The Transfer of Competency Agreement and the Constitutional Court
During 2004, before the adoption of the BiH-level Sales Tax3897 and Excise Tax Laws, which came into force from 1 January 2005, the Federation Parliament passed amendments to their own Sales Tax and Excise Tax Laws without the prior approval of the Board and in violation of the terms of the transfer of competency agreement.
The BiH Council of Ministers applied to the Constitutional Court to set these amendments aside, pending a full hearing and review. The Constitutional Court temporarily set aside these changes and later upheld that the Federation had acted ultra-vires by making these changes.3898
No other Constitutional Court issues arose during the indirect tax reform process.
Footnotes
While VAT was introduced one year later from 1 January 2006, due to the myriad of un-harmonised indirect tax laws at the BiH, Entity and District levels, BiH-level laws for the then current indirect tax system were adopted. The single account was activated one year before the introduction of VAT and it was essential that the same rules and tax base were applied across BiH when this happened to avoid discrepancies in the allocation of revenues at the Entity and District level.
See, U 14/04.