An Assessment of the new VAT Policy in Kosovo: its potential impact on consumers and businesses

Group for Legal and Political Studies (GLPS) released a Policy Analysis entitled: ‘Assessment of the VAT Changes: Potential Impact on Consumers and Businesses’.  Similar to most of the Balkan countries, Kosovo has been, and still is, undergoing socio-economic and political transformation. Characterized by the lowest GDP per capita in Europe, Kosovo’s main challenge remains the lack of economic development. In addition its challenges are illustrated by a very large informal economy. However, given that Kosovo has no monetary policy, fiscal policy is the only economic instrument used by policymakers to influence Government revenues in order to have an impact in the economy. According to the Policy Analysis these fiscal reforms will not necessarily have a positive impact for Kosovo citizens, on contrary there is a higher risk that they will have a negative impact by increasing the cost of living for citizens.  The report concludes arguing that there ‘…are no clear outputs for the announced fiscal reforms outlined by the Ministry of Finance by any economic analysis or statistics on how such changes would impact the overall economy – low income households and businesses. This gives us the impression that these changes are part of a populist agenda rather than thoughtful changes for the benefit of the population at large’. This is the first time after the independence of the Republic of Kosovo that the Law is being changed completely.To access the policy report, please click here.