A. Introduction

To the vast majority of onlookers, Article VIII of Annex 4 (the Constitution of Bosnia and Herzegovina) does not reveal too much. If the onlooker is not aware of BiH’s Entities and the tax raising and fiscal power conferred onto them, it may simply be assumed that fiscal policy and tax raising powers lie at the BiH level.

The effect of Article VIII was to award quite restrictive revenue raising powers to the BiH level, which effectively rendered the Council of Ministers and the BiH parliament impotent in fiscal matters. As this is the case, the legitimacy of tax and revenue raising legislation currently at the BiH level would appear to be questionable.

Article VIII, by itself, does not permit the current BiH-level tax and revenue legislation, nor the BiH-level institution of the Indirect Taxation Authority, and the BiH-level single account for collection of indirect tax revenues. Consequently, the commentary to this part of Annex 4 also needs to refer to Article III.5(a) of Annex 4 and how this was utilised for the first time to enhance, albeit with considerable restriction, the fiscal role and revenue raising powers at the BiH level.

Additionally, this commentary will at times, by necessity, refer to the work of the International Community. It will make reference to coordination issues that it had to wrestle with and resolve and will have to make reference to other parts of Annex 4 (as already done) and indeed, other aspects of the Dayton Agreement and settlements reached several years after that event, including the 2000 Brčko Final Award.