Kosovo

Taxable period

The taxation period for which the CIT is assessed is the calendar year.

Tax returns

CIT returns are filed annually, and the deadline to submit the annual return is 31 March of the following year. The amendment of a submitted tax return is allowed within three years after the mandatory date when the tax return was submitted.

Penalties

Submission of the tax return after the deadline is subject to fixed mandatory fines. The understatement of tax presented in the tax return is subject to penalty from 15% to 25%, depending on the under-declared amount.

Payment of tax

Taxpayers with income from economic activities exceeding EUR 30,000 per year are obligated to make quarterly advance payments (15 April, 15 July, 15 October, and 15 January) that amount to ¼ of 110% of the total tax liability for the previous tax period. If it is the taxpayer’s first year of business and/or a tax loss was incurred in the previous year, quarterly advance payments are made on the principle of estimation of that year’s CIT liability.

Final CIT payment is due with the return on 31 March.

Penalties

Late payment interest is charged on overdue payments if the tax payments are made after the deadline. The amount of interest due to late payment is calculated on a monthly basis, but not more than ten years from the date when the tax became due. The interest rate shall be determined at least once a year, which is higher than the interest rate of commercial lending by banks in the Republic of Kosovo.

The tax authority may also levy a tax penalty on taxpayers who claimed any tax refunds without eligibility. Penalties in these cases are levied based on the amounts claimed without eligibility.

Tax audit process

The Kosovo tax system is based on self-assessment. Tax audits include all types of taxes that the business is subject to. If any discrepancies result from the tax audit, the tax authorities issue an audit report and re-assessment notices, which the taxpayer can appeal to the Appeals Department within the tax authority.

A taxpayer may submit an amended tax declaration if one subsequently discovers an error in a tax declaration that has already been submitted. The deadline for submitting an amended declaration is three years after the due date of the declaration being amended.

Statute of limitations

The statute of limitations in general circumstances is six years.

Topics of focus for tax authorities

During a tax audit, the main focus of the tax authorities is on areas relating to CIT expense deductibility, VAT crediting rights, WHT compliance, etc.