• Microeconomic stability achieved through stabile currency
• Lowest inflation rate in Southeast Europe
• Favorable geographical location
• Completed privatization of domestic banks and existence of foreign banks (Raiffeisen Bank, Hypo-Alpe- Adria Bank, Zagrebacka Bank, Zepter Commerce Bank, Balkan Investment Bank, Southeast Development Bank);
• Significant natural resources and potentials (wood, water power supply potentials, minerals, available agriculture and industrial land, construction, etc.)
• Highly educated, qualified, price competitive work force
• The most favorable profit tax rate in relation to neighboring countries – 10%
• Risk management system for foreign investors ( around 30 ratified bilateral agreements on mutual increase and protection of investments)
• Favorable Laws regulating the area of direct foreign investment including national treatment of foreign investors  
• Preferential exporting regimes to EU member country  
Enabled export of products from the Republic of Srpska to all 15 EU countries without quantity limitations and payment of custom and similar taxes until the end of 2005
Preferential exporting regimes with Australia, Japan, Canada, Hungary, Norway, New Zeeland, Russia, SAD, Slovakia and Switzerland. 

• Privatization as biggest offer by the RS
Privatization of strategic companies
Privatization of large state monopolies (telecommunication, power, refineries).

Legal regulative

Foreign investments in the Republic of Srpska are determined by :
Law on enterprises ( “RS Official Gazette”, number 24/98, 62/02 and 38/03);
Law on Foreign Direct Investment Policy in BiH (“BiH Official Gazette”, number 17/98 and 13/03)
Law on employment of foreigners and persons without citizenship (“RS Official Gazette”, number 97/04)
Law on foreign investment (“RS Official Gazette”, number 25/02 and 24/04)
Law on registration of business entities in the Republic of Srpska (“RS Official Gazette”, number 42/05)

Rights and obligations of foreign person

Foreign investor has the same rights as domestic entity, based on rights and obligations as well as legal position in an enterprise.
Foreign investor attains the right to additional guaranties not provided to domestic entities, since the Constitution of the Republic of Srpska proscribes that the rights attained through the investment of capital shall not be lowered by the Law or other regulation and it insures free transfer of profit and capital out of the country after cessation of investment.
Law on Foreign Direct Investment Policy in BiH proscribes the rights and benefits given to foreign investors as well as obligations which cannot be abolished nor revoked by additionally passed and coming into force of laws and bylaws. If additionally adopted acts are more favorable to foreign investor they have the right to choose which legal regime shall be in forced for their investment.
Taxation of foreign investors and direct foreign investments shall be conducted in accordance with the Entity and the State tax legislature:
Law on profit tax ; (“RS Official Gazette”, number 51/01;
Law on citizen income tax (“RS Official Gazette”, number 51/01 and 65/03 and 68/03)
Law on products and service sales ax (“BiH Official Gazette”, number 62/04 ;
Law on excises in BiH (“BiH Official Gazette”, number 62/04
Tax profit rate in one of the most stimulating in surrounding countries and it amounts 10% , while in Federation of BiH amounts 30% and in Brcko District 20%.
Foreign investments are excluded from payment of customs and custom tax on equipment as an investment of foreign investor, excluding the custom recording.
Exclusion from tax payment based on investment of foreign person is in accordance with the :

- Law on Custom Policy of BiH (“BiH Official Gazette”, number 57/04)
- Decision on the procedure of acquiring rights to be excluded from payment of importing taxes on equipment representing an investment of foreign investor (“RS Official Gazette”, number 19/05)

 Type of investement of foreign persons

Foreign persons in the Republic of Srpska may:

• Establish a legal entity fully owned by a foreign investor,
• Establish legal entity in joint ownership of domestic and foreign investor,
• Invest in existing enterprise,
• Invest in bank or insurance,
• Open the store or act as self-employed individual ( entrepreneur),
• Receive a concession for the usage of natural resources, public resources and performing activity of public interest for the Republic of Srpska.

