In order to determine the cost of goods sold, the taxpayer must use one of the inventory methods prescribed by the Kosovo Accounting Standards, which permit the use of first in first out (FIFO) and average cost, but prohibit last in first out (LIFO).
Capital gains and losses are realised through the sale or other disposal of capital assets, including real estate and securities. Capital gains and losses are recognised as business income and business losses, respectively, and the latter can be carried forward for up to four successive tax periods. Capital gains are taxed at the standard CIT rate of 10% (i.e. are taxed at the same rate).
Dividends received by residents and non-residents are exempt from any form of taxation.
Interest income is taxed at the CIT rate of 10%.
Rental income is taxed at the CIT rate of 10%.
Royalty income is taxed at the CIT rate of 10%.
The partnership is not taxed itself; however, the members of the partnership are taxed separately at the standard CIT rate of 10% depending on their share in the partnership.
Foreign currency exchange gains/losses
Foreign currency exchange gains are subject to tax as capital gains.
Kosovo resident corporations are taxed on their worldwide income. If a DTT is in force, double taxation is avoided either through an exemption or by granting a tax credit up to the amount of the applicable Kosovo CIT rate.
Kosovo legislation does not contain any provisions under which income earned abroad may be tax deferred.