Dogana e Kosovës – Carina Kosova Kosovo Customs

Republika e KosovësRepublika Kosova - Republic of Kosovo

Qeveria - Vlada - Government

Ministria e FinancaveMinistarstvo za Finansije

Ministry of Finance

ANNUAL REPORT 2012

www.dogana-ks.org

Dogana e Kosovës – Carina Kosova Kosovo Customs

Republika e KosovësRepublika Kosova - Republic of Kosovo

Qeveria - Vlada - Government

Ministria e FinancaveMinistarstvo za Finansije

Ministry of Finance

ANNUAL REPORT 2012KOSOVO CUSTOMS

Prishtina, Januar 2012

Design & Layout: Berat Ymeri e-mail: berat.design@gmail.comPrinted: www.blendi-ks.com

List of abbreviation

KC Kosovo Customs DG Director General MF Ministry of Finances KSO Operational Strategy Framework 2011-2013EU European Union KB Kosovo Budget CBK Central Bank of the Republic of Kosovo IRB Independent Review Board IBM Integrated Border Management KCC Kosovo Chamber of Commerce MTI Ministry of Trade and Industry MPA Ministry of Public Administration PSU Professional Standards Unit SEEMS South East Europe Management System CPEI-PDMNE Customs Procedures with Economic Impact TASK FORCE Joint forces Customs, Police, KTA WCO World Customs Organisation TP Trainings Plan IPR Intellectual Property Right TS Training Sector ACA Anti-corruption Agency DC Disciplinary Commission

KOSOVO CUSTOMS

2012 ANNUAL REPORT

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KOSOVO CUSTOMS

2012 ANNUAL REPORT

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Summarized by:

Director General Office Other copies of this document may be taken by: K Press Office,Customs Directorate, Prishtina- The Republic of Kosovo. Tel: 038 540 796 Fax: 038 540 065 E-mail: hq@dogana-ks.org this report is also available through our customs web page: www.dogana-ks.org April 2012

KOSOVO CUSTOMS5

2012 ANNUAL REPORT

The economy of Kosovo has also continued to have constant economic increase during 2012, thus has affected in the increasing of trade of goods through the border. Beside the increase in private sector but also the continual of governmental investments in public projects has also affected in the increase of the demands, that in terms of import this has increased the collected revenues from Customs.

By all means 2012 has had its difficulties, since the continual crisis in euro zone has also indirectly affected customs performance. Beside difficulties in the north part of the country that caused the loss of revenues during 2012 as well as global economic indicators in general, customs has achieved to go beyond the expectations of last year by showing progress on revenues collection. During 2012 customs has achieved to collect about 845 million euro, or in percentage 2.2% more revenues that previous year.

The over-fulfilment of revenues against the difficulties, it is a clear indicator of work and increased customs professionalism.

The report of 2012 presents the work of customs during all the year and as such clearly shows what has been achieved during this year against the predictions in the beginning of the year. Meanwhile this report shows certain purposes from customs management and achievements of this year.

Kosovo Customs has been a part of technical dialogue with the government of Serbia. The agreement of IBM done in February 2012 has started to be implemented. On 10th of December 2012, two mutual customs points (Jarinje and Merdare) are functionalised followed by two other CP starting by 31st of December 2012 (Bërnjak and Konqul). For the first time since 19th of February 2008, staff of Kosovo Customs is fully represented in BCP of Jarinje and Bërnjak, by applying customs procedures as in other border crossing points.

The successful installation of the new customs electronic system called ASYCUDA has been finished. Businesses have started to use possibilities that this system offers and during this year 2013 we are waiting to fully utilize the system.

