The Banja Luka based Capital web site reported that tax inspectors from the BiH tax authorities (UNO) established the irregularity concerning VAT and that the company could not provide the documents required to justify a tax deduction.
It is estimated that the company "Andricgrad" defrauded the state of a little more than 1.2 million convertible marks (KM) and procedures were launched for compulsory collection and the company's bank account has been blocked and a ban on the sale of property owned by the company has been imposed.
Allegedly, the facilities at Andricgrad were constructed without a building permit and if this is to be obtained, the major part of the tax debt will be written off, an UNO spokesman, Ratko Kovacevic said, adding that a debt of 150,000 KM (75,000 euro) would remain because VAT was deducted twice for the same invoice.
Andricgrad was intended to be a special complex to honour Nobel Prize Winner and author Ivo Andric. Kusturica did not have the funds to build the complex and managed to obtain sponsorship from the RS government and incumbent President of the Serb entity, Milorad Dodik who offered budget funds to carry out the project.
In 2012, the entire amount earmarked from the budget for tourism development in RS amounting to 4 million KM (2 million euro) was allocated to the plan designed by Kusturica. The entire project is valued at around 35 million KM (18 million euro) and in addition to budget funds and a donation of around 1 million euro from the government in Serbia, Kusturica financed the project through private loans.
RS has a 24.50% share in Andricgrad as does the municipality of Visegrad while Kusturica's company - Lotika - holds 51% of the capital.
In 2011 the RS government adopted a decision exempting Andricgrad from the Public Procurement Act valid in BiH and obliged the local community, public companies and some ministries to provide funding for the project.
Andricgrad was officially opened in June 2014 in the presence of Dodik and Serbia's Prime Minister Aleksandar Vucic.