Your Incomes are Object of Taxation!

Administrata Tatimore e Kosovës
Poreska Administracija Kosova
Tax Administration of Kosovo
YOUR INCOMES ARE OBJECT
OF TAXATION!
2014
LET’S WORK
TOGETHER!
DEAR TAXPAYERS,
Tax Administration of Kosovo mission is to collect revenues
that enable financing of public services in a fair and transparent
way, such as: infrastructure, security, education, health,
programs of social welfare etc.
Therefore, it is your responsibility that through filing and
payment of tax liabilities to support economic development of
the country.
Our aim is to increase voluntary compliance of tax liabilities;
therefore we encourage you to file and to pay your tax liabilities
correctly and timely, in order that you do not become subject to
penalties.
1
Object of taxation in Personal Incomes
The objects of taxation for resident persons are taxable incomes
from the source of incomes in Kosovo and the source of incomes
outside Kosovo.
The objects of taxation for non-resident persons are taxable
incomes only from the source of incomes in Kosovo.
Pension Contribution
Natural persons that create incomes different from economic
activity, are obligated to declare and pay Pension Contribution in
those incomes minimum five percent (5%) while in a voluntary bases
they may declare and pay up to fifteen percent (15%).
2
In a special focus:
A. Natural Persons for whom the tax was not withheld;
B. Natural Persons for whom the tax was withheld and at
the same time they create additional incomes from
other sources;
C. Natural Persons earning incomes from different
sources; and
D. Natural Persons – non-residents that earn incomes
from different sources in Kosovo.
For the purpose of this brochure the natural person means the
individual earning personal incomes.
3
THE SOURCES OF INCOMES CREATED
BY NATURAL PERSONS
Natural persons may create incomes from the following
sources:
Wages;
Offering professional services such as: advisor, lawyer,
geodesist, accountant, architect, engineer, supervisor of
projects, doctor, artist, sportsperson, singer, painter,
composer, trainer etc.;
Any other service provided by Natural Persons that is not
mentioned above.
4
Tax rates for calculation of tax obligation
for the Natural Person’s income
Tax rates
Monthly income [€]
0%
4%
8%
10%
0 up to 80
80 up to 250
250 up to 450
450 and more
Annual income [€]
0 up to 960
960 up to 3000
3000 up to 5400
5400 and more
5
A
Natural persons whose tax was
not withheld
For all of the income created from Natural Person and for whom the tax
was not withheld, it is obligated to submit tax declaration until March 31 of
the following year.
Tax declaration will include all of the income by deducting allowable
expenditures.
Gross income
-
Allowable deductions
=
Taxable income
EXAMPLE
Natural Person during the year earned income on behalf of wage, and the
tax was not withheld by the employer. Monthly wage was determined in
amount of 800€, which during the year achieves the amount in total of
9,600€. For the incomes earned, the Natural Person is obligated to declare
and pay tax and Pension Contribution based on the following calculation:
Annual income ----------------------------------------------------------------- 9,600€
Obligated pension contribution--------------------------- 9,600€ x 5% = 480€
Taxable income --------------------------------------9,600€ – 480€ = 9,120€
Note: Pension Contribution will be recognized as a periodical expense only
if it is proofed that as such is declared and paid.
Taxable income
0 do 960
960 to 3,000
3,000 to 5,400
5,400 to 9,120
6
Tax base
Tax rate
960
2,040
2,400
3,720
0%
4%
8%
10 %
Tax obligation for period
Personal
Income Tax[€]
0.00
81.60
192.00
372.00
645.60
B
Natural Persons whose tax was withheld
and at the same time create additional
incomes from other sources
Natural Person, in addition to its wage for which the tax was withheld,
creates other incomes, is obligated that until March 31 of the following
year to submit tax declaration.
Tax declaration will include all of the incomes, allowable expenditures and
withheld taxes.
Gross
income
Allowable
- deductions
=
Taxable
Incomes
x
Tax Rate
=
Tax obligation of
the period
- Withholding tax =
Tax for
payment
EXAMPLE
A Natural Person with a monthly gross salary of 350€ (for whom the tax
was withheld) during the year earns other income of 2,500€ from
provision of professional services on supervision of construction project.
Considering that the Natural Person earns other incomes, it is obligated to
submit annually declaration by including all incomes. Tax calculation is
done as following:
Incomes from the wage (350€ x 12 months)
Pension contribution from the employee’s wage (4,200€ x 5%)
4,200.00€
210.00€
Taxable income from wage (4,200€ – 210€)
3,990.00€
Withholding tax from by the employer
Other incomes (project supervision)
Obligatory pension contribution (2,500€ x 5%)
160.80€
2,500.00€
125.00€
Other taxable income (2,500€ – 125€)
2,375.00€
The total of income (3,990€ + 2,375€)
6,365.00€
7
Note: Pension Contribution will be recognized as a periodical expense
only if it is proofed that as such is declared and paid.
