Investment IncentivesThe existing legal framework in Kosovo allows incentives for foreign and local investors. They are up to date and promote the growth of the SME-Sector. Additional incentives that enable Kosovo to cope with developments in the region are in preparation and will be introduced soon.Current incentives cover the following issues:
1. Carrying forward of losses
Based on the Law on Corporate Income Tax (No. 03/L- 162), tax and capital losses can be carried forward for up to seven successive tax periods, and shall be available as a deduction against any income in those years.
2. Special Allowances of new assets
In accordance with the Corporate Income Tax Law (No.03/L-16), if a taxpayer purchases new capital goods for the purpose of the taxpayers economic activity between 1 January 2010 and 31 December 2012, a special deduction of ten percent (10%) of the cost of acquisition of the asset shall be allowed in the year in which the asset has been first placed into service. This deduction is available in addition to the normal allowable depreciation deduction.
3. Avoiding Double Taxation
Based on the Law on Corporate Income Tax (No.03/L-16), a resident taxpayer who receives income from business activities outside of Kosovo through a permanent establishment outside of Kosovo, and who pays tax on that income to any state, shall be allowed a tax credit under this regulation in an amount equal to the amount of tax paid to such state.
Any tax credit under the present section is limited to the amount of tax that would be paid under this regulation on the income made in such state.
Any applicable bilateral agreement on the avoidance of double taxation shall supersede the provisions above.
In order to promote local production, the new Kosovo customs and excise code No. 03/L- 109 applies a reduced rate of zero percent customs duty on the import and export of certain capital goods, raw materials, agricultural production inputs, and services. For more details visit: www.dogana-ks.org/tarik/.
5. Investment guarantees
5.1. The Multilateral Investment Guarantee Agency (MIGA) (a member of the World Bank Group) guarantees investments in Kosovo up to the value of 20 million.
5.2. The US Overseas Private Investment Corporation (OPIC) also provides political risk insurance for foreign investors in Kosovo.
5.3. For investment and credit guarantees from Austria, please contact the Austrian Kontrollbank (OeKB) and for Germany, the Euler Hermes Kreditversicherung.
According to the Law on Local Self Government (No. 03/L-040), the municipalities in Kosovo have the right to lease movable and immovable property to foreign investors. The lease can be granted for a term of ten years with an extension opportunity of up to 99 years.
The Inventory of Incentives Offered and Awarded in Kosovo
In response to a request from the Government of Kosovo, International Finance Corporation, a member of the World Bank Group, has launched the Kosovo Investment Climate Project. As part of the initiative, IFC conducted a review of fiscal and non-fiscal investment incentives offered to domestic and foreign investors at the central and local level in Kosovo.
The inventory includes all types of investment incentives, which are commonly divided in fiscal and non-fiscal incentives.The inventory covers the two levels of Government in Kosovo: state and 6 municipalities (Prishtina, Ferizaj, Gjilan, Peja, Prizren and Suhareka) out of 37 self-governing units in Kosovo. The respective municipalities/cities were selected according to their high economic activity.
Please see the documents below: