Gjonlleshaj, Gjon K.; Kambe aj, Al ina
A icle
Fiscal Re o m in Taxa ion: Wha is an Op imal Taxa ion
Sys em o he Republic o Koso o?
ENTRENOVA - ENTe p ise REsea ch InNOVA ion
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Sugges ed Ci a ion: Gjonlleshaj, Gjon K.; Kambe aj, Al ina (2025) : Fiscal Re o m in Taxa ion: Wha
is an Op imal Taxa ion Sys em o he Republic o Koso o?, ENTRENOVA - ENTe p ise REsea ch
InNOVA ion, ISSN 2706-4735, IRENET - Socie y o Ad ancing Inno a ion and Resea ch in Economy,
Zag eb, Vol. 10, Iss. 1, pp. 105-125,
h ps://doi.o g/10.54820/en eno a-2024-0011
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ENTRENOVA - ENTe p ise REsea ch InNOVA ion
Vol. 10 No. 1
Fiscal Re o m in Taxa ion: Wha is an Op imal
Taxa ion Sys em o he Republic o Koso o?
Gjon K. Gjonlleshaj
Sou h Eas Eu opean Uni e si y, Te o o, No h Macedonia
Al ina Kambe aj
Sou h Eas Eu opean Uni e si y, Te o o, No h Macedonia
Abs ac
This pape explo es he Taxa ion sys em in he Republic o Koso o. I esea ches he
need and easons o he op imal axa ion sys em ha he Republic o Koso o should
de elop as pa o he p oposed Taxa ion e o m (based on ecommenda ion). The
Republic o Koso o is he newes coun y in Eu ope. Since 2000, one o i s co e pilla s
has been he Tax Adminis a ion, which se es as he p ima y public inance income
gene a o . I s u he de elopmen , e o m, and adap a ion wi h upda ed Taxa ion
mains eams is impe a i e. Taxa ion sys ems should implemen he bes p ac ices in
digi aliza ion and inno a ion. The pape uses seconda y da a wi h analyzed indings
based on he quan i a i e empi ical app oach. The indings show ha he e is oom
o he Republic o Koso o o apply Taxa ion e o ms o u he en ich, inno a e, and
upg ade i s Tax sys em. As s a ed, he coun y's economic and business de elopmen
signi ican ly depends on how i s axa ion sys em mee s i s de elopmen and s a egic
goals. This esea ch pape concludes wi h conc e e ecommenda ions ha he
Republic o Koso o is ad ised o unde ake in e o ming i s Taxa ion sys em.
Keywo ds: axa ion sys em, socioeconomic de elopmen , inno a ion, digi aliza ion,
e o m, ax adminis a ion, public inance.
JEL classi ica ion: H20, H21, H23, H24, H25, H26, H27, H29, H50, H51, H61
Pape ype: Resea ch a icle
Recei ed: 8 Ma ch 2024
Accep ed: 29 July 2024
DOI: 10.54820/en eno a-2024-0011
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Vol. 10 No. 1
In oduc ion
A he beginning o 1999, NATO o ces in e ened in Koso o wi h he pu pose o
s opping he e hnic cleansing o he local Albanian popula ion. On June 9 h, 1999,
he "Kumano o Ag eemen " was signed be ween NATO and ex-Yugosla ian (A ha
ime, he Yugosla ede a ion consis ed o Se bia and Mon eneg o) mili a y. The
ollowing day, on June 10 h, 1999, The Uni ed Na ions Secu i y Council app o ed he
1244 esolu ion, which helped end he wa in Koso o and es ablished UNMIK (Uni ed
Na ions Mission in Koso o). The UNMIK was s uc u ed in unc ional pilla s, and one o
he pilla s was o es ablish p o isional democ a ic ins i u ions in Koso o. As a esul , in
2000, unde he guidance o UNMIK, he Tax Adminis a ion o Koso o (TAK) was
es ablished. In 2003, he TAK ans e ed om UNMIK o he sole esponsibili y o he
Koso a Minis y o Economy and Finance (The Go e nmen ). Since hen, TAK has
ad anced and de eloped in newly es ablished coun y. Since i s es ablishmen , he
Koso o ax sys em has been hea ily based on consump ion and income axes, which
ha e eached up o 25% o he coun y's GDP. In o he wo ds, consump ion axes
( alue-added axes -VAT, cus oms, and excise axes) a e Koso o's p ima y e enue
sou ce. O he ax channels emain unde de eloped wi h he po en ial o u he
de elop as pa o ax e o m o o he means o eaching op imali y in he ax sys em.
