| LAW NO.03/L-114 ON VALUE ADDED TAX |
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LAW No. 03/L-114 ON VALUE ADDED TAX
Assembly of Republic of Kosovo,
According to paragraph (1) of Article 65 of Constitution of the Republic of Kosovo,
Approves:
THE
LAW ON VALUE ADDED TAX
CHAPTER
I
Article
1
Definitions
“Bad debt”
means a payment due to a taxable person that is included in such person’s
receipts, but despite the fact that all legal steps have been taken to collect
the debt, remains uncollectible.
“Capital good” means a good (such as
equipment or machinery) used for the production of other goods or services.
“Consideration” means any payment or
act of forbearance in respect of a supply of goods or services, and shall
include an amount that is payable, or goods received in a barter transaction.
“Credit note” means a document issued
by a taxable person to a recipient of goods or services after a tax invoice has
been issued, for the purposes of an adjustment, where the amount of tax charged
on the tax invoice exceeds the actual tax due for that taxable supply.
“Customs Value”
means the total value on which customs duties are calculated or applied in
accordance with international practice.
“Debit note” means a document issued by
a taxable person to a recipient of goods or services after a tax invoice has
been issued, for the purposes of an adjustment, where the amount of tax charged
on the tax invoice is less than the actual tax due for that taxable supply.
“Economic activity”
means an activity entered into for the purpose of earning income.
“Exclusion” means those
imports, inflows or supplies referred to in Article 11 that are excluded from
the scope of the value added tax and for which, as a consequence, value added
tax is not payable by the recipient.
“Exempt supply” means a supply,
referred to in Article 12, for which the supplier does not collect value added
tax.
“Export” means a
supply exiting Kosovo country
“Financial services” means one or more
of the following activities:
1.1.the exchange of
currency by exchange of banknotes or coins, by crediting or debiting accounts,
or otherwise;
1.2. the issuance,
payment, collection or transfer of ownership of a credit instrument such as a
cheque or letter of credit;
1.3. the provision of a
credit facility, or renewal or variation of obligations under a credit facility
contract;
1.4. the issuance,
allotment, drawing, acceptance, endorsement, underwriting, renewal, variation
or transfer of ownership of a security instrument;
1.5. the provision,
taking, variation, or release of a guarantee, indemnity, security instrument,
or bond in respect of the performance of obligations under a cheque, credit
facility contract, equity security, debt security instrument or participatory
security instrument or in respect of the activities specified in subsections 1.2 to 1.4 above;
1.6. the provision, or
transfer of ownership, of a life insurance contract or the provision of
re-insurance in respect of any such contract;
1.7. the payment or
collection of any amount of interest, principal, dividend or other amount
whatever in respect of any debt security, equity security, participatory
security, credit contract, contract of life insurance, superannuation scheme or
futures contract; and
1.8. agreeing to do, or
arranging, any of the activities specified in sub paragraphs 1.1 to 1.8 above.
“Goods” means all property
other than money.
“Import”
means a supply entering into Kosovo from another country, either directly or after
transiting through another country.
“Input tax” means the value
added tax paid by a taxable person on the input to the person’s.
“Non-governmental
organization” means a non-governmental organization registered under legislation on the Registration and
Operation of Non-Governmental Organizations in Kosovo.
“Open market value”
means the price at which similar goods of comparable quality and quantity are
sold by a supplier to an unrelated person in an arm’s-length transaction.
“Output tax” means the value
added tax charged on a taxable supply made by a taxable person.
“Person” means any
physical or legal person, public or private, including but not limited to
personal business enterprises, partnerships and other business organizations,
municipal and public authorities.
“Related person”
means any person with special relations to another person that may affect
arm’s-length transactions between them.
“Supply of services”
means any supply that is not a supply of goods.
“Supply of goods” means the transfer of
the right to dispose of tangible property as owner
“Taxable supply”
means a supply of goods or services by a taxable person. A taxable supply
includes a zero-rated supply but does not include an exempt supply.
“Taxable person”
means any person who, in furtherance of an economic activity:
1.1 imports, exports,
1.2 not being a
person referred to in section 1.25.1, supplies goods or services and has a
turnover that exceeds the registration threshold set out in paragraph 4 of article
3 of this law.
“Tax Administration”
means the Tax
Administration of the Kosovo.
“Turnover” means gross receipts of a person from all supplies,
including zero-rated supplies, exclusions and exempt supplies, made by such
person in Kosovo.
“zero ated supply”
means a taxable supply described in Article 10 for which the rate of the value
added tax charged is zero percent (0%) of the taxable value.