During 2012 Custom has achieved success on combating illegal activities with the aim of society protection and strengthening legal state. Anti-smuggling unit has undertaken over 180 operations on preventing illegal activities. Customs in general has discovered over 1000 cases of customs offences in amount of 1.3 million Euro, as well as, we have raised 40 criminal charges due to the tax avoidance by different companies. Positive development is also the increase of cash-money declaration during the border crossing, such from businesses as well as from individuals, so during this year we have had 1400 monetary declarations. In contrary, Customs has seized monetary means in amount of 350,000.00 euro, as a result of non-declaration. Another field where customs has achieved success is the prohibition of illegal goods such as narcotics (around 200 kg) and weapons (over 10.000 cartridges and 70 weapons of different calibres). Customs officers, as well as the main part of the organisation are those that with their effort and zeal during 24/7 worked to ensure revenues, offering safety and business environment, so the achieved success during this year, is due to their virtue.

2012 – Review

Naim Huruglica Director General

KOSOVO CUSTOMS 6

2012 ANNUAL REPORT

Vision

Modern administration with high level standards , in the service to citizens, economy and security.

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Mission

?State protection, ?Economy protection, ?Citizens protection, ?Trade facilitation,?Customs taxes collection such as: customs taxes, Value Added Tax, Kosovo Budget

Excise; ?Import and export control, economy protection, trademarks protection etc. Correct

statistics with external economy. ?Illegal activity combat, ?Increasing the level of security through presences in crossing points; ?Border crime and drug's trafficking combat etc. ?Population and environment protection, by preventing smuggling of weapon and

explosive substances.

2012 ANNUAL REPORT

Values

Kosovo Customs is zealous to offer to the citizens an excellence service. Relationships, businesses processes and administration, are based on:

?Confidence and mutual respect; ?Equality and justness; ?Integrity and honesty; ?Transparency and sincerity; and ?Courtesy and consecration

KOSOVO CUSTOMS 8

Strategic aims

?Making proper decisions for revenues; ?Offering excellent service; ?Engagement on amenable law enforcement; ?Transformation of business and building capacities; and ?The promotion of good governance.

2012 ANNUAL REPORT

Content

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Strategy

Revenues

Import

Export

Laboratory

Tariff

Facilities

Integrated Border Management

Capacity building within Customs

ASYCUDA

International collaboration and relationship

Legislation

Legal Advices

Appeals

Appeals review board

Court attorney

Combating crime and smuggling

Offences

Investigations

Intellectual Property Protection

Goods liquidations

Organisation

New Units

Training

Standards and inspection

Expenditures

Main events

Trade statistics

10

11

11

12

12

13

13

14

15

15

15

17

17

18

18

19

20

21

22

23

24

25

26

26

28

30

31

32

2012 ANNUAL REPORT

Strategy 2012

Operational Strategy framework is compiled for a three year period whereas during each year it is reviewed and adapted according to the needs and challenges of that year. The aim of the strategy is to define the objectives for every unit which shall be achieved during the year.

Kosovo Customs Management through the strategy aims in continuity to improve the performance and achieve prearranged aims on every year, although in the end of year is done the performance comparison against previous objectives and years.

The strategy foresees that units must have standard operating procedures which are synchronized documents with legislation and duties of each unit. In the beginning of 2012 Customs management defined six (6) main objectives for this year. Those were:

KOSOVO CUSTOMS 10

Objectives 1 Objectives 2 Objectives 3

Revenue collection

The promotion of communication and collaboration

Capacity building within customs

and implementation of EU-blueprint

fields

Objectives 4 Objectives 5

Improvement in execution and facilitation of

economic activities.

Infrastructure emplacement

in two customs points in the north.

Objectives 6

Law enforcement in: a. Smuggling prevention and combat b. The implementation of improved national strategies

(strategy over national security, IBM strategy, strategy against organized crime, anti drugs strategy, etc.).

c. Investigation of violations under the Public Prosecutor's leadership.

d. Administration capacity building that support investigations and law enforcement functions.

e. The application of the Code of Ethic and in particular anti corruption measures increase.

f. Measures implementation on protection of intellectual property

2012 ANNUAL REPORT

Revenues

Revenues from customs obligations (Customs, Excise and VAT) are increased during the entire year 2012. Customs during 2012 has collected 844,860,949.68 € or 17,726,149.39 million euro more than during 2011. The following table separates revenue collections and comparison with previous year.