Al hough TAK s i es o u he implemen he abo e-men ioned aspec s, he esul s
show di e en ac ual si ua ions. The e o e, he e is an impe a i e need o u he
e o m o TAK. The scope o his esea ch is o explo e and a gue u he needs ha
TAK should unde go o e o m i sel in aiming o each he op imal sys em o he
bene i o he Republic o Koso o and i s people. The empi ical indings in his pape
scien i ically p o e ha TAK e o m is impe a i e o each i s op imal le el o ax
collec ion e en hough based on li e a u e e iew, he ax op imali y is doable wi hin
he heo e ical amewo k, bu e y ha d achie able in eal applica ion. The e o e,
based on abo e men ion aspec s, his esea ch pape aims o u he ill he esea ch
gap in his domain om wha o he esea che s we e no able o esea ch and o
conclude based on un il now pe o mance aspec o TAK.
Backg ound
As s a ed in he in oduc ion, he TAK was g ea ly suppo ed om he in e na ional
mission in Koso o. Fu he , e en in i s wo decades and some o i s ope a ion, he
in e na ional suppo is s ill p o ided h ough di e en means o echnical assis ance
and o he aspec s o ope a ional suppo . As seen below in he able, he Koso o has
a well-de ined s uc u e o axa ion sys em ha does p esen he s anda d amewo k
o ax channels ha a e also employed in o he de eloped coun ies.
The ollowing is he Tax s uc u e in Koso o (Table 1): ax ype, h eshold o applica ion,
and ax a e % applicable (as o 2024).
Unde he guidance o domes ic legisla ion and o eign ins i u ions (e.g., USAID, GIZ,
o he s), he Republic o Koso o success ully implemen ed he ollowing Laws ha
egula e he axa ion sys em in Koso o (as o ac ual 2024) (Table 2).
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Table 1
Tax s uc u e in Koso o
Tax Type
Tu no e Th eshold
Tax Ra e
Value Added Tax- VAT
30,000 EUR
8% and 18%
Co po a e Income Tax - CIT
Manu ac u ing, ading and anspo ing
indus y, e c.
Se ice Indus y
unde 50,000 Eu o
3%
9%
Pe sonal Income Tax - PIT
Manu ac u ing, ading and anspo ing
indus y, e c
Se ice Indus y
unde 50,000 Eu o
3%
9%
Co po a e Income Tax - CIT
Manu ac u ing, ading, anspo ing indus y,
e c.
Se ice Indus y
o e 50,000 EURO
10%
Pe sonal Income Tax - PIT
Annual Income om 0 o 960
Annual Income om 960 o 3000
Annual Income om 3000 o 5400
Annual Income om 5400 o o e
o e 50,000 EURO
0%
4%
8%
10%
Tax on Wages (mon hly)
Annual Income om 0 o 80
Annual Income om 80 o 250
Annual Income om 250 o 450
Annual Income om 450 and o e
0%
4%
8%
10%
Tax on Ren s, In e es and Royal ies
10%
Tax on Special Ca ego ies
3%
Tax on non- esiden
5%
Sou ce: Tax Adminis a ion o Koso o (Tax Adminis a ion o Koso o, 2024)
Table 2
Regula ion o he axa ion sys em in Koso o
No.
Name o he Law
No. o he Law
No. o he
Adminis a i e
Ins uc ion
1
Law on Tax Adminis a ion and
P ocedu es
No. 03/L- 222
No. 04/L- 102
No. 04/L - 223
No. 03/2016
No. 15/2010
2
Law on Value Added Tax - VAT
No. 05/L - 037
No. 03/2015
No. 06/2016
3
Law on Pe sonal Income Tax - PIT
No. 05/L - 028
No. 01/2016
4
Law on Co po a e Income Tax - CIT
No. 05/L - 029
No. 02/2016
5
Law on Pe son Con ibu ions - PC
No. 04/L - 168
No. 04/L - 101
No. 05/L - 116
6
Law on Game o Chance
No. 04/L - 080
No. 03/2023
Sou ce: Tax Adminis a ion o Koso o. (Tax Adminis a ion o Koso o, 2024)
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Ne e heless, o he abo e axes, laws, and egula ions, TAK is s ill conside ed ela i ely
as a new ins i u ion and in much need o u he o ganiza ion, inno a ion,
digi aliza ion, and ans o ma ion o i s ope a ion owa d an op imal ax sys em (based
on indings/sou ces also ound om o he au ho s).
TAK's mission is o:
• Inc ease ax collec ion in he Republic o Koso o,
• Imp o e he e iciency o ax collec ion and i s ope a ion,
• Implemen adequa e and enhanced compliance,
• Implemen and align wi h in e na ional axa ion s anda ds.
Li e a u e Re iew
No coun y is wi hou Tax Adminis a ion sys em as i s p ima y public inancing income
gene a o . Ne e heless, no all coun ies ha e eached he poin whe e hei Tax
Adminis a ion is e icien and op imal pe hei coun y’s needs (No e: op imali y o
he coun ies’ Tax Admin. a ies subjec o coun ies’ speci ics). The ongoing dilemma
among schola s and esea che s is how much he op imal ax heo y indeed inds i s
p ac ical applica ion in he eal wo ld (Explana ion: “Op imal ax heo y o he heo y
o op imal axa ion is he s udy o designing and implemen ing a ax ha maximizes a
social wel a e unc ion subjec o economic cons ain s [G ego y, Ma hew, Danny
2009]”). Below a e a ew e iews and esea che s abou he op imali y o he ax
sys ems.