On the basis of the Law on enterprises in the Republic of Srpska it is possible to establish:

• Public company
• Partnership company
• Limited partnership
• Joint stock company
• Limited liability company

Foreign persons may acquire shares and stocks.
All companies shall be entered in the Registry of authorized court based on the location of companies‘head office.
Joint Stock Company and Limited Liability Company may be established with the founder’s capital in money, in kind and rights. 
Minimal founder’s capital amount necessary for the establishment of Joint Stock Company cannot be less than 50.000 KM (with stimulating establishment), i.e. 100.000 KM ( with succession establishment), while lowest nominal amount of the shares amounts 1 KM.
Founder’s capital in money of individual shareholder cannot be less that 500 KM
The company may be established by one or more natural and/or legal entities.
Founder’s capital for establishing the Limited Liability Company cannot be less than 2000 KM and individual founder’s stake (investment) cannot be less than 100 KM.
Company may be established by one or more persons.
Foreign person may in the Republic of Srpska act as individual entrepreneur, under the same conditions as domestic citizens.
For performing entrepreneurial activity foreign person must have a working permission and register its activity with the authorized municipal body on which territory the head office of entrepreneur is located, if it fulfills legally prescribed conditions.

Employing foreign persons

Foreign investor has a right to freely employ workers from abroad.Employment of foreigners is regulated by the Law on employment of foreigners and persons without citizenship (“RS Official Gazette”, number 97/04). The Law prescribes that the foreigners employed with domestic legal and natural entities have the same rights, obligations and responsibilities based on activity as domestic citizens, in accordance with regulations on labor and employment, as well as collective agreements and general acts of employer.
Foreigner must , next to general conditions determined by the Law, conditions determined by specific collective agreement and general act of the employer, also have approved residence permission on the territory of the Republic of Srpska , i.e. Bosnia and Herzegovina, and a working permission.
Working permission for signing the labor contract with the foreigner, on the request of the employer, shall be issued by the Employment Bureau of the Republic of Srpska according to the territorial location of the head office of employer.

 Transfering profit abroad

Transfer of profit abroad has been proscribed by the Article 11 of the Law on Foreign Direct Investment Policy in BiH and Article 8 of the Law on foreign investments in the RS. Transfer is performed freely, after the settlement of all legally defined liabilities in the RS. Foreign investor has the right to conduct a transfer abroad freely and without a delay.

Ownership rights of foreign persons

Legal entities established and registered in the Republic of Srpska, regardless if the foreign or domestic capital has been invested in them, are considered domestic legal entity and have the right to acquire ownership on immovables regardless if it’s used for performing activity or for other purposes. Mortgage on immovables in favor of foreign person is possible.  
Foreign natural or legal entity also may ( persons from ex Yugoslavia but only based on reciprocity ) acquire and have free disposal of property ( movable and immovable) in the Republic of Srpska. 

Branch office of foreign persons

Foreign person may, according to the Law on Foreign Trade Policy BiH  ( " Official Gazette BiH, number 7/98), establish branch office for the purpose of market research, performing promoting and informative activities, as well as for it's business representation.
Branch office may be established by foreign person registered in appropriate register of the state in which the foreign person head office is located.
Foreign person may establish branch office on its own or with another foreign person.
Branch office does not have a status of a legal entity and therefore it does not have the right to conclude contracts in the name of its founder.
Branch office may begin with its activity after its registration in the Register of  branch offices within the BiH Ministry of foreign trade and economic relations.

Founding (founders and type of companies/enterprises)

1. Foreign natural persons may establish: Partnership company, Limited partnership, Joint Stock Company and Limited Liability Company.
2. Foreign legal entities may establish: Joint stock company, Limited Liability Company and Limited partnership as a limited partner.

Application and registration of foreign investement

Procedure of application and registration of foreign investment within the BiH Ministry of foreign affairs in Sarajevo must be performed before the procedure of court registration of the company, and it consists of:

1. Filled out and signed DSU Form, provided by the Ministry,
2. Document determining the identity of the foreign investor- for legal entities certified excerpt provided by the court register in the country of origin or other appropriate document not older than 6 months ( certified translation) , i.e. natural person shall submit the evidence determining its identity ( certified copy of the passport or for domestic citizens a document confirming their permanent residence abroad)
3. Document determining nature of authorized representative of an investor 
4. Founding act , with certified signature of the founder ( x 2)
5. Appropriate approvals for performing its activity, if submitted to limitation
6. Confirmation on paid 55 KM tax.