KOSOVO CUSTOMS11

Import For the first time since 1999, we have had a decrease of import compared with previous year. Trade data shoe how the reflection of this situation, we have less collected customs taxes and VAT. The value of import for 2012 is 2.360 milliard € in comparison with 2011 when it was in amount of 2.372 milliard euro. It is valued that the reason of decreasing the import has affected some factors, such as:

?Requests degression ?The degression of external and internal investments. ?The lowest price in international market of some main products in import (naphtha

derivates)?Not fully functioning of two BCP in the north of Republic of Kosovo and street

barricade from local habitants, those streets from September 2011 continue to remain blocked.

?Anti-smuggling activities in the northern part of Kosovo

Whereas if analysed, the increase of revenues it is noticed that the main impact is concentrated at excise, this also enabled the overcome of revenues compared with previous year.

The increase of excise collection has been directly related with fiscal variations during the second half year of 2011; in that case excise's collection on gambling has started as well as the import of vehicles up to 13 years old is allowed. Obviously, this would not be achieved without the increase capacity on collecting taxes within the country.

The application of excise in gambling has brought to the budget 9.6 million euro whereas from vehicles are collected 4 million euro more than during 2011.

The mentioned fiscal variation, customs efficient building, increased international collaboration, etc. is estimated that there are some indicators that affected in order to overcome the previous year in amount of 2.2% more revenues than 2011, and against economic difficulties and political problems that have affected on the revenues. However, 2012 has once again shown that Kosovo Customs is already an institution has achieved to guarantee revenues and to save a positive trend on increasing if compared with historical data of previous 13 years. The table below shows clearly that the curved line is always over the previous year.

2012 ANNUAL REPORT

ExportDuring this year we have an increase in regular export of 10% in value but decrease of re-export in amount of -16%. Indication is the increase of good's value that have entered in customs warehousing procedure, with an increasing amount of 20% compared with 2011, or in goods value in amount of 627mil€ that is 26.6% of total amount of import during 2012.

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2000

114.6

2001

244

2002

362.6

2003

428.1

2004

435.9

2005

435.7

2006

459.7

2007

526.6

2008

604.8

2009

635.08

2010

700.03

2011

827.1

2012

844.8

114.6

244

362.6428.1 435.9 435.7 459.7

526.6604.8 635.08

700.03

827.1 844

Laboratory

The main objective of Customs Laboratory is mainly based on the professional help and support of different branches and sectors in Kosovo Customs, toward taxes collections in the fairest and the best way possible, prevention from illegal trafficking as well as reflection of a professional image of Kosovo Customs in general. There are in total 161 laboratory analyses accomplished, engaged 14 other laboratories and in total 193 advices are given.

2012 ANNUAL REPORT

Integrated tariff of Kosovo

TARIK 2012 is successfully applied and is incorporated amends due to government decisions. Customs during 2012 has done some amendments of tariff codes and good's descriptions commensurate to the amends applied in European Union combined nomenclature, and commensurate to the current laws in force. Taken decisions from government and during 2012 are as followed:

- No. 07/7 date 23.05.20121 the application of excise tax in bags and plastic bags, excise tax 3.00€ kg.

- The application of excise on used tires for vehicles, the excise tax 5.00€ per piece. - Since September 2012 with governmental decision No. 05/91 date 12.09.2012 excise

tax has changed respectfully three other new tariff codes are added with bags and bio-degraded plastic bags without excise tax.

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Business facilities

The increased collaboration with business community, importers, exporters, different associations is one of the main objectives. Meetings and discussions are developed also with foreign offices and embassies for the application and providing necessary documentation.

