Republic of Kosovo Public Sector Revenues : Tax Policies, Tax Evasion, and Tax Gaps
Kosovo has a simple tax system and relatively low tax rates. A risky feature of Kosovo’s tax system is the high dependence on border taxes. In 2012, 71 percent of revenue was collected at the border in the form of trade taxes and value added tax (V...
| Main Author: | |
|---|---|
| Language: | English en_US |
| Published: |
Washington, DC
2015
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/06/24663719/kosovo-public-sector-revenues-tax-policies-tax-evasion-tax-gaps http://hdl.handle.net/10986/22269 |
| Summary: | Kosovo has a simple tax system and
relatively low tax rates. A risky feature of Kosovo’s tax
system is the high dependence on border taxes. In 2012, 71
percent of revenue was collected at the border in the form
of trade taxes and value added tax (VAT) on imports.
Shifting from border to domestic revenue collection is
needed. The simple tax system can make it easier for the tax
administration of Kosovo (TAK) to adjust direct taxes while
encouraging labor market formality. Low domestic revenue
collection suggests the presence of large tax gap - the
difference between the amount the TAK should collect and the
amount it actually does collect. The wider social and
economic consequences of tax evasion are high. Finding ways
to raise domestic revenue to compensate for the decline in
border revenues is going to require actions on a number of
fronts. First, strengthening the TAK’s capacity to increase
compliance and reduce tax evasion, through judicial means.
Second, reducing the informal economy will bring more firms
and employees into tax net. Third, efforts can be made to
increase revenues through existing taxes. Finally, policies
that boost private sector growth, including an improved
business climate, will help increase domestic production and
therefore tax revenues. |
|---|