Empirical analysis of tax revenues, their impact on economic growth of the country - the case of Kosovo

AuthorTeki Shala
PositionEuropean University of Tirana
Vol. 1 No. 2
June, 2017
European Journal of Economics, Law and Social Sciences
IIPCCL Publishing, Graz-Austria
ISSN 2519-1284
Acces online at www.iipccl.org
Empirical analysis of tax revenues, their impact on economic growth of the
country - the case of Kosovo
Teki Shala
European University of Tirana
Main purpose of political makers is the economic growth of a country. Tax policy is o en
mentioned in research as an important determinant of economic growth. This study is of great
importance in the formulation of these policies which would a ect the e ciency of collection
of taxes in order to cover public expenditures, which would have an impact in the growth of
the country's economy. To assess this e ect, we have done a descriptive statistical analysis of
the structure and trends in tax collection in Kosovo from 2005 to 2015. In this research we have
considered how tax policies impact on economic growth by using data from years. The results
from this analysis con rm that the structure and trends of taxes in Kosovo have contributed
to the growth of public investment growth, contributing directly to GDP growth. Also based
on the ndings we have noticed that the share of tax revenues in the country's Gross Domestic
Product was relatively low compared to other countries in the region, re ecting a low level of
economic development of the country. Moreover, this research highlights some key issues that
policy makers need to take into account in dealing with the more e ective collection and use
of tax revenues to improve economic growth.
Keywords: tax, Kosovo, tax reforms, tax rates, tax policy.
Kosovo in the 1990s experienced a total collapse of the economic and scal
system. Immediately a er the end of the armed con ict and a er the declaration
of independence from Serbia, it built a new economic system that enabled it to
raise public revenues for covering public spending (Shala, 2017). Politics and
the scal system in Kosovo has its original origin right a er the end of the war
in 1999. Immediately a er the war, a United Nations mission called UNMIK was
installed. This mission was responsible for the governance of the country. Kosovo
from the war emerged economically, without any scal system, and the one who
had to take measures to establish it was UNMIK, so on June 25, 1999, Kosovo's rst
chief administrator approved Regulation no. 1999/1. This regulation is the highest
legislative act in post-war Kosovo, which regulates issues of state property, nance,
banks, and so on. The second important document for the scal system in Kosovo
is extracted from the SRSG, Regulation no. 1999/16 on the Establishment of the
Central Fiscal Authority (CFA). Among the rst regulations issued by the UN Special
Representative for Kosovo is that on establishing customs and other relevant services
in Kosovo. With the approval of the Regulation on Excise and the Regulation on Sales
Tax, the customs service and the payment of tax and excise duty on import of goods as

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