The op imal axa ion heo y explains ha he coun y achie es he op imal Tax
Adminis a ion i he desi ed e enue/income is achie ed wi h e icien ax
adminis a ion. Wi h his logic in place, an in e na ional ax compe i i e index has
de eloped, which app aises which coun ies wi hin he OECD ank as he mos
op imal ega ding hei ax adminis a ion, sys em/policy. By su p ise, he mos
de eloped coun ies do no necessa ily ank among he bigges and he
economically mos obus coun ies in he wo ld. Ha ing esou ces, high buying powe ,
and a la ge and obus economy does no necessa ily p esen ha he coun y has
an op imal Tax Adminis a ion.
In wo ldwide Taxa ion li e a u e, he e a e s ong a gumen s wi h p os and cons
abou he op imali y o Tax Adminis a ion. The subjec ma e is e y wide and has
been explo ed bo h quali a i ely and quan i a i ely so a .
a) Li e a u e e iew abou Op imal Taxa ion (Globally):
Acco ding o (Alm, 1996), in his esea ch pape "Wha is an 'Op imal' Tax Sys em?" he
models o op imal ax sys em do no indeed co ela e be ween eali y
(Socioeconomics) and ax policies. He u he a gues ha coun ies should conside
he ollowing:
• The impac o social and poli ical ins i u ions on p ope axa ion policies
• The cos ha he coun y should bea in adminis a ing di e en ax ypes. (As
we know, no all ax ypes esul in op imal e enue o he coun y),
• The di ec e ec o axes on people’s beha io in he coun y. (The sen imen
ha axpaye s ha e and build owa d ax ypes).
James Alm, among o he s, conside s he abo e-men ioned aspec s o be p ac ical
issues o designing a ax sys em ha eaches op imali y wo ldwide.
Mo eo e , James Alm del es deepe in o his pape , highligh ing he in ica e na u e
o op imal ax heo y, which ad oca es o a axa ion sys em wi h a mul i ude o ax
a es ( ax ypes). He poin s ou ha ine iciency can also be ound in ine icien ax
ypes, which a e he e o e cos ly o adminis e . Alm also challenges he e ec i eness
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o a 'P og essi e o eg essi e ax’, ci ing heo e ical models sugges ing ze o axes on
he weal hy may no be poli ically co ec o easible o gene a ing su icien e enue.
In summa y, James Alm aises he conce n ha i is impe a i e o conside
ac ual/objec i e wo ld eali y when designing and implemen ing any ax sys em.
Ga he ed: Coun ies' eali y and speci ics should be he base on app oaching he
d a heo e ical pa ega ding he op imali y o he Tax Adminis a ion.
Th ee au ho s: N. G ego y Mankiw, Ma hew Weinzie z, and Danny Gogan (2009), in
hei esea ch “Op imal Taxa ion in Theo y and P ac ice,” Elabo a e on ax op imali y.
On p os (The heo e ical insigh s), hey de i ed eigh “lessons” ha should be
conside ed while aiming o design an op imal axa ion sys em. The au ho s u he
ocused on e iciency (Maximizing economic e iciency). Also, hey elabo a ed on
dis ibu ion, equi y, and simplici y s. complexi y. By dis ibu ing equi y, hey sugges ed
designing a ac i e ax a es o axpaye s and p omo ing an equi able axa ion
sys em. On a simplici y s. complexi y amewo k, au ho s a gue ha he op imal
sys em should ha e many ax b acke s wi hin he simple axa ion bu eauc acy ha is
easy o adminis a e. On he Cons (The P ac ical Conside a ions), he au ho s a gue
abou he heo e ical s. eal wo ld. They say ha he op imal axa ion heo y
equen ly makes no ms ha do no p esen he eal wo ld (I s applica ion in p ac ice).
A i s co e, coun ies should apply a balanced app oach, which means balancing
heo e ical e iciency and conside ing he axa ion sys em's poli ical easibili y and
adminis a i e cos o de elop and implemen an op imal one success ully and
e icien ly.
In he pape "Do Coun ies Really De ia e om he Op imal Tax Sys em?"
(Sepul eda, 2023)elabo a es on and in es iga es he undamen al gap be ween he
Op imal Tax Theo y and i s ac ual applica ion. Sepul eda links he de elopmen o
he ax sys em wi h he de elopmen o he coun y's economy. As he coun y
de elops economically, he ax sys em will become mo e e icien .
b) Li e a u e abou Koso o and Wes e n Balkan coun ies
(Regionally):
In he pape "Unde s anding Tax E asion and P o essionalism o Tax Adminis a ion in
Koso o," Diaman a Skende i and Besnik Skende i (2022) in es iga e ax compliance in
Koso o, and hey came up wi h a ew essen ial ecommenda ions abou how he Tex
Adminis a ion can imp o e in Koso o. Pe he Au ho s, Koso o's Tax admin should
come up wi h he ollowing:
• Fu he de elopmen and capaci y building.
