Kosovo

Taxable period

The tax period for PIT purposes is the calendar year. However, withholding taxes on wages and pension contributions are made on a monthly basis (i.e. upon payment).

Tax returns

PIT returns are filed annually, and the deadline to submit them is 31 March of the following year. An amendment to the 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

Each employer is responsible for withholding the tax and pension contribution from taxable salaries paid to employees, including payments to non-business individuals, for professional, technical, management, and financial services, payments for service contracts, payment for actors, musicians, athletes, and dependent agents. The salaries shall be paid through the bank.

Employers are required to submit payroll records, together with pension contribution liabilities, and make the respective payment to the Tax Administration of Kosovo (TAK) by the 15th day of the following month. Employers must inform the TAK about a new employee one day before the employee starts work.

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 must be 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 individual 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

From a PIT perspective, during a tax audit, the main focus of the tax authorities is on areas relating to the calculation of gross income for employees (i.e. allowable and disallowable expenses paid for employees), wages paid in accordance to contracts, primary or secondary employee status, etc.