Notification for new businesses – Taxation option on real basis

Published on September 20, 2012 4:07 pm

In order to help young taxpayers regarding their requirements to be taxed on bases of real income, from now on Tax Administration in Kosovo, will enable these businesses to apply for taxation on the basis of real income, for the first year enrolled and after 1^st of March.

Article 33 of the Law No. 03/L – 161, on Personal Income Tax, determines the rules of taxation on real basis as follows:

3. Taxpayers who choose to deal with bookkeeping and records identified in paragraph 4 of this article for any tax period is required to prepare the bookkeeping and records for the tax period for which the choice (option) is done, plus at least three (3) subsequent tax periods, as provided in the sub legal act issued by the minister.

3.1 A taxpayer who wants to choose the option described in paragraph three (3) of this article shall submit a statement to the Tax Administration by 1^st  of March of the tax period in which the taxpayer wants to make the choice or the choice has already been made.  The submitted statement shall be in the format prescribed by the Tax Administration. When such a choice is made, the taxpayer must continue to prepare all the financial statements and adjust the recorded income and expenses in such statements for the tax period in which the choice is made, and at least three subsequent tax periods as it is foreseen in paragraph 3 of this article.

3.2 A taxpayer with the right to choose the bookkeeping and records as required by paragraph 4 of this Article, shall submit a request for explanatory ruling to TAK, in accordance with applicable provisions of the Law on Tax Administration and Procedures, and take the approval from TAK before bookkeeping and recordings in accordance with Article 34 of the law..

Approval must be received by March 1 of the year for which the taxpayer claims the explanatory ruling.

The same issue is also set by Article 36 of the Law No. 03/L – 162, on Corporate Income Tax.

Existing businesses consistently could use the opportunity to apply for taxation in real basis by submitting a statement to the Tax Administration until March 1 of the following year.

While, new businesses which register after 1^st of March may be taxed in real bases, if apply for taxation in real basis within the periods, as follows:

1. New business, registered during the period QL / 1, may be taxed on real basis, if applies to choose the taxation on real basis, until 1^st of April, prior to the deadline for submitting the statements for the reporting period Q1.

2. BNew business, registered during the period QL / 2, may be taxed on real basis, if applies to choose the taxation on real basis, until 1^st of July, prior to the deadline for submitting the statements for the reporting period Q2.

3. New business, registered during the period QL / 3, may be taxed on real basis, applies to choose the taxation on real basis, until 1^st of October, prior to the deadline for submitting the statements for the reporting period Q3.

4. New business, registered during the period QL / 4, may be taxed on real basis, applies to choose the taxation on real basis, until 1^st of January, prior to the deadline for submitting the statements for the reporting period Q4.

So, new businesses which apply for taxation on real basis within the mentioned periods above will be eligible to take advantage of this opportunity, complying with the rules prescribed by tax legislation, same as existing businesses.

Also, new businesses which have chosen to be taxed on real basis, are obliged to abide by the rules under the legislation where the bookkeeping and records are required to be kept in accordance with the Accounting Standards in Kosovo for the tax period in which the choice (option) is done, plus at least there (3) successive tax periods, as provided in the by-law issued by the Minister.