• Inc ease awa eness.
• Fu he in es men in echnology and axing sys em(s).
In he esea ch pape "Tax Incen i es in Wes e n Balkan Coun ies," he esea che s
Šimo ič and Žaja (2010) elabo a e on di e en ax incen i es in he domain o he CIT
(Co po a e Income Taxes). I explo es a) Reduced ax a es, b) Holiday axes, and c)
o he in es men incen i es. Pe he pape , incen i izing business may a) boos
economic g ow h, b) de elop job c ea ion, and c) de elop and p omo e speci ic
indus ies ha may be s a egic o he coun y's de elopmen . The pape explains
a ious axa ion incen i es ha may ul ima ely p omo e he economic de elopmen
o he Wes e n Balkan Coun ies."
The" Taxa ion and Budge a y Policies in he Wes e n Balkans" by Ma ing Hu sebau
(2015), esea ches he axa ion sys em in Wes e n Balkan coun ies and he budge
policies applied in hese coun ies. The au ho elabo a es on he ollowing:
• Low e enue collec ion om he Tax adminis a ions di ec ly impac s Tax
Adminis a ion e iciency.
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• A high budge de ici is a phenomenon in he Wes e n Balkan coun ies.
• And Ine icien Tax adminis a ions.
The Au ho explains ha Wes e n Balkan Coun ies mus s anda dize hei Tax
Adminis a ion wi h EU legisla ion as hey aspi e o join he EU. The Au ho se s
ecommenda ions ha coun ies should a) igh ax e asion, b) p oceed wi h iscal
consola ion, c) and conduc Tax Adminis a ion Re o ms. In gene al, Hus se bau
a gues ha imp o ing Taxa ion and budge policies will con ibu e o u he
economic de elopmen and owa d EU membe ship.
Summa y om p esen ed Li e a u e e iews:
By eading li e a u e e iews wo main cha ac e is ics appea :
• The op imali y o he Tax Adminis a ion wi hin he amewo k o he Theo y is a
well-unde s ood concep . Howe e , i s applica ion in he eal wo ld emains
he bigges challenge o many schola s a guing wi hin his domain, and i is an
ongoing conce n.
• Wes e n Balkan Coun ies, pa icula ly Koso o, p esen gaps in he Tax
Adminis a ion domain, wi h challenges in ax e enue collec ion, echnology
de elopmen , in o mali y, and ax compliance.
Resea ch Me hodology
Al hough he scope o his esea ch pape is Tax Adminis a ion in Koso o, ha e been
analyzed quan i a i e and quali a i e Da a om [1] Koso o and [2] Wes e n Balkan
Coun ies. Widening he esea ch wi h addi ional Da a (Especially om he Wes e n
Balkan Coun ies, which ha e simila ma ke , economic, poli ical, and socioeconomic
egional ana omy) is wi hin he scope o his pape . On he con a y, i p o ides a
much be e unde s anding o he ax adminis a ion sys ems in he egion and hei
le el o op imali y/e iciency. This app oach helps de elop and p esen ac ual
ecommenda ions ha u he help Koso o e o m and de elop i s ax adminis a ion
sys em.
The li e a u e e iew shows ha op imali y on he heo e ical le el s. absolu e
applica ion le el does e y. Consequen ly, many Tax Adminis a ions wo ldwide ha e
ye o each he op imal poin o desi ed e iciency. In Koso o’s case, he li e a u e
e iew poin s ou ha he e is oom o imp o emen and u he de elopmen o he
Tax Adminis a ion, which h ough esea ch poin ed ou in his pape does show: 1]
some imp o emen s ha e been made, his is also scien i ically epo ed, 2] he e is
much mo e o be done u he . This is also scien i ically epo ed.
The second pa o empi ical indings (as in poin I) includes a ca e ully balanced
app oach based on Quan i a i e esea ch me hodology. We u ilized a compa ison o
DATA om di e en sou ces/ epo s (Ac ual s. Budge ed pe o mance, beha io al
Da a) ha we e gene a ed om he TAK, IMF, OECD, e c.). S a is ical, empi ical
indings a e gene a ed om STATA s a is ical so wa e, including s a is ical models wi h
he aim o each o he signi icance o he s udied model(s).
I) Compa ing and explaining endencies:
Du ing he COVID-19 pandemic, he Go e nmen o Koso o (simila ly adap ed
models om o he coun ies applied du ing he COVID-19 pandemic) ook incen i e
measu es o suppo Koso o’s economy and ade. These measu emen s p esen ed
subs an ial bene i s o he businesses and wo k o ce, which we e also e lec ed in
u u e yea s, e.g., 2022 and 2023. The measu emen s a e e lec ed in he o maliza ion
o bo h wo k o ces ( egis e ed wo ke s could apply o ex a-go e nmen al s imulus as
pe ea ning h eshold) and businesses (businesses could apply o incen i e
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[economic eco e y] incen i e). This app oach inc eased TAK e iciency in ope a ion
du ing his pe iod, which esul ed in be e pe o mance, as seen in Figu e 1 below.
