnia and Herzegovina buy tobacco products from the black market, according to 2020 research data published by the Center for Policies and Management, a Sarajevo think tank organization that deals with European integration and public administration reform, reports the Sarajevo Times.
The legal sale of cigarettes decreased by 7.6 billion cigarettes per year from 2008 to 2020, though the number of smokers did not significantly decrease. The Liberal Forum, a nongovernmental organization, suggests that that means smokers turned to the black market for cheaper products.
Illegal cigarettes and tobacco are often smuggled into Bosnia and Herzegovina from Montenegro, Serbia and Albania; Bosnia and Herzegovina is a transit country on the international smuggling route leading to European Union countries, according to the Indirect Tax Administration.
The Bosnia and Herzegovina prosecutor’s office filed indictments against 13 people this year for illegal tobacco product trade, three of whom were border police members.
December 12, 2022
Dubai Businessman Buys Mostar Tobacco Factory

Photo: Freesurf
Jassim Abdullah Ibrahim Alhuwai is buying the Mostar Tobacco Factory in Bosnia and Herzegovina after making the best offer at public sale, reports the Sarajevo Times.
Alhuwai will pay BAM6 million ($3.4 million) for the factory. He has already paid BAM10,000 as a deposit and has been given a deadline of April 22 to pay the remainder.
“I hope that the investor from Dubai will pay the money by the appointed deadline and that our agony will end, that there will be the bridging of our service periods and that some money will be paid to us,” former Mostar worker Aida Kajtaz said.
This was not the first attempt to sell the factory. Previously, Mirsad Rahimic, a Swiss entrepreneur and Mostar native, attempted to buy the factory, but there were a number of complications that arose during the purchase process.
Production at the factory ended in 2007, but workers campaigned to restart manufacturing.
Mostar Tobacco Factory complex has an estimated value of BAM21 million, but due to lawsuits and debts, the Mostar Municipal Court declared that the complex should have been sold for BAM3 million.
March 24, 2022
Bosnia’s FDS Factory to Close Next Month

Photo: Richard Darko
Badeco Adria will close its Fabrika Duhana Sarajevo (FDS) tobacco factory due to financial losses, FDS said on Feb 14.
In the past three years, losses have reached KM7.5 million ($4.3 million), FDS told SeeNews.
The decision will be put to the vote at a Badeco Adria shareholders meeting in early March, after which the 200 employees at the factory will be laid off and will receive severance pay.
Badeco Adria is the legal successor to FDS, which was established in 1880 as a tobacco company. After a restructuring process, the company changed its name to Badeco Adria in 2018. Badeco Adria is majority owned by Austria’s CID Adriatic Investments, which holds an 89.2 percent stake, according to the Sarajevo Stock Exchange.
FDS plans to halt its operations on March 31, according to Faktor news agency.
February 14, 2022
Call for Lower Taxes in Bosnia and Herzegovina

Photo: Ahmed
The government of Bosnia and Herzegovina should consider reducing its tobacco excise taxes to help tackle the flourishing illegal cigarette trade, according to Svetozar Mihajlovic, director of AD Duvan.
Bosnia and Herzegovina levies a 90 percent tax on the retail price of tobacco products—above the 80 percent recommended by the European Union, where the average consumer has a much higher disposable income.
“It is a huge amount of tobacco that ends up on the black market, and the state, unfortunately, has not done anything about it yet,” Mihajlovic said in The Sarajevo Times.
. “They only increased excise taxes, and by increasing excise taxes they created an abnormal situation on the market and that led to the black market being dominant in this territory.”
Poor excise and agrarian policies have brought Bosnia and Herzegovina’s tobacco industry to the brink of collapse, according to observers.
In the 1970s, the region produced 25,000 tons of tobacco. This declined to about 10,000 tons in the 1990s, and today local farmers grow only about 500 tons per year—a significant share of which ends up in illicit cigarettes.
December 27, 2021
Bosnia and Herzegovina Black Market Surges

Photo: Nenad Maric from Pixabay
The illicit trade in tobacco products has expanded significantly in Bosnia and Herzegovina over the past decade, reports The Sarajevo Times.
The legal market for tobacco products shrunk by more than 56 percent from 2010 to 2020, resulting in huge losses to the state budget.
In the first seven months of this year, the government collected BAM430 million ($261.5 million) less in tobacco taxes than it did in the same period last year. Bosnia and Herzegovina’s black tobacco market is believed to be the largest in Europe.
The Indirect Taxation Authority (ITA) of Bosnia and Herzegovina is now advocating a harmonization of tax levies to reduce the prices of legal cigarettes, which it believes will reduce the incentive to smuggle.
Meanwhile, citizens are encouraged to anonymously report suspicions of illicit tobacco trade to the ITA.
September 15, 2020
Sourcing Success