Customs has received and analysed 848 requests that are consistent with economic impact procedures as well as are brought 22 decisions according to the official duty and are realised around 102 visits to the subjects that have applied for procedures with economic impact. Continual supervision of those authorized subjects for procedure, has consistently been held under control entries-exits and the condition of company's stocks that use different procedures such as customs warehousing, internal processing, processing under customs control, temporary import in accordance with Customs and Excise Code as well as Administrative Instruction No. 11/2009.

Below is the review of requests by companies in order to gain different procedures:

Table 1 –The trend of requests from companies for procedures with economic impact

2012 ANNUAL REPORT

Further facilitation of customs procedures for companies, will be increased during next year, since during this year the installation of ASYCUDA programme has been successfully ended which enables many modules to directly affect on facilities and simplified customs procedures.

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Integrated Border Management-IBM

IBM Custom's office during this year has successfully finished plenty of duties; where the foundation of a national centre of border control has been one of the main duties in order for this year to be closed successfully. The foundation of this centre includes more border agencies and increases the security for citizens, this centre is as a result of the Law for State Border Control and Supervision (which enters into force Law No. 03/L-065 for Integrated Border Management and State Border Control).

National Coordinator for IBM, deputy Minister of MIA, Mr. Sasa Rasic, has initiated the creation of inter agencies working group consisting of MIA representatives, Kosovo Police, Food and Veterinary Agency and representatives from ICITAP, EULEX, IOM, IPA project, with the aim of compiling a first draft of Strategy and Action Plan for IBM, working group that will do the Review of the Strategy and determining objectives for Action Plan for the next procedure 2012-2017.

2012 ANNUAL REPORT

Capacity building within Customs

Kosovo Customs during 2012 the investment of public budget has oriented toward international modernizing trends and the organisation's sophistication. The integration of working modern concepts has raised the need for capital project formulation that supports the development of a modern administration. In the capital expenditure budget during 2012 we have had some variations in the budget at the category of capital expenditures. The request is approved by Ministry of Finances for redestination of capital means. The table below clarifies main investments done by customs during 2012.

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Table 2 – Capital Projects 2012

ASYCUDA Project

In September 2012 the first and the most important phase of the project has started, respectively the former programme (TIMS) is substituted with ASYCUDA and it started the implementation in all customs points. In the first phase we had some problems which are briefly overrun and now ASYCUDA is 100%operational. Since 24.10.2012 it is implemented prepaid account for authorised subjects for customs warehouses and now and on the condition of stocks is done electronically. Meanwhile, within the system are integrated the selectivity of transit risk, processing procedures under customs control, the value manual and ASYCUDA is also functionalised in the north (Brnjak and Jarinje)

International collaborations

In order of facilitation of legitimate trade and on the other hand the prevention and combat of prohibited goods, narcotics, weapons and other illegal goods, Kosovo Customs decided a good collaboration with neighbouring countries, EU countries and broadly which are based on Bilateral sub-government Agreements for reciprocal assist and collaboration on customs issues. Kosovo Customs has in total signed 10 Memorandums of Understanding with regional customs administrations, EU and broadly whereas only during 2012 the finalized Agreements are as followed:

2012 ANNUAL REPORT

Capital projects of 2012

Supplying with licenses are spent 214,727.89€ from separated means for this

project.

Supplying with IT software for AW, supplying with Backup, Software, Antivirus Software, Oracle Software, Red-Hat, Linu are spent 269,549.21€.

Customs software system (Asycuda), are spent 405,221.43 €.

CCTV and

ANPR for customs points. Regarding the project in question separated

means from Customs Budget are 180,000€ , and

also their allocation and

commitment

is

done.

thOn 13 of June 2012 are signed Bilateral Agreements on customs issues between Kosovo Customs and Hungarian Customs and TAX National Administration.

thOn 14 of September 2012, is signed the Agreement between the Government of the Republic of Kosovo and Austrian Government over the collaboration and reciprocal assist on customs issues.

rdOn 3 of December 2012 is signed the Memorandum for customs collaboration between Kosovo Customs and Poland Customs.