Figu e 1
Changes in Taxes 2019-2022
Sou ce: Wo ld Economic Ou look, IMF. (In e na ional Mone a y Fund, 2024)
Acco ding o he abo e cha , Koso o elies hea ily on consump ion axa ion and is
he leas de eloped coun y in he egion. Howe e , du ing he COVID-19 pandemic,
ax e enue inc eased, posi ioning Koso o in a leading posi ion compa ed o i e
o he Wes e n Balkan coun ies.
When compa ing ax a e s uc u es (CIT, PIT, VAT Cus oms du y), as seen in Figu e
2 (A ac i eness o he ax a e s uc u es) in Wes e n Balkans, Koso o p esen s a
a o able s uc u e. Ne e heless, Koso o is s ill a ec ed by high in o mali y in ax
compliance, mainly cha ac e ized by an un o malized wo k o ce (Companies a e
allowed o employ s a and no epo hem o he Tax Adminis a ion) and no p ope
Co po a e Income Taxes epo ing and con ibu ion by business en i ies (Tax
Adminis a ion does allow business en i ies o decla e unde pe o mance in ope a ion,
while i s business ope a ion g ows du ing he ope a ion pe iods) (Da a: 10 yea s
pe o mance [2012
→
2022] on AVG he PIT = shows only 9% s anding, CIT = shows 6%,
while VAT = shows 51%). The compa ison conclusion shows ha ega dless o ax a e
a ac i eness, he Tax Adminis a ion o Koso o lacks mechanisms o inc ease
balanced ax collec ion compliance, p ima ily by s imula ing PIT and CIT collec ion
inc ease.
Figu e 2
Tax a es in Wes e n Balkans and sha e o di e en axes in o al ax e enues 2012-
2022
Sou ce: Coun y ax o ice websi es, Koso o Minis y o Finance and IMF. (Minis y o
Finance, Labou , and T ans e s, 2024) and (In e na ional Mone a y Fund, 2024)
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Time clus e analysis o VAT, CIT, and PIT pe o mance in Koso o 2019→2022
VAT
On he o he hand, ega dless o unbalanced ax collec ion among VAT, CIT, and PIT,
Koso o showed an inc ease in pe o mance in ime clus e s in 2019→ 2022. As seen
om he able below, he change in o al VAT e enue in 2021 has jumped signi ican ly
by 34.8% due o inc eases in o maliza ion and new Go e nmen policies ega ding
Tax audi s, con ols, and ax e u n bene i s. In 2022, pe he epo , he e enue
d opped, bu no o a lowe scale, as seen in 2020 and 2019. Collec ion imp o emen s
& o maliza ion imp o ed signi ican ly in 2021 and 2022 compa ed o 2020 and 2019,
which suppo ed he na owing o he e enue GAP%.
Table 3
Value added axes: Re enue Change and Con ibu ing Fac o s
Millions o eu o
Pe cen
Cumula i e
Cumula i e
2019
2020
2021
2022
2020-
2022
2019
2020
2021
2022
2020-
2022
Value-
Added
Taxes (VAT)
Change in
o al VAT
e enues
46.6
-76
268
190.1
382.7
5.8
-8.9
34.8
18.3
100%
Con ibu ion
ac o s
In la ion
49.2
10.5
130
146.4
287.0
6.2
1.2
16.9
14.1
75%
Change in
eal
demand
-8.3
-9.1
-7.5
-1.9
-18.5
-1.00
-1.1
-
1.00
-0.2
-5%
Buoyancy
7.6
-53
39.6
0.00
-13.2
0.9
-6.2
5.1
0.00
-3%
Change in
e ec i e
ax a e
0.6
-8.2
12.3
4.5
8.6
0.1
-
1.00
1.6
0.4
2%
Collec ion
imp o eme
n , including
o maliza i-
on
-2.5
-16
93.7
41.1
118.7
-0.3
-1.9
12.2
4
31%
Sou ces: Tax Adminis a ion Au ho i y o Koso o and IMF s a calcula ions
Conclusion: ci ca hi d o VAT e enue has inc eased in 2019→2022 because o
e iciency imp o emen s in ax adminis a ion by inc easing o maliza ion.