CHAPTER
II
IMPOSITION
OF VALUE ADDED TAX AND REGISTRATION
Article
2
Value
Added Tax
1. Value added tax or VAT, shall be
charged, in accordance with the provisions of this law, on the taxable value of
imports, intra inflows and taxable supplies.
2. The value added tax
shall be chargeable at the rate of sixteen percent (16%) on the taxable value
of imports, intra inflows and other taxable supplies except for zero-rated
supplies.
3. The value added tax shall be chargeable at
the rate of zero percent (0%) on the taxable value of a zero-rated supply as
set out in Article 10.
Article
3
Obligation to Register
1. A taxable person shall apply to be registered for value
added tax purposes with the Tax Administration within thirty (30) days of the
entry into force of this Law.
2. Where a person becomes a taxable person after the entry
into force of this law, the person shall apply to be registered for value added
tax purposes within fifteen (15) days from the date that person becomes a
taxable person.
3. The turnover for the purposes of determining whether a
person is a taxable person as defined in section 1 to definitions shall be
calculated based on the total consideration received by the person.
4. Registration threshold, which established at the level of
fifty thousand (50,000) euro per calendar year.
5. A taxable person who imports, exports shall apply to be
registered for value added tax purposes regardless of the threshold set out in paragraph
4 of this article.
6. Central Bank of Kosovo may, as required, issue an
administrative instruction specifying the procedure by which any supplier, who
is not required to register, may opt to be registered for value added tax
purposes.
Article
4
Procedure
for Registration
1. An application for
registration for value added tax purposes shall be made in the format that
shall be set out in an administrative instruction to be issued by the Central
Bank of Kosovo.
2. When registering a
person for value added tax purposes, the Tax Administration shall issue to the
person a registration certificate containing a unique Taxpayer Identification
Number. The registration shall take effect on the date stated on the
registration certificate.
3. The Tax
Administration may register any taxable person for value added tax purposes
whether or not such person has applied to be registered effective on the date
on which such person became liable for registration.
Article
5
Removal
from VAT Register
1. Subject to paragraph
2 of this Article, a taxable person who closes their business, or no longer
engages in economic activity, shall apply to be removed from the register not
later than fifteen (15) days after the last day on which the person made or
contracted to make imports.
2. A taxable person may
apply to be removed from the register if, with respect to the most recent
twelve (12) month period, such person’s taxable supplies have not exceeded the
threshold set forth in paragraph 4 of Article 3 of this law provided that no
such application for removal can be made during a period of twelve (12) months
from the date the registration took effect.
3. The Tax
Administration may remove from the register any person who is not required to
be registered under this law, unless such person is registered in accordance
with the procedure referred to in paragraph 6 of Article 3 of this law and
continues to opt to be registered.
CHAPTER
III
SUPPLY
Article
6
Supply
of Goods
1. A supply of goods
shall include, inter alia, the following:
1.1 a supply of electricity, water, gas,
heating, refrigeration, air conditioning, commercial samples, by-products of
manufacturing process, wastes, or scraps of products or assets;
1.2.
a supply of goods made by an agent on behalf of a principal, which shall be
treated as a supply by the principal;
1.3. a
supply under an agreement for hire purchase or for sales of goods on deferred
terms, which provides that the ownership shall pass on payment of the final
installment;
1.4. a supply taken by a taxable person for
the person’s own use and a supply consumed in the person’s business;
1.5. a lease of goods;
1.6. a supply of goods by a taxable person
to the person’s employees, including gratuitous supplies; and
1.7. the transfer of a business or part of
a business, subject to
paragraph 2 of this article.
2. The supply by a
taxable person of taxable goods as part of the transfer of a business or part
of a business to another taxable person shall not be regarded as a taxable
supply of goods if the transferee is or becomes registered under this Law
within thirty (30) days of such transfer.
Article
7
Supply
of Services
1. A supply of services
shall include, inter alia, the following:
1.1.
a supply of sewerage, garbage and soil collection for a fee by a municipal or
public authority; and
1.2.
a supply of services made by an agent on behalf of a principal, which shall be
treated as a supply by the principal.
2. A supply of services
shall not include work of any type where an employee renders to his or her
employer services in the course of employment for wages.
Article
8
Taxable
Value of Supply
1. The taxable value of a taxable supply in
Kosovo shall be the total consideration payable for that supply.
2. The taxable value of an import shall be the
customs value of the import plus customs duties, excise taxes or other
applicable taxes and charges, excluding the value added tax.
3. The taxable value of an inflow shall be the
total consideration payable for that supply.