KOSOVO CUSTOMS 16

Kosovo Customs has signed Protocols for electronic pre-arrival data exchange (SEED Application II, financed by European Commission) as followed;

?With Albania – signed on 01.10.2010, whereas second phase on 18.06.2012?With Monte Negro – signed on 01.03.2010, whereas second phase 20.04.2012 ?With Macedonia – singed on 11.02.2011, whereas second phase 05.10.2012

1. KC – Imperial Tobacco ( 02.04.2012)2. KC – Public University Haxhi Zeka (16.05.2012)3. KC – Prishtina International Airport (10.05.2012)4. KC – Trade Inspectorate (01.10.2012)5. KC – Copy right Office ( 18.10.2012)6. KC – Kosovo Post and Telecommunication ( 07.11.2012)7. KC – High Professional School “Tempulli” (18.10.2012)8. KC – Kosovo Central Bank (07.12.2012)

Meanwhile, on the frame of collaboration's formalization with other local and business community agencies, Kosovo Customs during 2012 has signed Memorandum of Collaboration, as followed:

2012 ANNUAL REPORT

Legislation

During 2012 in legislation aspect Kosovo Customs has worked on two main directions, the offering of advices and plaint's solution by different parties. On the same time is completed the application of strategical plans related to the enforcement, harmonisation and efficient application of internal legislation, interpretation of legislation's provisions, preparing disciplinary indictment, updates.

In the frame of appeal's addressing, customs units have worked with dedication on functionalizing but also further protecting and strengthening of inside and outside Kosovo. Corresponding to those responsibilities, customs has tried all possible efforts in order that all responsible appeals to be finished within the foreseen legal term as well due to the possessed competencies, so in this direction there are performed all efforts that consist on the fair and correct resolution of reviewing requests but also the attorney and Kosovo Customs interests protection in the Reviewing Independent Board as well as on local Courts. It is clearly noticed the engagement of customs legal officers while during 2012 in the High Court for Offences, customs legal officers has almost achieve to win all cases that raised an appeal in the Municipal Court for Offences which had to do with seizure of monetary means.

During 2012, are signed some administrative instructions, as in continuity is still being worked on a certain number of draft proposals, comments, explanations of sublegal acts, laws and project laws, as followed:

?Finalized project-laws: 2?Signed AI: 6?AI available to be signed 9 ?AI suspended till the new decision ML: 3?AI on drafting phase: 5?Signed circulation: 3

KOSOVO CUSTOMS17

Legal Advices

Positive development during 2012 is the increased number of requests for legal advices in comparison with previous year. All received requests during this period are reviewed within legal term, and are given in total 833, legal advices, as followed:

?833 legal advice requests ?Replays on 363 requests of parties in written.

- For subjects outside Custom: 188 - For subjects inside Custom: 175

?Replayed on 466 requests in verbal form (consultation by phone or in a office) for parties.

?Advices from previous months: 0?On reviewing procedure /submitted requests: 4

2012 ANNUAL REPORT

During 2012 Kosovo Customs has in total received 816 request for review, 85 has been brought from previous year (in total 901 subjects in review), and if we compare with 2011 we found decrease of the requests for 453 less (-35%). Viewed from the contests nature aspect it results that requests for reviewing good's value has been decrease for 336 requests or (- 47 %), that demonstrates the fact that first evaluation method is being applied more than previous year's report, also this decrease is reflected with requests for attacking violation's decision, where is a decrease of 107 requests (- 28 %) difference from previous year report.

