Kosovo is actively promoting itself as an attractive location for strategic investments to encourage economic and social development. The government has worked actively to promote projects that will lead to economic growth, employment, innovation, and hence an increase in citizens’ quality of life. These priority sectors consist of such areas as energy, infrastructure, manufacturing, health, and others. Using incentives and straightforward procedures, Kosovo aims to attract domestic and foreign investors to drive its growth.
Encouraging Strategic Investments for Kosovo’s Economic and Social Growth
The status of a strategic investor or strategic investment project in Kosovo can be obtained by projects that meet criteria and procedures defined by law. This status is dedicated to projects in priority sectors of economic and social development, which contribute to economic growth, job creation, the implementation of new technologies, the improvement of Kosovo’s economic competitiveness, the increase of exports, the reduction of trade deficits, and the overall improvement of citizens’ well-being and living conditions. The included sectors are energy, infrastructure and mining, transport and telecommunications, tourism, manufacturing, agriculture and the food industry, healthcare, industrial and technological parks, as well as wastewater and waste management. In this way, this status aims to encourage projects with significant positive impacts on Kosovo’s economy and society.
Process for Applying and Engaging in Strategic Investment Projects in Kosovo
Investors, who may be foreign, domestic, or public authorities, can apply for strategic investor status by submitting a written request to the Investment Agency. The Government of Kosovo may also invite investors for strategic projects through public tenders or engage in direct negotiations when permitted by international agreements. Priority projects are drafted by the Government based on developmental interests and are published to be implemented by strategic investors. Decisions and calls for investments are published on the Government’s official website to ensure transparency.
Tax Benefits and Exemptions for Businesses in Kosovo
In Kosovo, dividends received by both residents and non-residents are not taxed. Businesses that purchase new heavy machinery can get a one-time 10% tax deduction when the machinery is first used in Kosovo, though they cannot use this if they already benefit from other tax breaks. Companies that sponsor sports can receive a tax credit of up to 30%, and those sponsoring youth or cultural activities can get a 20% tax deduction. Additionally, VAT is exempt from the import of manufacturing equipment and raw materials. Raw materials produced in Kosovo are also temporarily VAT-exempt until 2028. Businesses that earn income from outside Kosovo and pay tax abroad can receive a tax credit for those foreign taxes, up to the Kosovo tax rate. In addition, a government-affiliated website has been established to guide interested parties on how to establish a business in Kosovo, simplify the employment regulations, and navigate the strategic investment framework.
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Why Invest in Kosovo?
Kosovo offers numerous opportunities for investment across various sectors. Its economy has shown strong economic performance in terms of GDP growth, thanks to export growth and private consumption. As energy production and some degree of stressed consideration towards alternative energy production increase, it provides an investment opportunity, especially in power plants and energy storage facilities. Mining remains important in Kosovo since Kosovo still possesses large quantities of critical minerals, such as nickel and manganese, but exploitation is still limited, both because of the inadequacy of being able to carry out a rapid review of the exploration licenses. The telecommunication and IT sector is in an expansion phase and Kosovo is a regional hub of IT-enabled activity. The healthcare sector, strength of quality care and infrastructure, represents a cash-rich business opportunity for private sector investments. Waste management and recycling are still on the road to maturity, and these can evolve even further by the EU policy measures addressed to Kosovo. Along with the economic development, increasingly sophisticated specialized services (e.g., legal service, commercial service, service design service) are in demand. Each of these impacts, along with the pro-West orientation of Kosovo’s population and the stability of its economy makes Kosovo attractive from the point of view of investing.
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If you are interested in investing in Kosovo, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with related matters. We can connect you with top professionals to support your business activities in Montenegro if needed. Please feel free to contact us.
