Bosnia & Herzegovina will expel more than 300 foreigners, mainly from the Gulf, on suspicion of evading taxes on their investment properties, Reuters reported on December 14, quoting the office for expatriate affairs.

Bosnia is becoming more attractive for foreign visitors from the Gulf due to the low property prices, the country’s mountains and cool climate. The country is also gaining from the fact that half of its population are Muslims. 

However, the purchase of property by Gulf tourists has provoked mixed reactions among the local population with many people even fearing that the country could become home to radical Muslims and a base for terrorists.

The office for expatriate affairs has inspected around 700 firms and 16 tourist resorts owned by citizens from the Gulf, Libya, Russia and Ukraine in the past several months. The inspections revealed that some 500 firms were registered at false addresses and had no staff. Those 500 firms own more than 600 residential and business premises.

Some of the property owners have registered as real estate companies, paying a BAM2,000 (€1,023) fee, then bought or developed tourist facilities worth hundreds of thousands of Bosnian marka without filing tax declarations.

The inspections also found out that some of the owners were living illegally in the country, while others were not registered as having arrived in the country at all. Some of the investors have also violated their visa requirements or misused their work permits.

Many investment projects in the tourism sector are being developed by Arab investors from the Gulf. Among them, the most significant is the BAM4.5bn (€2.3bn) Buroj Ozone tourism project by UAE property developer Buroj. Located near the city of Trnovo, the Buroj Ozone complex will be built on an area of 137 hectares and will include 70 luxurious hotels, thousands of flats, as well as retail, recreation and sports facilities. The complex is due to be completed within eight years.

The increasing interest in Bosnia has also attracted the UAE-based low-cost airline Air Arabia that launched flights between the Sharjah emirate and Bosnia’s capital Sarajevo earlier this year. The route operates three times a week.

Bosnia desperately needs to attract fresh investments to boost the economy and employment. Although the country’s Directorate for Economic Planning (DEP) has projected that the FDI will rise this year and will amount between BAM880mn and BAN930mn, the figures so far show that this forecast was way too optimistic. In the first half of the year, the net inflow of FDI sank 46.8% y/y to BAM194mn.