4. The taxable value of a supply made to a
related person for consideration that is less than the open market value for
the supply shall be deemed to be the open market value of the supply. The
procedure for establishing the open market value of a taxable supply shall be
set out in an administrative instruction to be issued by the Tax Administration
of Kosovo.
5. The taxable value of a supply made for one’s
own use, for leased goods, for goods transferred on barter or for gifts shall
be the open market value of the supply.
6. Where the amount of value added tax is not
itemized separately on the tax invoice, the taxable value shall be the stated
amount less the value added tax included in the stated value.
7. Where consideration
is given for both a taxable supply and a supply that is not a taxable supply,
the taxable value shall be the portion of the consideration attributable to the
taxable supply.
8. The taxable value of a taxable supply that
has been reduced by a discount shall be the taxable value of the supply reduced
by the discount.
9. The taxable value of a taxable supply that
has been increased by a premium shall be the taxable value of the supply
increased by the premium.
Article
9
Place
of Supply
1. Except as otherwise
provided in this Law,
a supply of goods takes place at the location in Kosovo where the goods are
made available to the purchaser by the supplier.
2. Except as otherwise
provided in this Law,
a supply of services, including transportation service, takes place at the
place of business of the supplier or, if this cannot be ascertained, then the
place where the services are rendered.
3. A supply in
connection with lands and/or buildings takes place where the property is
located.
CHAPTER
IV
ZERO-RATE,
EXCLUSION, EXEMPT SUPPLY AND REBATE
Article
10
Zero-rated
Supply
1. The following
supplies shall be zero-rated supplies:
1.1. Exports and imports of goods;
1.2.
supply of goods and services in connection with;
1.2.1. the international transportation of
goods or passengers,
1.2.2. irrigation of farming lands and
1.3.
imports and supply of goods marked in the Annex of this law
2. The proof required to ascertain presentation
of an export shall be set forth in an administrative instruction to be issued
by the Tax Administration of Kosovo.
Article
11
Exclusions
1. No value added tax
shall be charged on the following:
1.1.
import of a traveler’s personal effects as permitted under the applicable
customs provisions;
1.2. import of tourist duty-free goods
as permitted under the applicable customs provisions;
1.3.
imports, or supplies
funded from the proceeds of grants made to
for Ministries and Departments
governmental or non-governmental organizations in support of
humanitarian and reconstruction programs and projects in Kosovo;
1.4.
imports or inflows made by, or supplies made to, diplomatic representatives or
liaison offices.
1.5. imports or
inflows made by, or supplies made to, the United Nations or any of its organs
including UNMIK (as defined in UNMIK Regulation No. 2000/47 of 18 August 2000
on the Status, Privileges and Immunities of KFOR and UNMIK and Their Personnel
in Kosovo), the specialized agencies of the United Nations, KFOR, the World
Bank and international inter-governmental organizations and
1.6.
imports or intra inflows of medicines,
medical services, pharmaceutical products, or medical and surgical instruments
and apparatus; and
1.7. a fine or penalty levied by public
authorities.
Article
12
Exempt
Supply
1. The following
supplies shall be exempt supplies:
1.1.
a supply of medicines, medical services, pharmaceutical products, or medical
and surgical instruments and apparatus;
1.2.
a supply of public education services;
1.3.
a supply of financial services;
1.4.
a transfer of title or lease of land or residential property;
1.5.
a supply made by a person who imports or makes inflows but whose turnover does
not exceed the threshold set forth in Article 3.4; and
1.6. a supply of permits or licenses
for a fee by a municipal or public authority.
Article
13
Rebates
1. Where a person
referred to in paragraph 2 of this Article, imports any good, the TAK shall,
subject to paragraph 3 of this Article, pay a rebate to the person equal to the
amount of value added tax paid by the person on such import.
2. Persons entitled to a
rebate under paragraph 1 of this Article shall be the following:
2.1. contractors for UNMIK, the specialized
agencies of the United Nations, KFOR, the World Bank and international
inter-governmental organizations, upon proof that the goods so introduced into
Kosovo are used exclusively in connection with the performance of a contract
with UNMIK, the specialized agencies of the United Nations, KFOR, the World
Bank or international inter-governmental organizations; and
3. The proof required
under paragraph 2 of this Article shall be specified in an administrative
instruction to be issued by the MFE.
4. In order to claim the
rebate allowed under the present Article, an eligible person shall make an
application to the Tax Administration, within one (1) year of the import or
inflow on which rebate is claimed, in accordance with the procedure to be set
out in an administrative instruction issued by the MFE.
