Tax Reforms in Selected Balkan Countries: The Case Study of Kosovo

Abstract

The aim of this research is to analyze and find out the major issue of tax reforms in selected Balkan Countries and the case of Kosovo. In this analysis we have used the research method of case study. The results of research show that reforms of tax systems of Balkan Countries, including Kosovo, is one of the most important components of their social-economic transition led by the aspiration to become members of the European Union. Higher results consist in the fact that the Balkan countries, some earlier some later, have included Personal Income Tax, Corporate Income Tax and the VAT into their tax systems. In this context, in order to create competitive tax systems to attract investments and to make tax harmonization with the EU, the tax rates have considerably been reduced and successful steps have been taken in the function of harmonization of taxes with the EU member countries. Some countries have managed to build their tax systems in accordance with acquis communautaire. After the declaration of Independence, the Government of the Republic of Kosovo took the first reformation step by reducing the income and corporation income tax rates. However, the taxation system and policies in Kosovo must also be reformed in many other components. Today, when from the start of transition process in the Balkan countries about 26 years have passed, the reformation of their tax system is still ongoing, facing numerous challenges.

The Impact of Reduced Tax Rate of Corporate Income Tax and Other Incentives in Foreign Direct Investments in Selected Balkan Countries

“…Therefore, small countries like these in the Western Balkans with developing economies should be encouraged to take steps towards creating a suitable environment for investors but with special care to the long-term results of these measures. Through the balancing of direct and indirect taxes, higher tax competition will be enabled and at the same time, the financing of social needs will be enabled (Peci, 2016).…”