INDIRECT TAXES IN KOSOVO'S TAX SYSTEM: IMPACT ON BUSINESS ACTIVITIES WITH SPECIAL EMPHASIS ON VAT AND EXCISE CHANGES RATE
Keywords:
VAT, excise duty, fiscal policyAbstract
This study explores the role and significance of VAT (Value Added Tax) and excise duties in Kosovo's economy, considering the economy in the Republic of Kosovo and the impact that taxes have on the collection of public funds, this paper aims to assess how these fiscal policy changes have influenced economic activity, compliance, and business operations within the country.
This paper will provide evidence from research conducted earlier on the importance of taxes and excise in many different countries, including the Republic of Kosovo. The purpose of the study will be focused on the effects of several key changes: the increase in VAT from 16% to 18%, the reduction of VAT on essential consumer goods from 16% to 8%, the increase of VAT in the pharmaceutical sector from 0% to 8%, the implementation of a flat VAT rate for agricultural products, the reduction of the VAT threshold from €50,000 to €30,000, and the increase in excise duty on tobacco. Data are gathered through surveys conducted with businesses in Republic of Kosovo with close questions regarding the area of changes in taxes and excise , with the results processed using Stata to assess the impact of these changes. Fiscal policy is crucial for economic development, and this changes implemented by the Government of Kosovo have positively influenced overall state revenues. However, the increase in pharmaceutical products due to VAT changes has negatively affected consumers, while the increase in excise duty on tobacco has contributed to higher collected revenues.
The main limitation of this research is the availability of comprehensive data from relevant institutions in Kosovo, which may affect the depth of analysis Also, although this study does not include all types of businesses, it is planned that future research will be more comprehensive, providing a more complete overview of business diversity in Kosovo. This research highlights the importance of fiscal policies in economic development and the need for the government to provide businesses with sufficient time and support to adjust to tax rate changes.
The study also underscores the varied impacts of VAT changes on different sectors, emphasizing the need to consider consumer welfare in tax policy decisions.
This study provides real data on the current situation of VAT and excise duties in Kosovo, from the business sector contributing valuable insights for policymakers and stakeholders, especially considering support for the private sector can lead to an overall increase in export levels and positively impact the economy as a whole.
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