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Kosovo offers many benefits to potential foreign and domestic investors: particularly low taxes, abundant resources, and a supportive business environment.
Taxes in Kosovo are very low compared to those of any of its neighbours. The tax system has been kept extremely simple. There are few taxes and compliance is straightforward. Furthermore, the Government is introducing tax incentives to support domestic production.
• The value added tax (VAT) rate is 15%; a reduced rate of 0% applies to agricultural production inputs. Exporters receive a full VAT rebate.
• Tariff rates are 10% on imports; a reduced rate of 0% applies to imports of certain capital and intermediary goods. The new Customs Code provides a number of business friendly trade-facilitating instruments.
• Personal income tax rates vary from 0-20%.
Kosovo has an enviable endowment of human and natural resources:
• abundant natural resources: lignite, zinc, lead, ferronickel and fertile agricultural land; and
• a young and motivated labour force with a strong entrepreneurial spirit and skills as well as a widespread knowledge of all major European languages.
A stimulating investment environment
Kosovo's institutional environment supports business:
• free access to the market of the European Union and the markets of its direct neighbours;
• modern business-support institutions;
• simple and quick business registration procedure (within 3 days);
• modern and EU compatible legal framework; and
• the Euro is the official currency in Kosovo, eliminating Euro zone currency risk.
In particular, Kosovo has a modern foreign investment legislation (UNMIK Regulation 3/2001), providing for the same investment regime for Kosovo's citizens and foreign investors. It includes measures such as national treatment, guarantees for unrestricted use of income, prohibition of favouritism and discrimination as well as protection against expropriations.
There is a notable rise in foreign investors' interest. According to Business Registry data for 2004, there are 593 companies in foreign and mixed ownership in Kosovo. These investments originate from FYROM, Serbia and Montenegro, Turkey, Albania, China, Germany, Slovenia and Italy. More than 90% of foreign investment goes to enterprises with less than 10 employees.
In many respects, Kosovo is already the most attractive business environment in the region. The vast potentials in mining, energy, agriculture and food processing sectors present opportunities for very attractive private investments. The Government and UNMIK are working to improve the investment climate even more. Kosovo is now enjoying sustained economic growth.
Central location in the region
Kosovo is located amidst a potential market in South-East Europe of 100 million people. It is well connected to regional centres via road, rail, and air communications, and linked to the regional centres via 16 roads that pass through Kosovo.
Major transport connections have been rebuilt and will be upgraded in the near future. After completion of planned road constructions, Kosovo will have access to the ports of Durres in Albania and Thessaloniki in Greece.
Prishtina Airport is Kosovo's air bridge to Europe and the rest of the world. It has a capacity of one million passengers per year. The airport connects Kosovo via direct flights to London, Vienna, Istanbul, Budapest, Zurich, Tirana, Frankfurt, Düsseldorf, Stuttgart, Hannover, Copenhagen, Stockholm and Gothenburg. Railway transport has an 80-year old tradition in Kosovo. The railway lines cover the entire territory, both north to south and east to west. The main network is 236km long, and in addition there are 97km of industrial railways. Railway upgrades are planned to divert more heavy transport from roads to rail.
A stable political system and a young, multilingual population
Kosovo has an estimated population of 2 million, of which approximately 90% is Albanian, 8% Serb, and 2% others. The age and gender breakdown is as follows:
The Albanian majority and the non-Serbian minorities are mostly Moslems. Few of them are Catholic. The Serbian Minority is largely Christian Orthodox.
The official languages in Kosovo are Albanian and Serbian. The majority of the population speaks Albanian. Serbian, Bosnian and Croatian are spoken by minorities. A very large number of people also speak English, German and other European languages. English is the official language of UNMIK. The texts of legislation created in Kosovo since the beginning of the UNMIK administration exist in English, Albanian and Serbian.