Necessary documentation for court registration

1. Decision of the Ministry of foreign affairs on registration of foreign investment
2. Founder's act - Contract, i.e. Decision on foundation, depending if the company is established by two or more persons or just one person ( one persons' ltd, one persons' joint stock company), or the Contract on investment
Founder's act (founders’ signatures) is necessary to be certified within authorized court.
3. Statute of the company - enterprise (except for partnership and limited partnership company).
4. Foreign legal entity shall submit certified excerpt from the court register in the country of origin or other appropriate document, not older than 6 months                 (certified translation) i.e. natural person shall submit evidence confirming its identity.
5. Confirmation on payment of founder's capital.

- Founder's capital in money for ltd. cannot be less than 2000 KM, but 50% or 1000 KM shall be paid immediately during foundation on the temporary business bank account , and remaining 50% in the period of 2 years from the day of foundation. Foundation capital in money of individual member of the company cannot be less than 100 KM. Stakes in ltd cannot be in labor and services.
- Founder's capital in money of joint stock company founded by simultaneous foundation cannot be less than 50 000 KM, and successive foundation in the amount 100 000 KM. Founder's capital in money of one shareholder cannot be less than 500 KM. Shareholder's stake except in money can also be in kind and rights evaluated by an authorized evaluator.
- Member of Partnership Company may invest in money, in kind, rights, labor or services. Value of non-money stake shall be evaluated by partners and shall be stated in money. Minimal amount of founder's capital has not been determined.
- Provisions of the Law on Partnership Company shall be applied on the Limited partnership company. Share of limited partner may be in money, in kind and rights, but cannot comprise in labor and providing services to limited partnership company. Limited partner shall invest total agreed amount of the stake until the registration of the company.
6. Certified signature of the person authorized for representation, on proscribed form (x 2).
7. Decision on appointing the representative, unless it has not been appointed by Founder's act  
8. Confirmation on payment of court tax amounting 900 KM for founding of company with the possibility of performing foreign trade turnover, or 600 KM if company does not have registered right to perform foreign trade turnover.
9. Confirmation of payment of announcement cost in the RS Official Gazette ( 4,5 KM on one line of announcement text )
10. Certified copy of diploma for person authorized to perform foreign trade business activity ( at least IV level of degree is required)
11. Application for entry, on proscribed uniformed form , which can be purchased in bookstore and costs 15 KM.
12. If the Law or other bylaws proscribe issuing of permission, agreements or other appropriate acts, registered entity is obliged to submit the documentation to the court in the period of 60 days from the day of registration.

Procedure after the court registration of the company

1. Creation of the stamp with Resolution on company's registration
2. Application to Republic Statistics Institute for the purpose of determining identification number and code of company's activity (tax amounts 70 KM). Application shall be submitted on proscribed form published by the Statistics Institute together with certified copy of court Decision with appendixes, copy of director's ID and OP form (can be purchased in Statistics Institute).
3. Approval for performing activity issued by the Sector for economy and social activities of the municipality - town, on which territory the head office of company is located together with necessary documentation. Costs of Commission inspection of business premises amount 201 KM (for the town of Banja Luka).
4. Opening of account. Application shall be filed out on proscribed forms provided by the bank submitted on OP form (certified signature of representative person) certified copy of court Decision with appendixes and other documentation, according to bank's request.
5. Tax form, i.e. issuance of unique identification number performed by the Territorial Unit of RS Tax Administration, according to head office of the company. Documentation necessary to submit: Decision on registration, Decision of meeting conditions for performing business activity, copy of director's ID card ( all copies must be certified) . Application form can be found in Tax Administration. Tax amounts 2 KM and can be purchased in Tax Administration. ( IT IS OBLIGATORY TO SUBMIT TAX FORM IN THE PERIOD OF 5 DAYS FROM THE DAY OD RECEIVING DECISION FROM MUNICIPALITY)
6. Opening the custom number with Republics Custom Administration for performing activity of foreign trade turnover (tax amounts 30 KM). Request shall be submitted in written form together with certified copy of court Decision with appendixes, Decision of Republic Statistics Institute ( original), copy of submitted signatures for disposing financial assets of the company, unique identification number, copy of the ID card or passport.