PIT
Imp o emen s in he mix unde aken a e also e iden o Pe sonal Income Taxes (PIT)
e enue ha inc eased om 2020 → 2022. As seen in Table 5 below, changes in o al
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ENTRENOVA - ENTe p ise REsea ch InNOVA ion
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2022
2
359,
794
183,128
183,134
49,349,9
39.27
1,109,912,265.2
2
1002
2022
3
368,
140
280,551
280,561
60,444,8
13.64
1,472,485,133.1
9
1054
2022
4
371,
407
185,444
185,450
54,768,5
14.75
1,402,826,693.7
6
926
2022
5
374,
132
186,576
186,582
55,397,2
30.61
1,393,421,971.2
1
1034
2022
6
376,
848
282,878
282,888
67,269,9
07.90
1,593,870,322.3
9
979
2022
7
375,
189
189,395
189,401
64,396,4
86.46
1,663,025,457.5
5
1070
2022
8
376,
229
190,704
190,710
69,636,3
04.10
1,819,921,217.8
6
872
2022
9
376,
420
286,986
286,996
67,533,7
31.24
1,593,554,559.2
3
794
2022
10
378,
752
191,962
191,968
63,500,1
38.99
1,582,733,504.7
1
852
2022
11
381,
577
192,527
192,533
62,313,9
34.76
1,569,636,662.0
4
978
2022
12
379,
481
319,694
319,813
271,142,
649.09
2,507,145,392.9
9
872
2023
1
372,
351
196,298
196,304
65,304,1
07.39
1,304,759,761.2
1
905
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ENTRENOVA - ENTe p ise REsea ch InNOVA ion
Vol. 10 No. 1
2023
2
375,
301
197,790
197,796
59,539,7
76.10
1,263,766,634.8
7
1093
2023
3
382,
103
292,255
292,265
70,012,1
24.81
1,624,835,631.5
0
1237
2023
4
384,
417
199,736
19,742
63,828,8
40.36
1,442,570,595.3
1
746
2023
5
387,
971
200,927
200,933
65,427,8
38.61
1,587,734,804.4
0
1054
2023
6
392,
387
294,348
294,358
73,441,2
21.59
1,614,114,086.8
5
939
2023
7
394,
578
202,245
202,251
76,545,5
80.75
1,785,940,976.4
8
1026
2023
8
393,
379
202,869
202,875
78,772,2
48.70
1,905,230,964.5
0
951
2023
9
396,
057
292,432
292,442
75,252,0
72.42
1,690,485,852.2
5
949
2023
10
395,
380
202,026
202,032
69,852,4
51.87
1,703,733,935.0
6
1143
2023
11
397,
559
199,024
199,030
71,174,3
18.51
1,667,594,716.2
8
966
2023
12
396,
211
275,969
276,054
240,478,
465.32
2,163,764,133.1
6
882
Sou ce: (Tax Adminis a ion o Koso o, 2024).
No e: Tes s ha e been un wi hou he s a ed adjus men s, and no signi ican de ia ion was
no iced in he applied s a is ics.
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ENTRENOVA - ENTe p ise REsea ch InNOVA ion
Vol. 10 No. 1
S a is ical analysis
OLS analysis acco ding o he mul iple linea eg ession:
Table 9
Mul iple linea eg ession
Sou ce: Au ho s’ wo k
Acco ding o he o mula o mul iple linea eg ession we subs i u e he cu en alues
om he able abo e as ollows:
0 1 1 2 2 1
...
i i i p p i
y x x x
= + + + + +
(1)
Y(Income) = a + b1 ( u no e ) + b2 (en i ies)+ b3(employed) + b4 ( axpaye s)+ b5
(decla a ions) 2
Y (income) = a + b1 (.1306403) + b2 (-84170.35) + b3 (-780.5747) + b4 (-78.28443) + b5
(273.8426)3
Acco ding o he ealized esul s, i can be seen ha we ha e ou meanings and one
no . Acco ding o his, u no e and he numbe o decla an s ha e a posi i e
signi icance, while he numbe o egis e ed subjec s, and he numbe o employees
ha e a nega i e signi icance. In he end, he numbe o axpaye s u ns ou o ha e
no signi icance in he model.
Fixed e ec s analysis acco dingly he mul iple linea eg ession o mula as ollows:
Income
Obse a ions
Coe icien s
p>
[95% con .
in e al]
Tu no e
60
.1306403
8.11
0.000
.0983432
.1629374
Numbe o
Regis e edEn
- i ies
60
-84170.35
-3.15
0.003
-137752.1 -
30588.55
Employed
60
-780.5747
-3.94
0.000
-1177.907 -
383.2428
Numbe o ax
paye s
60
-78.28443
-0.95
0.346
-243.2047
86.63579
Numbe o De
cla a ions
60
273.8426
2.80
0.007
78.03787
469.6473
cons an
60
2.10e+08
3.59
0.001
9.28e+07
3.28e+08
R-squa ed
0.6955
F (5, 54)
24.67
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Table 10
Fixed e ec s in mul iple linea eg ession
Sou ce: Au ho s’ wo k
A e applying he ixed e ec s, we see ha we ha e only wo ealized signi icances,
be ween income and u no e , i emains posi i e, while he nega i e one be ween
income and he numbe o egis a ions o subjec s.
