CURRENT VAT AND CUSTOMS REGULATIONS INHIBIT HUMANITARIAN AID IN KOSOVO, NGO's say

Representatives of non-government organizations, government institutions and international agencies discussed the rationale for, and impact of, removing value added tax (VAT) and customs and excise duty exemptions for public benefit NGOs during a conference on Oct. 5 at Hotel Victory in Prishtina.

Barbara Hall IREX, Micheal Farbman USAID Mission
Director Kosovo, during his speech and
Jahja Lluka adviser to the prime minister

Advisor to Minister of Economy during his speech

“The current situation has stopped the work of public
benefit NGOs, and decreased humanitarian aid for poor
communities in Kosovo,” Zef Shala chairman of the
Mother Teresa Association said.

The conference was organized by IREX and the Advocacy Training and Resource Center through the Kosovo Civil Society Program, in cooperation with the International Center for Not-for-Profit Law.

Until Jan. 1, 2006, NGOs with public benefit status were exempt from value added, customs and excise duty taxes. The current VAT and customs regulations have re-instated taxes for public benefit NGOs.

Representatives of public benefit NGOs called for the immediate removal of these taxes. “The current situation has stopped the work of public benefit NGOs, and decreased humanitarian aid for poor communities in Kosovo,” Zef Shala, chairman of the Mother Teresa Association said.

Public benefit status no longer helps NGOs meet the needs of communities in Kosovo, according to Shala.
Artur Krasniqi, representative of the organization “House of Hope,” added,

“The current situation precludes charity activities of NGOs and this is not fair.” 

Representatives from UNMIK Pillar IV, the Ministry of Economy and Finance, and the Tax Administration argued that the emergency phase has ended and taxation would contribute to the Kosovo Consolidated Budget.
NGOs responded that taxing public benefit NGOs would result in more negative consequences than positive benefits for Kosovo’s population.

The current VAT and Customs regulations preclude humanitarian aid for many poor people, they said, referring to World Bank statistics that show 15% of Kosovars live in destitution.  

Edgargo Ruggiero, director of the International Monetary Fund for Kosovo, stressed the importance of setting a system that would enable the work of public benefit NGOs and also avoid possibilities for abuse. 

The conference participants concluded that the people of Kosovo suffer more from the current laws than non-government organizations and the dialogue to resolve this critical issue should continue.