The tax policy in Kosovo is oriented towards simple regulations that ensure broad tax basis and prevent tax evasion.
Taxes differ based on type of business and annual turnover.
The tax administration applies three main tax regimens:

Value Added Tax (VAT)

Corporate Income Tax (CIT)

Personal Income Tax (PIT)


Value Added Tax (VAT)

Value Added Tax in Kosovo is the lowest in the region. Value Added Tax (Law No. 05 / L-37) applies to all importers and businesses with annual turnover greater than € 30,000. VAT rate is 8% for basic products (services and food baskets) and 18% for other products. VAT will be reimbursed fully to exporters for exported goods.


Import liberalization:  

  • Production lines and equipment’s for productions
  • Row material (not produced in Kosovo)  
  • Information Technology (IT) equipment


Dividend tax: 0%


Corporate Income Tax

This tax is paid every three months depending on the annual turnover. The corporate tax rate for annual turnover over 50,000€ is 10%.


Personal Income Tax


Personal Income Tax (Law no. 05/L-028) is applied to natural persons who receive personal income from Kosovo sources and foreign incomes of Kosovar citizens. Personal Income tax rate 0 -10 % (Progressive tax)


This type of tax is applied on incomes from wages, business, rent, interest, real estate, etc. Tax rates for personal income from wages are normally progressive based on the level of earned salary and lower rates in the region and countries of EU.


The tax rate are:

0% up to 960 euro/year

4% from 960 and 3000 euro/year

8% between 3001 and 5400 euro/year

10% over 5400 euro/year

Pension Contribution

Kosovo Pension Savings Trust Fund is responsible for administering and managing the individual pension saving accounts.
This tax obliges the employee and the employer to contribute in financing the employee’s pension at the rate of 5% from the employee’s salary and 5% from the employer.


Specific taxation cod for impairment


According to article 15 of the Law on Tax Corporative Income (no. 05/L-029), the allowed as a depreciation deduction for the tax period shall be defined by applying the following percentages to the capital accounts through discount balancing method:

Category 1: Buildings; five percent (5%)

Category 2: Vehicles and office equipment; twenty percent (20%)

Category 3: Heavy transportation machinery and vehicles; fifteen percent (15%)