Table 11
Co ela ions
Va iables
Co ela ions
Income
1.0000
Tu no e
0.6822
1.0000
Numbe o Re~s
-0.0962
0.2708
1.0000
Employed
0.2908
0.7606
0.3090
1.0000
Nume o Tax~s
0.4334
0.5885
0.2763
0.4497
1.0000
Numbe o De~s
0.4888
0.4371
0.1644
0.3092
0.7133
1.0000
Sou ce: Au ho s’ wo k
Based on he co ela ion analysis, we ha e a s ong posi i e co ela ion be ween
e enue and u no e , a nega i e co ela ion be ween e enue and he numbe o
egis e ed en i ies, a low co ela ion be ween e enue and employees, and a medium
co ela ion be ween e enue and he numbe o decla an s. On he o he hand, we
ha e no co ela ion be ween income and he numbe o axpaye s.
Income
Obse a ions
Coe icien s
p>
[95% con .
in e al]
Tu no e
60
.1328242
8.27
0.000
.1005634
.1650851
Numbe o
Regis e ed En i ies
60
-77211.3
-2.81
0.007
-132342.5
-22080.08
Employed
60
-606.5972
-1.49
0.143
-1424.437
211.2424
Numbe o
axppaye s
60
181.4205
1.11
0.272
-146.7926
509.6336
Numbe o
Decla a ions
60
86.07221
0.59
0.556
-205.8422
377.9866
cons an
60
1.30e+08
0.91
0.367
-1.57e+08
4.17e+08
R-squa ed:
Obs pe g oup:
Wi hin = 0.7158 min = 12
Be ween = 0.8423 a g = 12.0
O e all = 0.6240 max = 12
F(5, 50) = 25.19
co (u_i, Xb) = -0.5642 P ob > F = 0.0000
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P ac ical implica ions
By esea ching and unde s anding epo s, ends, indings, and empi ical esul s, he
ollowing is he conclusion and ecommenda ion:
Fu he Tax compliance mechanisms and be e p ocesses:
As a Koso o, i has been p o en ha [1] incen i izing [2] subsidizing in he domain o
Taxa ion, p o ides a solid g ound o a ac i eness o employees and businesses o
o malize u he and become complian wi h Tax laws and egula ions. The e o e, as
pa o i s pa h wi h he e o m, TAK mus de elop sus ainable mechanisms and
p ocesses ha will a ac much g ea e compliance wi h ax laws and egula ions.
E.g., Tax model in he USA: ax p epa a ion and eimbu semen o P i a e Indi iduals
on PIT, is a g ea model ha suppo s bo h: be e compliance wi h he ax obliga ions
and laws, and much e icien Tax Adminis a ion in collec ion and se ing i s
popula ion,
Be e and much e ec i e Audi p ocesses:
The TAK needs o e o m i s ax audi unc ionali ies and p ocesses in o de o imp o e
i s ax adminis a ion. Cu en ly, TAK lacks su icien s a o ax audi s ha will e icien ly
co e ax audi asks o op imal ax compliance. I is impe a i e ha TAK has an
in e nal special audi ask o ce ha con ols audi unc ionali ies, p ocesses and
e ec i eness o he audi s a (An Audi o he Audi ). The TAK should s eng hen
in e nal Compliance s uc u es. The passi e, ac i e audi s and con ols should be
much e icien by checking businesses in mo e e ec i e c oss-examina ion o ma . In
addi ion, TAK should u he s eng hen c oss ins i u ional coope a ion wi h o he
Go e nmen al Ins i u ions, e.g. mo e e icien coope a ion wi h Cen al Bank o
Koso o, Koso o S a is ics Agency, Minis y o Finance, Labo , and T ans e , e c. I
should also de elop much e icien epo ing o ma . TAK should p o essionally and
pe o mance wise adhe e o he bes p o en Taxa ion ends and mechanizes ha
al eady a e implemen ed, especially in OECD coun ies.
Tax Laws should upda e:
Tax laws should u he upda e o elimina e loop holes. TAK elies hea ily in he o ma
o Tax Law in e p e a ion om i s clien ca e depa men . In one hand his seems as
added alue o he clien s, bu in he o he hand p esen s ein e p e a ion o
Laws/Regula ions and se s p esiden s ha may ha e ad e se e ec on Taxa ion.
S a ing and aining:
TAK should inc ease s a ing and aining, especially in he domain o Tax inspec o s.
Be e echnology co e age:
Fo he pu pose o communica ing wi h axpaye s, he TAK has de eloped EDI sys em
(IT sys em) ha ecen ly has been upda ed. Ne e heless, u he digi aliza ion should
be s a egic p io i y by applying he mos mode n Taxa ion ends in echnology.
Technology and digi aliza ion a e one o he p e- equi emen s owa d much e icien
Tax Adminis a ion and i s op imali y.
Awa eness:
TAK should con ibu e agg essi ely owa d ax cul u e h ough awa eness p og ams.
Tax cul u e and bene i s should well de elop in Koso o. By ha ing ax bene i s
in o ma ion, and o he axa ion law equi emen s, Koso a s will u he con ibu e o
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ENTRENOVA - ENTe p ise REsea ch InNOVA ion
Vol. 10 No. 1
ax paying and as such minimize in o mali y and con ibu e owa d e icien ax
sys em.
