A notice of tax audit is rarely received calmly, yet an audit is usually a routine administrative procedure: the Tax Administration of Kosovo (TAK) checks whether what you declared matches what your books show. This guide is written for those who have never been through one. The references are to Law No. 08/L-257 on Tax Administration and Procedures, available in our legislation library.
1. What triggers an audit
Cases are not picked at random: the law requires a selection method that minimises the possibility of TAK exceeding its authority (Article 8). An audit begins when something does not add up — returns that contradict one another, a persistent VAT credit or a refund claim, failure to file, unexpected swings in turnover, or third-party data. That last source is often underestimated: financial institutions report account transaction information to TAK, and notaries report sale and purchase contracts (Article 9).
It is also worth knowing that an unannounced visit is not an audit: TAK may visit without notice to confirm that obligations are being met or to collect past debts, but not once the taxpayer has already been selected for audit.
2. The notice and the first deadlines
An audit is preceded by a notice of pending audit, which must set out your rights and obligations (Article 8). Read it to the end and note which periods are being audited, which types of tax, and what the deadline for documents is.
When TAK requests documents by written notice, the deadline is seven (7) calendar days from delivery of the notice, or another period agreed between you and TAK (Article 9). If the documents have to be brought in from outside Kosovo, the deadline is extended by at least thirty (30) days. If you are called for an interview, the time set must be at least 48 hours after the notice is delivered. Inform your accountant the same day and, if the deadline cannot be met, request another one in writing before it expires.
3. Which documents are requested
The list depends on the tax and the period, but the core is always the same; if monthly bookkeeping is kept properly, it can be assembled within a day.
| Document | What it is used to verify |
|---|---|
| Accounting books and journals | Complete and chronological recording of transactions. |
| Sales invoices and fiscal receipts | Declared income and output VAT. |
| Purchase invoices and customs declarations | VAT deduction and recognition of expenses. |
| Bank statements for every account | Turnover and payments above EUR 300 through a bank. |
| Payroll records and employment contracts | Wage tax and the 5% + 5% contributions. |
| Inventory and fixed asset registers | Stock, movement of goods and depreciation. |
| Contracts and electronic records | The basis of transactions and the accounting system. |
The officer may take the books into possession where they constitute material evidence, but must make copies and return the originals as soon as possible; ask for a written list of everything taken.
Here comes the most important warning in this guide. Documents not submitted on time may be presented only up to the date the final assessment report is delivered, and only if you prove that the delay was beyond your control. Any document offered after that date will not be considered by the Appeals Unit, by the Board, or by a court (Article 8).
4. How the audit runs and what your rights are
TAK has access to the premises where the economic activity is carried out and where the books, computers and fiscal electronic devices are kept; also to third parties holding your documentation, such as your accounting firm. The audit itself is a series of requests and clarifications: returns are compared with the books, the books with the invoices, the invoices with the bank. Appoint a single point of contact and, where a question needs time, answer in writing — guessing on the spot is the most frequent source of problems.
- To be represented by an accountant, lawyer or other agent holding written authorisation, without losing your own right to take part (Article 65).
- To ask for identification from the officer: they have no right to remain on your premises if, once asked, they do not produce the official TAK identity card. Powers are exercised within working hours, except where the tax is declared to be in jeopardy.
- To submit documents and clarifications for as long as the final report has not been delivered.
One thing should be said plainly: the burden of proof rests with you. The law states that the taxpayer bears the burden of proving that a TAK assessment is incorrect (Article 15). Saying that the figure is wrong is not enough — you have to prove it.
5. The assessment and the notice of assessment
If TAK believes that a return does not accurately present your liability, it makes an assessment based on its best judgement — drawing on your books, third-party data and other objective information. Where the books have been lost or an accurate determination is impossible, indirect methods are used, based on assets, turnover or expenditure (Article 15). This is exactly why properly kept books protect you — without them, someone else sets the figure.
The formal outcome comes as a notice of assessment, stating the type of tax and the periods, the amount, the penalty and the interest, the explanation of the assessment, the method of payment and the appeal procedures (Article 18). From the day it is delivered to you, you have ten (10) days to pay. As a rule, taxes are assessed within six (6) years of the date the return was due or the date it was filed, whichever is later (Article 16).
6. Penalties and how they are reduced
Penalties are not fixed; every way of reducing them depends on when you act (Article 110).
| Situation | Penalty reduced to |
|---|---|
| You inform TAK yourself before being notified of a possible inspection | 25% of the penalty that would apply |
| You inform TAK yourself after the notice, but before the inspection begins | 50% of the penalty that would apply |
| You pay the liability together with the interest in a single payment | 30% (except under Article 104) |
| You enter into a written agreement to pay in two or more instalments and keep to it | 50% (except under Article 103) |
| You pay the penalty within 15 calendar days of the notice applying it | 50% (except under Article 103) |
The exceptions concern penalties for failure to withhold tax at source (Article 103) and for failure to surrender property subject to a seizure measure (Article 104). TAK may also reduce or waive a penalty where you demonstrate reasonable cause or severe hardship.
An instalment agreement has a second effect as well: for as long as it is honoured, interest does not accrue from the month following the month it was concluded; if it is broken, interest is reinstated (Article 24). The criteria and the duration are governed by a sub-legal act, so confirm them with TAK before signing.
7. The appeal: the route and the deadlines
- Request for review to the Appeals Unit — within 30 days of receiving the notice of assessment; in writing, with the grounds and supporting documents (Article 111).
- Decision of the Appeals Unit — no later than 45 days. If further clarification is required, the deadline is extended by up to another 45 days; if no decision arrives within 45 days, you appeal directly to the Board.
- Appeal to the Appeals Board — within 30 days of receiving the decision. It must contain the particulars of the contested decision, the legal and factual reasoning, and the evidence (Article 113); you may appear before the Board without a lawyer.
- Review by the Board — within 30 days of receipt. Its decisions are final in the administrative procedure and are challenged by filing a claim with the competent court (Articles 62 and 115).
One point catches many businesses off guard: an appeal does not suspend the obligation to pay (Article 117). While the right of appeal is still open, collection through seizure of immovable property is prohibited, and you may submit a bank guarantee to defer collection. If you win, tax paid in excess is refunded to you with interest.
How to reduce the risk
Most findings do not stem from fraud, but from incomplete documentation and missed deadlines. Invoices recorded properly, monthly bank reconciliation, transactions above EUR 300 settled through a bank or another electronic form of payment, and filing within the tax deadlines all narrow the room for additional assessments. Further questions are answered under tax procedures; our way of working is set out in how we work.