CHAPTER
V
TAX
INVOICE, TIME OF LIABILITY AND REMITTANCE
Article
14
Tax
Invoice
1. A taxable person who
makes a taxable supply shall issue to the person receiving the supply a tax
invoice in respect of that supply.
2. For a taxable supply
in Kosovo, inflows and outflows, the tax invoice shall be the commercial
invoice. The information required to be stated on such invoice shall be
specified in an administrative instruction to be issued by the MFE.
3. For imports or
exports the tax invoice shall consist of the unified customs declaration as
required under applicable customs provisions.
Article
15
Adjustments
Where the amount of
value added tax charged on the tax invoice is less or greater than the actual
value added tax payable for that supply, the supplier shall issue a credit note
or a debit note, as applicable.
Article
16
Time
of Tax Liability
1. For a taxable supply
in Kosovo the value added tax liability shall arise under the accrual method of
accounting at the earlier of:
1.1. when the invoice is issued;
1.2. when the goods are made available
or the services are rendered to the customer; or
1.3. when the consideration is received.
2. For a taxable supply
that is continuous, the value added tax liability shall arise each time a tax
invoice is issued or, if payment is made earlier, at the time when payment is
made.
3. Where the
consideration is received on account before the taxable supply is made, the tax
shall be charged at the time the consideration is received. Where two or more
payments are made for a taxable supply, the value added tax liability shall
arise at the time of each payment.
4. For imports, the
value added tax liability shall arise at the time prescribed in accordance with
the applicable customs provisions, or if there are no relevant customs
provisions, at the time of importation.
5. For inflows, the
value added tax liability shall arise at the time of the entrance into Kosovo
of the supply.
6. For exports, the
value added tax liability shall arise at the time prescribed in accordance with
the applicable customs provisions, or if there are no relevant customs
provisions, at the time of exportation.
7. For outflows, the
value added tax liability shall arise at the time of the exit from Kosovo of
the supply.
Article
17
Declaration
and Remittance
1. A taxable person shall submit a tax
declaration not later than the last day of the calendar month following the end
of each tax period and shall remit the value added tax due for the tax period
on or before the date the declaration is due.
2. The form of the
declaration, the place at which the form shall be submitted and the place and
manner of remittance of the value added tax shall be specified in an
administrative instruction to be issued by the Central Bank of Kosovo.
Article
18
Tax
Remittable
1. Except where otherwise provided in This law,
the total value added tax to be remitted by a taxable person for the tax period
is the total output tax as calculated pursuant to Article 20 less the total
input tax as calculated pursuant to Article 21.
2. Where an import
inflow of a capital good has been made by a taxable person who starts a new
business, then the value added tax to be remitted for such import or inflow
shall be deferred and set off against the output tax that the taxable person
will remit for a period of up to six months from the date of such import or
inflow. The procedure for such deferment shall be set out in an administrative
instruction issued by the MFE.
3. The deferment shall
be made only against a bank guarantee. Where the taxable person fails to set
off the whole or a part of the deferred amount within a period of six (6)
months from the date of import, inflow, the taxable person shall remit
immediately thereafter the amount not set off. This remittance shall be deemed
to be the input tax paid in respect of the capital good referred to in paragraph
2 of this Article.
Article
19
Tax
Periods
1. For a taxable supply
in Kosovo, including an inflow, the tax period shall be each calendar month,
except where otherwise provided in this Law.
2. For imports, the tax
shall be payable by the importer in the same manner and at such time as any
other import duties prescribed in accordance with the applicable customs provisions.
3. When a taxable person
is first registered for the value added tax, the tax period shall begin on the
date the registration takes effect and ends on the last day of the same
calendar month.
4. Where a person is
removed from the register for value added tax, the relevant tax period begins
on the first day of the calendar month in which the removal occurs and ends on
the day the person is removed from the register.
5. Ministry of Finance and Economy may,
through the issuance of an administrative instruction, vary the tax periods
with respect to any category of taxable person.
Article
20
Output
Tax
1. The total output tax
due for a tax period shall be the sum of:
1.1. taxable value of zero (0) rated
supplies multiplied by zero percent (0%); plus
1.2. taxable value of taxable supplies
other than zero-rated supplies, multiplied by sixteen percent (16%).
Article
21
Input
Tax
1. Except where
otherwise provided in this Law, the input tax that may be offset as a credit
against the output tax for a tax period shall include:
1.1.
the total value added tax paid by a taxable person in respect of inputs,
including capital goods, for taxable supplies during the tax period; and
1.2. the total value
added tax paid by a taxable person on imports and inflows during the tax
period.
2. A credit of input tax
shall not be allowed for value added tax paid in respect of supplies that are
not used for the taxable supplies made by the taxable person.
