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7.1 Trade regime

Kosovo has a liberal trade regime and derives three major benefits from trade liberalisation, namely improved export possibilities, a better investment environment, and stable relations with its neighbours.

Committed to establishing principles for the stable development of a pure market economy, since a very early stage of development, Kosovo's government has been working towards establishing a system for the free movement of goods and services throughout the country's borders. As a result, Kosovo currently enjoys free trade within Central European Free Trade Agreement – CEFTA, enabling its businesses and producers of goods to access the regional market comprising of 30 million consumers, free of any customs duties.

In addition, Kosovo benefits from non-reciprocal, customs-free access to the EU market based on the EU Autonomous Trade Preference (ATP) Regime (EU Council Resolution 2007/2000). Quantitative and qualitative restrictions remain in force only for a very limited number of goods. Furthermore, goods produced in Kosovo enjoy a preferential treatment in the US market.

Kosovo is still an import-based economy. Imports have been increasing steadily in recent years (as the figure shows) reaching some 1.89 billion Euro at the end of 2009. The main importing countries in Kosovo are EU-countries followed by CEFTA-members. Even though local production is increasing steadily, Kosovo is still forced to import goods and raw materials that are not offered by the local market. The main imports of commodity goods range therefore from chemical products and base metals to machinery and mineral products.

Recognising the opportunities that the local market is offering, and benefiting from various cross-sector incentives introduced by the Government, local production has grown exponentially in recent years. Not only does local demand continuously rely on local production but Kosovo is increasing its exports to its main trade partners, EU-countries and CEFTA-members.

At the end of 2009, exports reached 162.6 million, and thus represented a slight decrease in comparison to 2008. The main exports of Kosovo comprise mainly minerals and base metals, as well as vegetables and unprocessed leather.

Given that the country has a very favourable business climate, a modern legal framework and a cost effective work force, and taking into consideration that there is still immense opportunity for local producers to fulfil market demand and also approach the regional market, local production as well as exports are expected to increase further in the future.


7.2 Customs regime

Kosovo is an independent customs entity with a liberal trade regime.
Custom duties and border taxes are regulated by the Customs and Excise Code of Kosovo, Law No. 03/L-109.

  • Customs: A flat rate of 10 percent is imposed on imports and zero percent on exports. Exemptions exist for imports of raw materials, a range of capital and intermediary goods, but also for pharmaceutical goods, which are zero rated.
  • Excise tax: Is levied as a certain percent of the value of the goods or represents a fixed amount per specified quantity, is applied to coffee, soft drinks, beer, wines, alcohol, spirits, liquors and other spirit beverages, cigarettes, other tobacco products, cars, petrol, diesel for motor engines and kerosene.
  • Details on customs rates and excise taxes applied to specific goods can be found under: www.dogana-ks.org/tarik/index.htm

The Customs Code is based on the EU custom code and is fully compliant with WCO agreed rules on customs procedures and the Harmonized Commodity Description and Coding System. It additionally allows the use of a number of business friendly trade-facilitating instruments such as:

  • Bounded warehousing – allowing storage in customs warehouses for non-domestic goods, without import duties being imposed. Under this procedure the goods may undergo any form of handling intended to preserve them, improve their appearance or marketable quality or prepare them for distribution or resale.
  • Inward processing relief – allowing non-domestic goods which are intended for re-export from Kosovo to be used in Kosovo in one or more processing operations without such goods being subject to customs duties. This offers a great opportunity for outsourcing projects.
  • Processing under customs control - The procedure for processing under customs control allows goods which are not domestic goods to be used in Kosovo in operations which alter their nature or state, without being subject to import duties or commercial policy measures, and shall allow the products resulting from such operations to be released for free circulation at the rate of import duty appropriate to them.
  • Transit – permitting the movement of the goods, which do not originate in Kosovo from one point within Kosovo to another, without such goods being subject to customs duties.
  • Temporary admission – allowing the use in Kosovo, with total or partial relief from import duties, of goods which are non-domestic goods and intended for re-export without having undergone any change except normal depreciation.
  • Outward processing – allowing for domestic goods to be temporarily exported in order to undergo any processing operations, with the products resulting from such operations to be released for free circulation with total or partial relief from import duties.

For details concerning the import of goods please contact Kosovo Customs at www.dogana-ks.org.

7.3 Transport and distribution

Located in the heart of the Balkans, Kosovo serves as a connecting bridge between the countries of South Eastern Europe. Through its unique geographical position and its liberal trade regime, it offers instant access to the interesting and growing market in the Balkans and Central Europe, comprising 100 million potential customers.

Kosovo's capital Prishtina is within one hour's driving time to any neighbouring country (Albania, Montenegro, Macedonia, and Serbia), thereby providing a connection for all countries in the region.

Road network
The road network consisting of 630 km of main roads has been rebuilt to a high extent during the past years, but some completely new roads have also been constructed. With the construction of the highway that will connect Kosovo with Albania on one side and with Serbia on the other, Kosovo is becoming an important gateway in the corridor that will connect the Adriatic Sea with Western Europe.

Railway
The railway network in Kosovo has a combined length of 330 km. It covers the entire territory, connecting both the south with north and east with west. On the south side as well as the north side the railway line provides access to the international railway network. The ongoing rehabilitation and modernisation of Kosovo railways provides a solid base to satisfy the growing demand on logistical services. The project for the construction of the new line that will connect the capital of Kosovo, Prishtina, to the port of Durres in Albania is under development.

Air communication
Besides the road and railway network, Kosovo has a modern international airport. With over one million passengers per year, Prishtina International Airport is ranked among the most frequented airports of the region, serving several international airlines and offering flights to the most important European centres. Prishtina Internationl Airport has been given with concession to the Limak-Airport de Lyon for a period of 20 years, in exchange for Euro 100 million investments in modernisation and expansion of the Airport. This should help the Prishtina Internation Airport to become a regional hub in the near future.



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