The existing legal framework in Kosovo allows incentives for foreign and local investors. They are contemporary and help 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::
7.1 Carrying forward oflosses
Based on the Regulation No. 03/L-113 on Corporate Income Tax, the tax loss stated in the tax return can be carried forward and offset against future profits over a period of up to seven years.
7.2 Special Allowances of new assets
In accordance with the Corporate Income Tax Regulation No. 03/L-113, special allowance of new assets can be reduced from the tax base (10 percent of the cost of the acquisition of the asset).
7.3 Avoiding Double Taxation
Based on the Regulation No. 03/L-113 on Corporate Income Tax, 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 of the present section.
In order to promote the local production, the new Kosovo customs code applies a reduced rate of zero percent customs duty on capital goods, raw materials and agricultural production inputs.
7.5 Investment guarantees
- The Multilateral Investment Guarantee Agency MIGA (a member of the World Bank Group) guarantees investments in Kosovo in the value of 20mn Euro.
- The US Overseas Private Investment Corporation (OPIC) also provides political risk insurance for foreign investors in Kosovo.
- For investment and credit guarantees from Austria please contact the Austrian Kontrollbank (OeKB) and for Germany the Euler Hermes Kreditversicherung.