KOSOVO Law and Practice Contributed by: Ardian Rexha, Nora Grajcevci Mehmeti and Vjollca Hiseni, Rex Law Partners
• two parties share a common controlling third party; or • parties are related individuals up to the third degree, as per the Law on Heritage of Kosovo. The taxpayer has to ensure that their controlled trans - actions are conducted in accordance with the market standards. When requested by TAK, transfer pricing documentation must be submitted within 30 days. 5.7 Anti-Evasion Rules Kosovo’s anti-tax evasion framework is primarily set out in Law No 08/L-257 on the Administration of Tax Procedures, which establishes the rights, obliga - tions and enforcement powers of TAK. For instance, TAK may disregard transactions that lack “substan - tial economic effect” or re-characterise them if their form does not reflect their economic substance. This includes re-characterising elements of transactions entered into specifically as part of a scheme to avoid tax liability. Transfer Pricing Adjustments With respect to transfer pricing, when controlled transactions do not reflect the open market value, TAK may adjust taxable income and allocate revenues and expenses between related parties to reflect the out - come that would have arisen between independent entities. Fictitious Invoices TAK does not recognise expenses for income tax pur - poses or input credits for VAT purposes if they are based on fictitious transactions or invoices. A fictitious invoice is defined as one issued by an unregistered person or for a transaction/supply that did not take place. Payment Restrictions Since June of 2026, any transaction concluded between a business and a non-business individ- ual is subject to mandatory electronic payment requirements, with cash payments being capped at EUR2,000. Enforcement and Inspection TAK officials have “full and free access” to any facil - ity where economic activity occurs or where records
are stored. These inspections may be carried out at any time, and/or with prior notice, for verifying compli - ance or recovering outstanding tax obligations. TAK may also conduct visits, without prior notice to the taxpayer, to confirm compliance with applicable tax laws, obtain information pertinent to subsequent audit activity and collect past due tax debts as considered Kosovo’s tariff system is regulated by the Customs and Excise Code and is based on harmonised sys - tem (HS) of the World Customs Organization and the combined nomenclature (CN) of the EU. Customs duties range from 0% to 10%. A standard 10% duty applies to imports from countries with which Kosovo does not currently have a preferential or free trade arrangement. Preferential tariff treatment applies under Kosovo’s FTAs and other applicable frame - works, including the Central European Free Trade Agreement (CEFTA), the Stabilisation and Association Agreement (SAA), the European Free Trade Associa - tion (EFTA) and preferential agreements with Turkey, the USA and the UK. necessary. 5.8 Tariffs Goods originating from CEFTA members are gener - ally not subject to any custom duty, nor are certain industrial, agricultural and fishery imports from the EU under the Stabilization and Association Agreement. In addition to customs duties, Kosovo applies excise taxes on specific goods, primarily for public policy pur - poses. These taxes are calculated as fixed amounts per quantity and apply to products such as tobacco, alcoholic beverages and petroleum products.
6. Competition Law 6.1 Merger Control Notification
M&A transactions are governed by Law No 08/L- 056 on Protection of Competition (LPC). Under the LPC, concentrations have to be approved by the Competition Authority if defined thresholds are met. A concentration is defined as any “steady change of control of enterprises when independent enterprises join together or parts thereof; one or more enterprises
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