Kosovo's influential market: Proceeds, commercials, and a little control

In Kosovo, this is not always clear to followers.

In the Instagram, TikTok and other online platforms, influencers advertise cosmetic products, clothes, restaurants, cars, derivative pumps and services every day, but institutions don't have a full mirror for this market: how much money is distributed, who pays taxes, and who makes sure that paid advertising is perceived by personal recommendations.

The term influential usually describes social media content makers, who have multiple followers and use their influence to promote products, services, brands or ideas.

Taxable Revenues

According to the Kosovo Tax Administration (ATK), the activity of influence earners through the creation and distribution of content on social networks is considered economic activity and, as such, revenues from this event are taxable, according to legislation in effect.

But the tax - collecting institution does not have a particular mirror for this category.

Fatime Krasniqi, senior public communication official in ATK, in a written response to Radio Free Europe, says he cannot provide statistical data for the number of influencers who declare income or pay taxes, because they are not identified as a special category in the tax system.

In the ATK system, taxpayers are divided according to legal status: individuals or individual businesses register as physical persons, while other forms of registration are treated as legal persons.

According to Krasniqi, if a person has a job contract or contract for special services, creating an employer-worker report, he should be identified on the business salary list he contracted. She adds that if these people operate economic activities independently, they are obliged to register as businesses, according to their respective activity.

Informing fields, no clear control plan

The ATK, in April of this year, also launched an informational campaign for influentials, bloggers, auditors and other people who generate online income.

Through a video on social networks, ATK announced a meeting with several influentials, saying the purpose of the campaign was to inform them of legal obligations and boost transparency.

But by public announcement it did not become clear how much campaigning will take place, how many influenceers intend to include, whether there will be concrete checks, or whether ATK plans to create any clearer way of obtaining this category.

Limited Control, Few Records

Of the 12 influences that Radio Free Europe contacted on this subject, no one agreed to answer questions about how they were paid, whether they have contracts with businesses, and if they declare revenue.

In data from the Agency for Registering Business in Kosovo (ARBK), only three of them figure as registered businesses. Of these three, only one is registered with primary activity in advertising, while the other two are registered for photography and distribution of films, videos, and television programs.

Former ATK director Ilir Murtezaj says the legal aspect hasn't changed anything, and that the “influencers have been and are obliged to pay taxes on income that they made”.

But how much the state can gain from this activity, Murtezaj estimates no one can say exactly.

Economics professor Shkumbin Misini also says the problem lies, not in the lack of laws, but in their implementation. He estimates that ATK has not been active enough in controlling this event.

For influence, it is a golden opportunity to flee tax obligations, because ATK is very passive in this direction”, he says.

Missin adds that ATK should better inform the influencers of tax duties, but also strengthen control over them. It recommends fines and punitive measures for those who do not declare revenues, as well as the creation of a database, which would help institutions get a clearer picture of the market.

Secret advertising and lack of standards

But the market of influence does more than raise tax questions.

Valon Canhas, director of the Hallaka social media agency, says this market in Kosovo is not yet sufficiently regulated, and that it needs more professional standards, transparency and responsibility.

According to him, one of the main problems is that the public often does not know whether the content you see on social networks is personal recommendation or paid advertising.

Must be clear when a content is adment or paid co-operation. This is important for the consumer, especially when health-related products, finances, children's products, or other sensitive categories” are promoted, says Canhasi.

He adds that clear contracts between businesses and influencers are often lacking in the market, regulation of the rights for use of content, professional reporting of campaign results, and the regular practices of income statements.

For obligations that influence consumers when advertising products, when it doesn't become clear that a content is advertising, and the measures taken in such cases, REL demanded clarification from the Ministry of Industry, Trade, Trade and innovation (MINTI), but received no answers.

From Classics to Influencers

For businesses, however, influences have become an important part of marketing.

Marketing services through influence offers agency “Development”, its director, Donat Mustafa, announced.

Mustafa says there are times when customers ask for this service, but the agency itself proposes it, when it estimates that marketing through influence can help achieve the goals of a campaign.

The influential marketing is part of our services for several years. The increased use of social networks and the belief that audience creates in contentmakers have made this channel increasingly important. During this time we have realised successful co-operation in various sectors”, Mustafa says.

REL also asked how much influencers are paid for such commitments, but no information was provided by this agency.

Another agency, under the condition of anonymity, said influencers could be paid from 200 to 5,000 euros, “regardless of the impact and fame they have”.

How do companies choose their influence?

REL contacted ten businesses that have engaged influence on advertising their products or services. Until the publication of this article, the response returned only the Limbo store network.

Genta Varang from the Jumbo marketing department says influential co-operation has helped them communicate with the audience more authentic and creatively.

According to her, the influence commitment has been “a natural step” in developing the company's marketing strategy.

“has been responding to changing the way consumers are informed, interact with brands, and make decisions for purchase”, Varang says.

It shows that communication with influenced ones is done in two ways - directly with them or through agencies that represent them.

The selection, according to it, depends on campaign targets and business-reaching audiences.

“Taking into consideration the audience of the influence, compatible with brand values, the quality of content it creates, and the commitment it generates with its or her followers, says Varang.

She adds that conditions of co-operation, including compensation, differ from the objectives, format, and duration of the campaign.

Existing rules and European practices

Although Kosovo's legislation does not have specific rules for influence, the Consumer Protection Law requires commercial-type promotion to be clear to the consumer, and not presented as ordinary or independent content.

In the European Union, marketing through influence is primarily handled through consumer protection regulations and the transparency of commercial content.

The main principle is that the public should know when a post is ad, sponsorship, or paid co-operation.

This rule applies even to EU member states, though each country has its own specifications.

For example, France in 2023 passed special laws on influences. According to him, they are obliged to specify when a content is realised by partnership with any brand, or even when paid to promote products. Even if they mention this in the videos they publish, they should accompany the post with labels like #sponsorized, #education, etc.

Although not by special law, even in Italy, Germany and Portugal are not allowed secret advertising until it requires that influencers use the hashtags in their content. In Finland, in addition to advertising, influencers should inform consumers even when products they promote are donated. /Periscope/