Legal and tax toolbox

The Law on Foreign Investment provides for non-discriminatory treatment, constant protection and security, compensation in case of nationalization and expropriation, including payment of interest, compensation in case of violation of applicable law and international law attributable to Kosovo, freely, transferable and otherwise unrestricted use of income, protection against retroactive application of laws, legal or non-legal actions.

The new Law on Strategic Investments in Kosovo, which was promulgated in February 2017, aims to stimulate and attract investments. Called the Law on Strategic Investments in the Republic of Kosovo, its primary function is to limit or dispense with the unpleasantries of bureaucratic procedures involved in larger-scale investments that fall into the scope of “strategic investments”. The status of a strategic investments is given to those endeavors which contribute to the crucial economic and social development and economic growth, employment, introduction of new technologies, increase of competition, export or growth of welfare and living conditions.

Bilateral agreements are concluded with numerous countries with regard to investment protection, such as: USA, Austria, Turkey, Albania, Switzerland, Belgium, Luxemburg, United Arab Emirates and Macedonia. These agreements provide for investment protection and security, free funds transfer, free profit and dividends repatriation, protection against retroactive application of laws as well as protection from expropriation.

Incentives

Carrying forward of losses

Based on the Law No. 05/L-029 on Corporate Income Tax (“Law on Corporate Income Tax”), tax and capital losses can be carried forward for up to six successive tax periods, and shall be available as a deduction against any income in those years.

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.

Customs

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.

Investment guarantees

The Multilateral Investment Guarantee Agency (“MIGA”) (a member of the World Bank Group) guarantees investments in Kosovo up to the value of EUR 20,000,000.

The US Overseas Private Investment Corporation (OPIC) also provides political risk insurance for foreign investors in Kosovo.