Taxable income
0 up to 960
960 up to 3,000
3,000 up to 5,400
5,400 up to 6,365
8
Tax base
Tax rate
960
0%
2,040
4%
2,400
8%
965
10 %
Tax obligation for the period
Withholding tax by the employer
Tax for payment
Personal
income tax [€]
0.00
81.60
192.00
96.50
370.10
160.80
209.30
C
Natural persons earning income from
different sources
All of the income earned by natural persons such as: income from
wages, income from different professional services etc. should be
subject to personal income tax.
The natural person is obligated to submit tax declaration until March 31 of
the following year.
Tax declaration will include incomes, allowable expenses and withholding
tax.
9
EXAMPLE No.1
During the tax period, the Natural Person has earned following
incomes:
Amount
The source of income
Income from professional services- architect
Income from the rent
Income from the interest
Total income
Withholding tax
6,500€
2,800€
1,700€
11,000€
0
0
0
0
Since the natural person creates income from different sources for which
there was no withholding tax, no declaration and no payment, than this
person is obligated to submit annual declaration including all of the
income. Tax calculation is done as following:
Annual income----------------------------------------------------------------11,000€
Allowable expenditures from the rent------------------ 2,800€ x 10% = 280€
Obligated pension contribution----------------------- 6,500€ x 5% = 325€
Taxable income ------------------------------- 11,000€ –280€ – 325€ = 10,395€
Note: Pension Contribution will be recognized as a periodical expense
only if it is proofed that as such is declared and paid.
Taxable income
0 do 960
960 up to 3,000
3,000 up to 5,400
5,400 up to 10,395
10
Tax base
Tax rate
960
0%
2,040
4%
2,400
8%
4,995
10 %
The tax obligation for the period
Personal
ncome tax [€]
0.00
81.60
192.00
499.50
773.10
EXAMPLE No.2
During a tax period a Natural Person - artist / singer has earned the
following incomes:
The source of income
Income from professional services in Kosovo
Income from professional services outside Kosovo
Income from rent
Income from interest
Total income
Amount
6,500€
12,000€
2,800€
1,700€
23,000€
Withholding tax
0
12,000€ x 18% = 2,160€
0
170€
2,330€
Since the natural person creates income from different sources for which
there was no withholding tax, with an exception for income earned outside
Kosovo and income from interest, than this person is obligated to submit
annual declaration including all incomes. Tax calculation is done as
following:
Annual income ----------------------------------------------------------- 23,000€
Allowable expenses from the rent -------------------- 2,800€ x 10% = 280€
Obligatory pension contribution---------------------- 18,500€ x 5% = 925€
Taxable income ------------------------------- 23,000€ – 280€ – 925€ = 21,795€
Note: Pension Contribution will be recognized as a periodical expense
only if it is proofed that as such is declared and paid. Also, withholding tax
outside country will be accepted only in maximal amount of 10% (tax credit
allowed according to the Law on PIT).
Taxable income
Tax base
0 up to 960
960 up to 3,000
3,000 up to 5,400
5,400 up to 21,795
Tax rate
960
0%
2,040
4%
2,400
8%
16,395
10 %
Tax obligation for the period
Withholding tax outside country (allowed 10% on max)
Withholding tax on interest
Withholding tax on total (1,200€+170€)
Tax for payment
Tax on
personal income [€]
0.00
81.60
192.00
1,639.50
1,913.10
1,200.00
170.00
1,370.00
543.10
11
EXAMPLE No.3
The natural person during the tax period has earned income as following:
Amount
Source of incomes
Income from professional services - trainer
Income from the rent
Income from the rent
Total income
Withholding tax
7,200€
3,000€
1,600€
11,800€
684€
270€
160€
1,114€
Since the natural person creates income from different sources for which
there was paid and withheld tax, than this person is not obligated to submit
annual declaration, but may opt to submit.
If it opts to submit annual declaration than the tax calculation is done as
following:
Annual income -----------------------------------------------------------------------------------11,800€
Allowable expenditures from the rent -------------------------------------- 3,000€ x 10% = 300€
Pension contribution (from the income as a trainer) --------------7,200€ x 5% = 360€ (paid)
Taxable income -----------------------------------------------11,800€ – 300€ – 360€ = 11,140€
Note: Pension Contribution will be recognized as a periodical expense e
only if it is proofed that as such is declared and paid.
Taxable income
0 up to 960
960 up to 3,000
3,000 up to 5,400
5,400 up to 11,140
12
Tax base
Tax rate
960
0%
2,040
4%
2,400
8%
5,740
10 %
Tax obligation for the period
Withholding tax (684€+270€+160€)
Refund
Personal
income tax [€]
0.00
81.60
192.00
574.00
847.60
1,114.00
-266.40
D
Natural Persons – non-residents earning
income from different sources in Kosovo
Natural Persons – non-residents earning income in Kosovo, for whom
the tax is not withheld, are obligated that until March 31 of the following year
to submit tax declaration and to pay for those income.
