Government Announces Salary Increase Plan

Published date06 March 2022
Subject MatterEmployment and HR, Tax, Contract of Employment, Employee Benefits & Compensation, Income Tax
Law FirmEurofast
AuthorMs Slavica Zeljkovic

Amendments to the RS Labor Law were published in the Republika Srpska Official Gazette on December 29, 2021, while previously announced changes to the Law on Income Tax and the Law on Contributions entered into force on January 1st.

The RS Government made clear that the reduction of contributions is aimed to directly raise employee's individual salaries after the reduction of the income tax rate and changes applied in the salary calculation model, the income tax base and the Labor Law.

The concept of gross salary has been altered since now it represents the basic salary, increases prescribed by the Labor Law, collective agreement and employment contract, income tax and contributions. The cumulative contribution rate has been reduced from the current rate of 32.8% to 31%, with only the health insurance contribution rate being reduced from 12% to 10.2%.

The law also stipulates that the minimum wage is increased based on length of service (0.3% for each year of service); the minimum salary for 2022 will be 590 BAM.

In addition, the personal income tax rate was reduced from...

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