Success for government lobbying campaign in Kosovo
In today’s modern world, having a competitive ICT market is imperative for private sector development. Businesses know this and governments know this, but adjusting policies is a time consuming process and is often seconded to more pressing concerns. However the Kosovo government has recently prioritized ICT on its agenda, recently enacting a VAT reduction on ICT equipment in its fiscal policy.
Such a move exemplifies the power of the combined efforts of SPARK and its local partner STIKK (Kosovo ICT Association) in advocating and lobbying the Kosovo government for a more fruitful economic environment for businesses.
SPARK and STIKK first began their lobbying back in 2011 to ensure that the country’s ICT sector was able to develop to its full potential. These efforts have already generated results in the last two years, such as resolving ongoing obstacles to successful business practices as well as creating sustainable opportunities for entrepreneurs to increase their productivity and business networks. However the greatest victory came this week when the Kosovo government announced that a new law on fiscal package has been approved by the parliament, effectively halving the VAT on ICT equipment from 16% to 8 %.
Such legislation is imperative to Kosovo’s sustainable economic development as the former VAT rate was not competitive enough to ensure profitable business practices; regional neighbour Macedonia had previously decreased VAT on ICT equipment from 18% to 5%. As such businesses were tempted to look beyond Kosovo’s border for a good deal. Now however Kosovo’s new VAT rate applies to all goods and services traded inside and outside of Kosovo, including the all important imports and exports.
But what does this really mean for the economy’s development? Well, figures drafted using trends from the Tax Administration data forecast that such an amendment will stimulate tangible economic growth; VAT cuts will drive domestic consumption higher resulting in an increase in tax revenues, and new employment opportunities will be generated. Importantly a rise in direct investment into Kosovo ICT companies and services by the foreign market has been forecasted.
Figures from the World Bank show that Kosovo has experienced solid economic growth over the last decade. Furthermore it is one of only four countries in Europe to have experienced growth in every year since the onset of the global financial crisis in 2008. SPARK’s lobbying and Advocacy which assisted the result of the new reduced VAT rate of 8% will certainly sustain the continuing development of Kosovo.
As one of its activities STIKK has produced an ‘IT Barometer‘; a document which explores the IT sector in Kosovo and provides current information for potential investors.
Read original article written by SPARK.