Chief of Customs: Import tax from Serbia, Bosnia dropped for 514m euros

So says in an interview for Radio Free Europe, Kosovo Customs General Director Bahri Berisha.

He has already indicated that in the same period last year import from these two states has been 520m euros.

Radio Free Europe: Mr Berisha, is filling a year in the 100 per cent tax decision, which the Government of Kosovo has imposed on all imports from Serbia and Bosnia and Herzegovina. What are the main effects of this tax, from your point of view as Customs director?

Bahri Berisha: We have had about 450m euros worth of imports of products from Serbia and 85m from Bosnia and Herzegovina. It's already been a year since we've established protective measures against these countries, and during this one - year period, we've had about 99 percent worth of imports less than those two countries.

If we translate it into nominal value, it shows that we have about 440m euros less import from Serbia and 80m euros of less import from Bosnia and Herzegovina.

So the total import we've had during this period is about 6m euros from these two countries. Meanwhile, before the tax was imposed, we had 520m euros from Serbia and Bosnia and Herzegovina.

From the standpoint of Dogan, there has been no major impact because this import has been replaced by other states. It was initially difficult, at the end of last year, because it was the end of the year and for business maybe it was harder until they renegotiated new contracts, finding new supply channels, replacing products. But then, by January of this year, these products have come from other countries, whether the region or countries of the European Union.

Are there still imports of goods from Serbia subject to a 100 per cent tax?

Bahri Berisha: Kosovo has a small import, for a year we have 6m euros of imports from these two countries. It's products that bring in small amounts because many businesses may not be able because of the high cost of transport to EU countries to bring that product. Transport costs are very high by EU countries and bring them from Serbia and Bosnia. But they are to a small extent. There are certain food products, parts of vehicles, which are very accessible on the market, but pay protection measures 100 percent.

However, Serb-run municipalities, in the north and other areas, can readily face products from Serbia. Do you have customs data about that commodity entering Kosovo?

Bahri Berisha: It is difficult to say that the figure of smuggling, the very fact that revenues are in positive trends, takes into account many fiscal policies that are in place, and releases many tax products, and are constantly beyond economic growth, shows that it is not an smuggling that harms the economy because of customs revenues, but also economic growth depends mainly on imports. We are a country that imports from about 90 percent. Those products, as I mentioned earlier, sometimes tend to reduce products into small stores, but never break down the supply network and legal trade in Kosovo. There could be products in the northern part of Kosovo, we are present with other institutions, we have actions in that part, we have arrested smugglers who have attempted to smuggle, we've confiscated vehicles and their goods. But these are on daily basis, these efforts are in very small quantities that tend to enter from the mountain.

When we take into account that Serbia and Bosnia and Herzegovina are members of the Agreement on Free Trade (CEFTA), have customs revenues increased as the import of goods in Kosovo comes from European Union countries?

Bahri Berisha: It is true that we have the Free Trade Agreement and we are part of CEFTA, but at the same time, Kosovo has signed the Stabilisation and Association Agreement (MSA) which envisions many products with different customs taxes, including products that have only Cover Value Tax (TVSH). Also from September this year's Free Trade Agreement with Turkey is in force. What it means that most products by both CEFTA and European Union states currently do not submit to the customs tax with Turkey, only to the VAT and excise tax on products subject to the excise tax.

Has the increase in goods smuggling been observed during this year's tax implementation?

Bahri Berisha: Each time there is a change of fiscal policies or when there are new standards, criminal groups express interest in smuggling those products because they potentially make higher profits for them. However, right away, even though it is our duty on daily grounds even before the arrangement, Customs has made additional arrangements, whether with our operational units or with other law enforcement agencies. We've made joint operational plans, we've created Taska Force to fight criminal groups that try to smuggle products of origin from these two countries following the establishment of protective measures. Always checking the so-called hottest points of smuggling, such as those on the green border line, and especially in the northern part of Mitrovica.

Thanks to this good co-ordination among law enforcement agencies, we have managed to prevent products from entering the Kosovo market. We've had dozens or hundreds of cases, but all of these have been in small quantities, in car luggage or with national transporters trying to bring through mountain roads towards the Kosovo market. But, it has not been encountered in products, even taking the data from the Ministry of Commerce, the interior inspectorate and the domestic Customs, we control not are products which are in Kosovo's market (siterests) that harm both the legal and illegal economy.

When we talk about smuggling products, there is also health to deal with is a matter of protection. If products are illegally introduced through mountain roads and win-sanitary control, veterinarians are not made to those products, which pose a danger even to the public health of citizens.

Recently, the initiative for creating a “Menni-Shengeni” has been set up. Is Kosovo willing to do so?

Bahri Berisha: This is more of a political level, government and assembly since it is a major project that requires a full agreement both in the legal and political respect of the Government of Kosovo. Until today, “Mini-Sengen” has never been asked Dogana and no thought has been taken about the recent discussions about this idea. We had a request from the Government of Kosovo two years ago when it was the idea for the Customs Union, so we gave the customs perspective what the benefits are or what are the positive and negative sides in relation to the idea of the Customs Union of six Western Balkan countries.

As for the “issue Mini-Shengen” We haven't had any demands for our position and I believe this is a more political issue. We're not even familiar with the details of “Mini-Shengen” because more has been talked about the aspect of people's free movement. But we have not encountered public statements about free movement of goods or tax or customs union issues.

Customs is valued as an important source for Kosovo's budget. What are the revenues so far?

Bahri Berisha: Until today when we're talking, we've managed to spend over a billion revenues that we've collected this year. It's an extremely ambitious projection, it's inflow that Customs has managed to overcome. The actual situation is about 35m euros more than the same period last year or about 4 percent more. This is a very good performance in terms of revenues considering that at the same time we have a lot of fiscal policies implemented, which we release from all taxes.

If we take only the releases from producers, where every Kosovar producer for every raw substance, any impact you used for the production process, has zero taxes on import. The tax value alone has amounted to around 70m euros for this period of this year. While at the total value of goods, there are about 300m euros worth of goods that have been released to Kosovo producers. When we add the MSA, which is 60m euros, shows that we have 130m euros in tax effects on Dogan because of fiscal policies.

The enormous effect is on Kosovo producers for the economy, Kosovar products that note a slight increase in Kosovo export of certain products after these fiscal policies on the European market. We now recently have the Free Trade Agreement with Turkey, which envisions the customs rate being reduced for years to come. Even there is an effect, but the effect is still not high, as the agreement is being implemented by September. But, of course, by the end of the year, there will be up to 3m euros of effect on the customs duty. In view of all of this, Customs still continues to perform at a percentage of about 4 percent more than last year, and this is a very positive trend of revenues.