Thursday, October 19, 2006

Next hurdle...the VAT

 With increasing government responsibility come increasing government control.  When it comes to Kosovo this has generally been fairly positive as the local provisional government brings the legal system up to what I can only assume are fairly European norms.  The Value Added Tax, however, has been nothing but a pain over the last two years.


The VAT is a sort of national sales tax and one I’m all for.  But the way the VAT is being applied to NGOs and charities is causing a lot of concern.   Up until a couple of years ago all relief supplies (used clothing, bedding, etc) were exempt from customs and the VAT.  Organizations, Christian and otherwise,  were able to bring supplies and donations into Kosovo without paying what can amount to taxes of about 26 percent.  Over the last couple of years, however, the government is seriously clamping down on various tax loopholes including assessing the VAT to charity work.

On example of the problems this creates is with Samaritan’s Purse shoeboxes that have been distributed in Kosovo since the war.   This year SP is hoping to send 100,000 shoeboxes to Kosovo.  However, unless the tax codes on charity work are loosened, local organizations would be liable to pay 26 percent in taxes on these shoeboxes.  That is, a value would have to be assessed on the shoeboxes and taxes will have to be paid on that estimated value.  No one has the money to pay taxes on donated items.  The shoeboxes will stop coming to Kosovo.

Obviously this really jeopardizes, not only the SP shoebox distributions, but many other kinds of charity and benevolent work as well.   Please pray that the parliament not sign into effect the draft law on the VAT or that amendments would be made that ease how the law is applied to NGOs.


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