EXAMPLE
A non-resident natural person in Kosovo has earned income in Kosovo from
provided services – giving for rent three residential buildings. From these
three buildings, gross rent was 3,000€ per month. In total it earns 36,000€.
Since Natural Person (non-resident) creates income for which the tax was
not withheld, is obligated to submit annual declaration based on the
following calculation:
Annual income---------------------------------------------------------------36,000€
Allowable expenses from the rent----------------- 36,000€ x 10% = 3,600€
Incomes before tax--------------------------------36,000€ – 3,600€ = 32,400€
Taxable income
0 up to 960
960 up to 3,000
3,000 up to 5,400
5,400 up to 32,400
Tax base
Tax rate
960
0%
2,040
4%
2,400
8%
27,000
10 %
Tax obligation for the period
Personal
income tax [€]
0.00
81.60
192.00
2,700.00
2,973.60
13
TAX DECLARATION AND PAYMENT
The Natural Person who has earned income (for which the tax was not
withheld) it is required to get Fiscal Number in order to declare and pay
the tax.
Filing annual tax on Personal Income is done through Electronic System
– EDI. Also declaration and payment of pension contribution is done
through this system. Access in this system is done through the TAK
website: www.atk-ks.org.
Payment for tax on personal income may be done in one of the authorized
banks in Kosovo, through payment-order generated from Electronic
System – EDI.
The deadline for declaration and payment for personal income tax is
from January 1st until March 31 of the following year for the previous
year.
DECLARE
YOUR
INCOME
ym
Pa
ent-order
14
EDI
Banks
cal NumBbe
s
i
F
r
VOLUNTARY COMPLIANCE
Voluntary compliance means declaration and payment of tax obligation
from the taxpayer by respecting legal provisions regarding the tax amount
that should be paid and by respecting timeframe of payment of this amount,
without intervention of TAK.
Natural Persons/Taxpayers that voluntary declare and pay their tax
obligations in accordance with Tax Legislation are not going to be subject to
penalties by TAK.
Therefore, we kindly ask all of the Natural Persons/Taxpayers which do not
comply voluntary their tax obligation that they should declare and make the
necessary corrections to set the real situation on their activities because in
this way the Law on Tax Administration and Procedure provides incentives
for under-reported additional tax on time.
15
CONSEQUENCES FOR NONCOMPLIANCE OF TAX OBLIGATIONS
If Natural Person/Taxpayer fails to comply with
tax obligations (by not declaring at all or by
under-reporting) than TAK based on her best
judgment will make assessment for that
person/taxpayer. If TAK will make assessment,
in addition to tax obligations there shall be
applied punitive measures provided by legal
provisions, as follows:
Failure to file tax declaration = 5% of tax obligation, maximum up to
25% (5% x 5 months);
Failure to pay tax = 1% of tax obligation, maximum up to 12% (1% x
12 months);
Interest = 1.25% until the moment of full payment;
Under-reporting of tax = 15% or 25% of tax obligation.
TAK reminds all Natural Persons/Taxpayers
that complying with tax liabilities is
a legal obligation, therefore we encourage
you to voluntary declare and pay tax!
16
S
W E L L
E
E T
P A Y
X
TAK Contact
If you need more information, we encourage you to review the laws and
relevant administrative instructions. These are available in our website
www.atk-ks.org. If you are not able to find responses in your questions, TAK
staff is in your disposal to assist you, therefore please contact the nearest office
of TAK.
Regions
Prishtina-1
Prishtina-2
Prishtina-3
Prizreni
Peja
Ferizaj
Gjilani
Mitrovica
Gjakova
LTD
Headquarters
Phone
numbers
038 / 200-255-02
038 / 200-255-59
038 / 200-255-60
029 / 244-901
0290 / 320-387
028 / 530-059
Address
Street: Nënë Tereza, Former Gërmia Building
Street: Nënë Tereza, Former Gërmia Building
Street: Fehmi Agani - 39
Street: William Wolker - NN
Boulevard: Skenderbeu - NN
Street: Dëshmorët e Kombit -NN
Street: Skenderbeu - NN
Street: Agim Hajrizi - NN
Street: Nënë Tereza - NN
Street: Fehmi Agani - 41
Corner of Streets: Dëshmorët e Kombit and
Bill Clinton; 10 000 Prishtinë, Kosovë
Address: Corner of the streets Bill Clinton & Dёshmorёt e Kombit
10000 Pristine, Kosovo
Tel & Fax:+381 (0)38 200 250 17 & 200 250 07
Email: info@atk-ks.org; Web: www.atk-ks.org