Photos courtesy of Belaprom
Based in Bosnia and Herzegovina, Belaprom obtains its materials from the EU to deliver high-quality cigarette tubes at an affordable price.
TR Staff Report
As the cost of cigarettes continues to rise, consumers are finding less expensive ways to smoke. Many are turning to make-your-own (MYO) cigarettes. Using a little machine, MYO allows consumers to create cigarettes at home by inserting their preferred tobacco blends into hollow cigarette tubes.
A relative newcomer to the filter tubes business, Belaprom was founded in Bosnia and Herzegovina in 2014. Over the past six years, the company has been expanding its operations, product portfolio and consumer base. According to Belaprom’s founders, brothers Nadir Jasarevic and Fadil Jasarevic, the company has grown more than 600 percent since opening its doors.
“The main reason why Belaprom continues to grow its customer base is because of the quality of the product we produce,” explained Nadir, who added that the brothers ventured into the tobacco industry because they wanted to provide high-quality products at a reasonable price. They also wanted to be the type of business that its clients could count on by providing the highest level of customer service possible.
“After many years of importing cigarette filter tubes from other European companies, we decided to start producing our own products in order to better the Bosnian economy and bring something new to our country,” says Nadir. “Since beginning Belaprom, the company has grown into the largest cigarette filter tubes producer in the region. This shows that we’ve been doing things the right way.”
The Jasarevics started Belaprom because there were no major importers of cigarette filter tubes in Bosnia and Herzegovina. They believed that starting a local business could become a lucrative project if the company offered higher quality products at more reasonable prices than other players in the market.
“The process of starting the tube manufacturing endeavor had many obstacles. Other companies from Bosnia and Herzegovina operated on a smaller scale; however, from the very beginning, Belaprom was designed to be both a manufacturer and an exporter of goods,” says Fadil. “Finding the right machine, training the personnel and securing the best material suppliers took more than two years.”

As part of its business promotion efforts, Belaprom exhibited at TABEXPO 2019 in Amsterdam. Pictured are General Manager Adnan Mesanovic (left), and Export Manager Mirza Imamovic. (Photo: Taco Tuinstra)
The brothers developed their business acumen by opening a small grocery store, a business that has since grown into a conglomerate of more than 20 supermarkets, 14 gas stations and Belaprom. Fadil oversees the finances and directs the operations of the supermarkets and gas stations while Nadir is charged with importing goods and services, finding new suppliers and increasing the company’s customer base. “Our goal is to be recognized as a leader in both the industry and the marketplace,” says Fadil. “Our clients are more than customers; they are our partners.”
At Belaprom, the company focuses on the production of cigarette filter tubes and the import and wholesale of products for broad consumption. “Our production meets the highest of European standards. All our materials used in production are from the European Union. We do this because it allows Belaprom to guarantee the final product meets the needs of even the most demanding of customers,” says Nadir. “The production plant is equipped with state-of-the-art machinery using highly sophisticated technology to create the highest quality products possible.”
Belaprom’s 3,000-square-meter (approximately 32,292 square feet) production facility is built specifically for the manufacturing of cigarette tubes, according to Nadir. He says that every section of the factory is organized to optimize the production progress. “We decided to purchase Hauni machinery because Hauni is considered the best machine manufacturer in the tobacco industry,” Nadir says. “We use machines that are capable of producing 8,000 tubes per minute or 3,840,000 tubes per day.”
Belaprom is positioned at the crossroads between the eastern and western countries of Europe. The company currently employs 50 skilled and highly motivated workers producing more than 20 brands, according to Nadir. He says that Belaprom can easily produce a brand that meets the specific criteria for any company in need of cigarette tubes. Currently, Belaprom has four licensed brands: Zlatni Filter, Bella, Practic and Casual. Its most popular brand is Ritual 500, which has a modest but pleasing design.
“The reason our brands are popular is that the designs are simple, yet appealing. Our customer base includes many different regions of Europe, so our brands are designed to represent the region where they are sold,” says Nadir. “For example, customers from the flatlands of Croatia use the brand Pannonian Choice, which has a green box symbolizing lush, fertile valleys and golden letters that stand for the plentiful harvest of barley.”
Currently, Belaprom is negotiating the purchase of another tube machine from Hauni for installation sometime later this year. The investment required for the state-of-art equipment is more than €3.5 million ($3.9 million), according to Fadil.
“Belaprom is ramping up its production capabilities and investing more resources into opening up operations to other parts of the world, especially Southeast Asia with its vast population and economic areas. It is part of our five-year plan,” says Fadil. “Long term, we hope to expand globally, with a primary focus on Eastern Europe and North Africa. It’s a balancing act. While we want to offer more markets our superior products, it must not come with a compromise in customer service. Providing the highest level of service to our partners is our primary mission.”

July 1, 2020