Conclusion
Tax adminis a ion has been one o he main pilla s o public inance e enue
gene a ion. Koso o has con inued o be s able in consump ion axes when usually
consump ion axes ( alue added axes-VAT, excise, and cus oms) ha e been he
main sou ce o income o he Go e nmen on a adi ional basis.
The coun ies o he Wes e n Balkans a e conside ed egions ha sha e simila socio-
economic ypologies, as well as poli ical ones. On he o he hand, co po a e income
axes-ATK and pe sonal income axes-TAP a e s ill ine icien , ep esen ing a
subop imal ope a ing end ha equi es a en ion.
The esea ch is mainly ela ed o he da a ob ained om seconda y da a, which
show ha he Republic o Koso o has oom o implemen ax e o ms, o mo e
speci ically o u he imp o e i s ax sys em.
The limi a ions o his wo k a e mainly he ac ha he da abase is no e y
p ominen , and he s a is ical analysis is no e y de ailed.
Re e ences
1. Alm, J. (1996). Wha is an" op imal" ax sys em? Na ional ax jou nal, 117-133.
doi:10.1086/NTJ41789190
2. Hu sebau , M. (2014). Taxa ion and budge a y policies in he wes e n Balkans. SEER: Jou nal
o Labou and Social A ai s in Eas e n Eu ope, 207-235. Re ie ed om
h ps://www.js o .o g/s able/43294046
3. In e na ional Mone a y Fund. (2024). Re ie ed om Wo ld Economic Ou look:
h ps://www.im .o g/en/Publica ions/WEO
4. N. G ego y Mankiw, Ma hew Weinzie z, and Danny Gogan (2009). Op imal axa ion in heo y
and p ac ice. Jou nal o Economic Pe spec i es, 147-174. doi:10.1257/jep.23.4.147
5. Minis y o Finance, Labou , and T ans e s. (2024). Re ie ed om Sha e o Di e en Taxes in
To al Tax Re enues: 2012-2022: h ps://m p . ks-go .ne /
6. Sepul eda, C. F. (2023). Do coun ies eally de ia e om he op imal ax sys em? Public
Finance Re iew. Sage Jou nals, 76-131. doi:10.1177/10911421221132670
7. Šimo ić, H. and Žaja (2010). Tax incen i es in wes e n Balkan coun ies. In e na ional Jou nal
o Social, Beha io al, Educa ional, Economic, Business and Indus ial Enginee ing, 731-736.
Re ie ed om ile:///C:/Use s/Admin/Downloads/475512.Tax-Incen i es-in-Wes e n-Balkan-
Coun ies%20(1).pd
8. Skende i, D. & B. (2022). Unde s anding Tax E asion and P o essionalism o Tax Adminis a ion
in Koso o. ELS, 55(39), 70-75. IFAC. doi:10.1016/j.i acol.2022.12.013
9. Tax Adminis a ion o Koso o. (2024). Re ie ed om Taxes: h ps://www.a k-ks.o g/
10. TAX FOUNDATION. (2023). Re ie ed om In e na ional Tax Compe i i eness Index 2023:
h ps:// ax ounda ion.o g/ esea ch/all/global/2023-in e na ional- ax-compe i i eness-index/
11. O icial websi e o OECD, upda e 2024, h ps://www.oecd.o g/abou /membe s-and-
pa ne s/
12. O icial websi e o In e nal Re enue Se ices, upda e 2024,
h ps://www.oecd.o g/abou /membe s-and-pa ne s/
13. O icial websi e o Minis y o Finance, Labo , and T ans e s, upda e 2024, h ps://m p . ks-
go .ne /
14. O icial websi e Koso o Agency o S a is ics, upda e 2024, pages:
15. ASK public Da a h ps://askda a. ks-go .ne /pxweb/en/ASKda a/
16. O icial websi e In e na ional Mone a y Fund-IMF, upda e 2024, page:
h ps://www.im .o g/en/Da a
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Abou he Au ho s
Gjon K. Gjonlleshaj is a senio execu i e wo king in baking sec o . He has almos 20
yea s o Banking expe ience in di e en oles s a ing o m sales, c edi isk, ope a ions,
inance, IT, and adminis a ion. Since 2015 he holds he posi ion o he CEO and
Chai man o he managemen boa d a Rai eisen Leasing in Koso o (Ne wo k uni o
Rai eisen Bank In e na ional). In addi ion, since 2023 he holds he posi ion o he
membe o he supe iso y boa d a Rai eisen Insu ance B oke Koso o. The au ho
has expe ience in lec u ing inancial, manage ial accoun ing and isk managemen .
Con ac email: [email protected] o gjo[email p o ec ed]om
Al ina Kambe aj cu en ly engaged in he academic ield as a lec u e assis an in
subjec s quan i a i e/quali a i e analysis, and business managemen . She is a
membe o he boa d o di ec o s a he mic o inance ins i u ion TimiIn es (P is ina,
Koso o). Con ac email: [email protected]
