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News 28 Jun 16

Kosovo Customs Earnings Rise Despite SAA

Despite the abolition of tariffs on a range of goods as a result of the Stabilisation and Association Agreement with the EU, Kosovo customs declared an 18-per-cent rise in revenues.

Rrahman Ramaj
Kosovo customs officers on the border with Serbia. Photo: BIRN

The Stabilisation and Association Agreement, SAA, with the EU has cost Kosovo customs 5 million euros in revenues.

The agreement entered in force on April 1 after being signed in October 2015. Much of it concerns scrapping customs tariffs on a range of products.

The director of customs, Lulzim Rafuna, on Monday said that up until June 24, the impact of the free trade deal had been a loss of 4,955,061 euros due to removed or reduced fees on goods entering from the EU.

“Now it is three months [since the SAA entered took force] and we are collecting the first data on the SAE … in terms of revenues,” Rafuna said.

Despite the scrapping of customs fees from the SAA, the customs service declared that revenues rose by 18 per cent compared to the same period in 2015.

Finance Minister Avdullah Hoti attributed the success of the customs service to its work on fighting contraband trade.

The shortfall in customs revenues as a result of the SAA was no surprise and was anticipated by several institutions.

In July 2015, the World Bank warned that about 70 per cent of Kosovo’s revenues earned from customs fees could be affected by implementation of the SAA, adding that extra internal revenues should be generated to fill the gap.

While Kosovo institutions have held a several meetings with exporters about the SAA's impact, no official estimates on its impact on the trade regime and potential revenues for the state budget have been issued.

Alternative measures intended to generate extra internal revenues are still a matter of speculation among experts, as the government has not issued an official plan.

European Commissioner Johannes Hahn told the inaugural meeting of the EU-Kosovo parliamentary commission in Pristina on May 17 that the SAA could create thousands of new jobs, among other benefits.

“But this won’t just happen by itself,” he warned.

“The SAA is not the end of a process … it also requires strong, efficient institutions – an independent public administration, an impartial and well-resourced judiciary and other rule-of-law bodies.”

The Commissioner noted that during the first year of the agreement, Kosovo would receive 300 million euros to help the business community to face the challenges.

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