Customs Revenue Collection and Development Fund

Kosovo and Serbia reached the agreement on the Customs Revenue Collection on 17 January 2013. They agreed on the collection of customs duties, excise duties and VAT. This meant that all goods may enter Kosovo through crossing points in Jarinje/Jarinjë and Brnjak/Bërnjak and would be directed to the Mitrovicë/a south terminal for release.

All the procedures are done by Kosovo authorities, in accordance with their legal responsibilities and liabilities under the presence of EULEX.

Before this agreement, parties had agreed on Custom Stamps and IBM and had established border control in northern crossing points on paper, but were not able to ensure the same in practice.

Right after independence the northern part of Kosovo had become an informal economic zone. Serbian businesses that traded with the north did not pay VAT and custom duties at Jarinje/Jarinjë and Brnjak/Bërnjak crossing points, refusing to recognize the Kosovo authority.

To establish tax order in the northern crossing points, parties agreed on the Collection of Custom Duties. Kosovo and Serbia also decided to establish a Development Fund to promote socio-economic development in Leposavić/Leposaviq, Mitrovicë/a, Zubin Potok and Zvečan/Zveçan.

The idea behind this development fund is to use the revenues that come from the goods entering through these two crossing points; which are destined for the northern municipalities, to develop and improve infrastructure of the northern municipalities (i.e. water supply, electricity, roads, technical and technological advancements in education, health care, arable land and agriculture, public transport) as well as to stimulate and support the investment for small and medium size enterprises.

The money collected is public, and is treated as such, during its management and expenditure.

This fund is operated by a managerial board, which convened on 13 December 2014 and consists of three members- one representative of the Serb community from one of the four municipalities, Kosovo Minister of Finance and one representative of the European Union Special Representative for Kosovo (EUSR). The decisions are made by consensus, but in case of repeated inability to reach consensus, the EUSR may use a casting vote to uphold the purpose of the Fund.

The agreement further states that revenues collected at the crossing points in Jarinjë/Rudnica and in Tabavijë/Bernjak are transferred into an account of the Fund established in a commercial bank in Pristina determined by the EU.  The money collected is public, and is treated as such, during its management and expenditure. Moreover, the revenue for the fund might come from other contributions such as international donors, in accordance with Kosovo legislation.

To implement this agreement, the Assembly of RKS approved the Law on amending and supplementing the Law on the Budget (no. 04-L165), on 25 July 2013.

An important step forward was made on 5 November 2013, when parties reached the EU conclusions on the implementation and agreed to initiate the collection procedure on 14 December 2013.

Under these conclusions, for the goods that fall under a controlled regime (licensing), it was foreseen that companies must apply for licenses in accordance with Kosovo legislation within 3 months of the start of the collection. During that period, companies could bring into Kosovo those goods but would have to pay all applicable customs duties and excise duties as well as VAT in accordance with Kosovo legislation. Parties were further obliged to exchange -before 30 November 2013- their respective lists of licensed human and veterinary medicinal products and devices.

The implementation of the licensing of companies from north of Kosovo on controlled goods started on 1 January 2015.  Parallelly, intensive consultation meetings were organized between Kosovo respective institutions with the company owners and representatives of business sector from the northern part of Kosovo on licensing process and other issues related to the customs procedures on import/export and licensing process.

All in all, the agreement has contributed to establishing rule of law or reducing informal economy in this area, but also in providing an additional source for development investments in the northern part:

  • By September 2015, in the system of Kosovo Customs, 439 companies registered for export and import of goods from the four northern municipalities and around 98% of them were equipped with Kosovo fiscal numbers;
  • Kosovo agencies issued around 195 licenses/permissions and authorizations regarding the procedures for export/import for the companies in the northern part of Kosovo (185 are from Kosovo Veterinary Agency, 7 from Kosovo Medicine Agency and 1 from Ministry of Trade and Industry);
  • And by the end of 2018, the Fund raised around 15.5 million and the total number of the approved projects reached 30.

Currently, the Fund holds over €5 million, available to be disbursed for the infrastructural, social, economic development of the four municipalities in northern Kosovo. However, due to political dynamics, there was a hiatus in the work of the management board of the Development Fund; which is expected to resume its work in the upcoming period.

Agreements in PDF