Policies Towards Foreign Direct Investment

Kosovo seeks more FDI.  Kosovo’s laws do not discriminate against foreign investors.  The Government – including the Prime Minister’s Office, Ministry of Trade and Industry (MTI) through its Kosovo Investment Enterprise and Support Agency (KIESA), the Ministry of Finance, the Ministry of Economic Development, and the Ministry of Diaspora and Strategic Investments – recognize the importance of FDI to the expansion of the private sector.  However, the lack of a single entity empowered and responsible for cataloging investment opportunities and supporting potential investors results in an uncoordinated approach and limits competitiveness with other emerging markets.

KIESA’s mission is to promote and support foreign investments.  The agency is tasked with offering a menu of services, including: assistance and advice on starting a business in Kosovo, assistance with applying for a site in a special economic zone or as a business incubator, facilitation of meetings with different state institutions, and participation in business-to-business meetings and conferences.

Limits on Foreign Control and Right to Private Ownership and Establishment

The laws and regulations on establishing and owning business enterprises, and engaging in all forms of remunerative activity apply equally to foreign and domestic private entities.  Kosovo legislation does not interfere with the establishment, acquisition, expansion, or sale of interests in enterprises by private entities. Under Kosovo law, foreign firms operating in Kosovo are granted the same privileges as local businesses.  Kosovo does not have an investment screening mechanism.

We have no reports of restrictions from U.S. investors.  There are no licensing restrictions particular to foreign investors and no requirement for mandatory domestic partners for joint ventures.

Other Investment Policy Reviews

Kosovo is not a member of OECD, WTO, or UNCTAD; there are no investment policy reviews from these organizations. In September 2018 the European Investor Council (EIC), a Pristina-based business association of European investors, launched a “Whitebook 2018” that identifies a collection of barriers to investment and recommendations for improvement.  However, this has not been posted online. In February 2017 the Pristina think tank, Group for Legal and Political Studies, published the report, “How ‘friendly’ is Kosovo for Foreign Direct Investments: A Policy Review of Gaps from a Regional Market Perspective  ”.

Business Facilitation

The government has taken steps to facilitate businesses’ operations.  Kosovo moved up 20 spots to 40 on the 2018 World Bank’s Doing Business report, then up to 44 in the 2019 report.  This was largely due to Kosovo’s high scores in the categories of ‘ease of registering a business’ and ‘transferring property’.  Per the amended Law on Support to Small and Medium Enterprises, KIESA offers support to both domestic and foreign-owned micro, small, and medium enterprises (MSMEs), without any specific eligibility criteria.  Such services include voucher programs for training and advisory services, investment facilitation, assistance to women and young business owners, and the provision of business space with complete infrastructure at industrial parks, at minimal cost.

The Kosovo Business Registration Agency (KBRA), part of the Ministry of Trade and Industry, registers all new businesses, business closures, and business modifications.  The KBRA website is available in English and can be accessed at www.arbk.rks-gov.net  .  As of February 2019, business registration can be completed online.  Successful applicants will receive a business-registration certificate, business-information document, a fiscal number, and a VAT number.  New businesses must register employees for tax and pension programs with the Tax Administration under the Ministry of Finance. Business registration generally takes one day for an individual business and up to three days for joint ventures.  A notary is not required when opening a new business unless the business registration also involves transaction of real property.

Outward Investment

Kosovo does not promote or incentivize outward investment.  There are no restrictions on investments abroad.

Kosovo is signatory of the Central European Free Trade Agreement (CEFTA) and has finalized negotiations, but has not ratified, a free trade agreement with Turkey.  Kosovo has started the accession process for the European Free Trade Association and has expressed interest in signing a cooperation agreement with the United Kingdom in the event it leaves the European Union.

The United States does not have a bilateral investment or a taxation treaty with Kosovo.

Kosovo has signed double-taxation treaties with Luxemburg, Austria, Albania, Switzerland, Slovenia, Turkey, United Arab Emirates, Hungary, Croatia, North Macedonia and the United Kingdom.  Older treaties with Hungary, Netherlands, Germany, Finland, and Belgium from the time of the former Yugoslavia are still in effect. Kosovo is currently negotiating or is in the process of ratifying double-taxation treaties with Italy, Luxemburg, Kuwait, and Saudi Arabia.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

* Source for Host Country Data: Central Bank of Kosovo

Table 3: Sources and Destination of FDI

Data from the CBK is generally consistent with the IMF data in terms of ranking of the top five partners in each column of the table, but amounts for each country in both categories differ slightly.  According to the CBK, total inward direct investment was USD 3,520 million and total outward direct investment was USD 299 million in 2017.

Table 4: Sources of Portfolio Investment

Data from the CBK is generally consistent with the IMF data in terms of ranking of the top five partners in each column of the table, but amounts for each country in both categories differ slightly.  According to the CBK, total inward direct investment was USD 3,520 million and total outward direct investment was USD 299 million in 2017.

Data from the CBK is consistent with the IMF data in terms of ranking of the top five partners in each column of the table, but amounts for each country in each category differ.  According to the CBK, total portfolio investment assets for 2017 were USD 2.14 billion, with total equity securities USD 1.67 billion, and total debt securities of USD 473 million.