3. A credit of input tax
shall not be allowed for value added tax paid in respect of supplies unless the
claimant is in possession of the following:
3.1. for imports or exports, authentic customs
documents that shall be specified in an administrative instruction to be issued
by the MFE;
3.2. for all other transactions, an
authentic invoice issued by a taxable person; or
3.3. proof that the debt is a bad debt,
pursuant to Article 22.
4. A credit of input tax
shall not be allowed in respect of an exempt supply referred to in Article 12.
Article
22
Bad
Debt
1. Where the whole or
part of the payment for a taxable supply has not been received by the supplier
and is a bad debt, a tax credit shall be allowed in accordance with this
Article.
2. A tax credit shall be
allowed in any one tax period after the debt has become a bad debt. A debt may
become a bad debt not earlier than six months after the close of the tax period
in which value added tax on the un-recovered amount was paid.
3. The amount of tax
credit allowed under this Article shall be the value added tax paid in respect
of the supply that is attributable to the un-recovered amount of the bad debt.
4. Where credit has been
allowed for a bad debt and the whole or part of that debt is later paid, the
taxable person shall repay to the Tax Administration the part of such credit
attributable to the bad debt recovered.
Article
23
Excess
Tax and Refunds
1. If the total input
tax paid for a tax period exceeds the total output tax for that period, a
taxable person shall carry forward the excess tax credit to the next tax period
and to successive tax periods where applicable. Such excess tax credit carried
forward may be applied against the output tax liability in the successive tax
periods.
2. A taxable person may
claim a refund of excess tax if:
2.1.
the taxable person has carried forward an amount of the excess tax credit for a
continuous period of six months; and
2.2. the amount of the excess tax credit
exceeds five thousand (5.000) euro.
3. For exports and
intra-outflows, a refund may be claimed even if an excess tax credit has not
been carried forward for a continuous period of six (6) months, provided that
all the following conditions are met:
3.1.
the taxable person’s credit of input tax in relation to exports and outflows of
goods consistently, for more than six months within a twelve (12) month period,
exceeds their output tax liability;
3.2. the taxable person complies with all
applicable customs and tax provisions; and
3.3. claims
for refund are not made more than once per quarter, or where the tax credit is
in excess of five thousand (5,000)
euro, more than once per calendar month.
CHAPTER
VI
POWERS
AND DUTIES
Article
24
Tax
Authorities
1. The Tax Administration
shall have the exclusive responsibility to administer the value added tax.
2. The Kosovo Customs
Service shall, on behalf of the Tax Administration, assess, levy and collect
the value added tax on imports and exports, as well as undertake any other
function relating to the administration of the value added tax, as may be
required.
Article
25
Duty
to
A taxable person shall
inform the Tax Administration in writing within fifteen (15) days of any change
in the person’s name, address, economic activities or other information
provided to the tax authorities at the time of, or since, the application for
registration was made.
Article
26
Duty
to Keep Records
A taxable person shall
keep such books and records for value added tax purposes as shall be specified
in a subsequent administrative direction.
Article
27
Inspection
of Records, Assessments, Interest, Enforced Collection
1. In administering the
value added tax, the tax authorities may, inter alia, in accordance with the
applicable law:
1.1. require production of relevant
documents or other information;
1.2.
issue a notice of assessment;
1.3. issue a demand for payment;
1.4. issue a demand for interest;
1.5. carry out audit of documents and
declarations; and
1.6. enforce collection of tax owed.
Article
28
Violations
and Penalties
Any person who commits a tax violation shall be subject to
the penalties provided under the applicable law, including those set forth in
Law No. 2004/48 on Tax Administration and Procedures.
Article
29
Appeals
1. Any person who
contends that an official determination made under this Law is incorrect may
make an appeal in accordance with the procedures set forth in Law No. 2004/48 on Tax
Administration and Procedures.
2. Any action or
decision by the tax authorities in administering the value added tax, including
those listed in Article 27 above, shall be regarded as an official
determination for the purposes of the taxpayer’s appeal rights.
CHAPTER
VII
IMPLEMENTION
Article
30
Implementation
The Minister of Economy
and Finance issue sub- legal act for the implementation of this Law
Article
31
Applicable
Law
This law shall make void any provision which is inconsistent
with it.
Article
32
Entry
into force
This
Law shall enter into force 1 January 2009.
Law No. 03/L-114
18 December 2008
Promulgated by the Decree
No. DL-080-2008, dated 30.12.2008, of
the President of Republic of Kosovo, Dr. Fatmir Sejdiu.
ANNEX
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