The effect of VAT change on the budget of the Republic of Kosovo (Period of 2002-2014).

The purpose of this paper is to examine the effect of VAT rate increase from 15% to 16% in the Republic of Kosovo for the period 2002-2014. Analysis and collection of data through the years are used to make comparisons and draw conclusions about the effects of VAT on the budget of the Republic of Kosovo. How does this increase of VAT rate impact the budget revenues in the case of the Republic of Kosovo? The answers for this question are given through analysis on econometric models which enable to validate hypotheses and link the VAT rate with the budget revenue. Having in mind that VAT is one of the major contributors in the budget of the Republic of Kosovo, results show that the increase of VAT rate has a positive impact on the budget revenues and the budget of Kosovo has been increased because of the increased VAT rates. The contribution of this paper is to offer a better understanding on the relationship between VAT rates and budget revenues. The results obtained provide the necessary recommendations that shall serve for institutions and decision makers to make fair decisions in the interest of the country's economy. [ABSTRACT FROM AUTHOR]