Kosovo

Tax-exempt treatment of dividends

Dividends received by residents and non-residents are exempt from any form of taxation.

Extra tax deduction for new assets

Taxpayers that purchase new heavy machinery categorised under the 10% depreciation rate group enjoy an additional one-time 10% deduction for CIT purposes when put into use for the first time in Kosovo. Taxpayers who benefit from tax breaks or other tax benefits shall not have the right to utilise the special deduction of 10% on new assets purchased and put into use.

Tax credits for sponsorships in sport, youth, and culture

Taxpayers that make contributions to sports have the right to receive a tax credit of up to 30% of CIT, whereas those contributing to youth and culture will be granted a deduction of up to 20% of CIT, as per the guidelines laid out in Law No. 05/L-090 on Sponsorships in the fields of Culture, Youth and Sports.

VAT exemption on import of manufacturing equipment and raw materials

Importation of production lines and machinery used in the production process or manufacturing, as well as raw material similarly used for manufacturing purposes, are exempt from VAT upon import.

Temporary VAT exemption on raw materials

As per the Law on Economic Recovery, raw materials that are produced from registered and active businesses in Kosovo, regardless of whether they are exported or internally traded, are exempt from chargeable VAT until 31 December 2028.

Foreign tax credit

Taxpayers who receive income from sources outside Kosovo and pay tax on such income in other countries are allowed the right to a tax credit for the amount of the tax paid abroad or up to the applicable Kosovo income tax rate, whichever is lower. Foreign tax credits can be claimed even if there is no DTT between Kosovo and the respective country where such income arose, subject to proper documentation.