During 2012 there were a smaller number of appeals compared to previous year, so based in statistical aspect this factual state results as:

KOSOVO CUSTOMS 18

Appeals

Table 3 – Legislative nature of subjects on complain procedure

The resolving method of those customs contests as well as the value of goods on contesting procedure divided in two categories, refused and approved (reimbursement) are presented on the following table:

Table 4 – The settings manner of complaints subjects by Customs

From the table above is obviously noticed a trend of decreased appeals, and that is fact is compared with the increase of revenues is noticed direct affect of better valuation and more efficient work in customs points. Meanwhile the increase of legal advices has affected in the awareness of companies and in general a more efficient work from customs in correct collection of revenues is performed. Customs in her strategy foresees a visible decrease of appeals number, through improved professionalism and collaboration with business in general.

Independent Board of appeals During 2012 dissatisfied parties by the decision of the Customs have used the legal right to continue with the appeal procedure in Independent Reviewing Board. During 2012 are performed in total 329 hearing sessions, the representatives of customs were authorized officers, those sessions have been separated due to the nature of the contests in :

2012 ANNUAL REPORT

?Re-evaluation of goods 160 appeals ?Violence 134 appeals?The payment of customs obligations 30 appeals ?Other contests 5 appeals.

Furthermore from Independent Reviewing Board, Kosovo Customs has received 228 decisions that are decided as below:

?Appeals approbation 65,?The refusal of appeals 43,?Reclamation 82,?Partly approved appeals 17,?Declined appeals16, ?Abeyance appeals 5,

During the year there are executed the majority of decisions brought by Independent Board bringing decisions for drawback of means that arrive a financial amount of 424,443.35 Euro.

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Court representations Court Representations during 2012 have had a good flow, if compared with last year there was an increased number of sessions even though this is not pleasant meaning that the adjournment of Courts on customs issues treatment. It is mainly noticed to the civilian character subjects where the number of sessions is smaller in comparison with number of charges exercised by Kosovo Customs.

The statistic gives indicators that during 2012 we attended on 186 court sessions, and the financial value is 5.184, 936.52 €uro, which are divided based on the nature of contests, such as:

?91 sessions have been criminal acts;?82 civil contests sessions;?5 Intercessions;?6 Executions;?2 Offences.

From local courts during 2012 are received in total 155 decrees, 99 are of criminal nature, 34 are civil and 22 offences related with seizure of monetary means.

From the aspect of comparison in 2012 we have this statistical statement:

Table 5 – The review of cases in courts

2012 ANNUAL REPORT

Customs has continued its efforts to fight smuggling and inter border crime. Customs shall adjust to the requirement in maximum commitment on Kosovo citizen's confidence. 2012 clearly shows a development of capacities, during this year in this aspect we have seized goods over the amount of 1 million euro, in courts for executions are delivered 48 cases, there are processed post importing analyses for 793 business subjects. We have controlled over 200 businesses also after import due to risk indicators. Post-importing controls specifically applied audits has come with 214 control report, and are issued 186 decision for collection in amount of 2.432.378,13 €, 368.404,82 € are cashed and reported meanwhile to be receivable also from previous period remained 7.315.660,90 € (this amount is transferred to 2013 receivable).

During 2012 Customs have arrived visible results toward the execution of predetermined aims. 2012 is characterized with the increase of staff engagement in organizing a huge number of actions, where all are organized due to the modern concepts “Actions leaded by Intelligence”. The increase number of cases control affected in different discovered commercials good, counterfeited and unhealthy.

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Combating Crime and Anti-smuggling

Prohibited goods

During 2012 Kosovo Customs managed to prevent a variety of cases on attempting to smuggle prohibited goods such as narcotics, weapon and munitions, cold weapon as well as following parts of weapons (weapons magazine, binoculars etc.).

The following table presents these data:

Table 6 – Prohibited goods during 2012

The followed chart compares 2012 with 2011 and measures the increase or decrease of prohibited goods.

Sasia 2012 Sasia 2011

185.44 72.83

25.847

70 27 61 83

Narkotikë (kryesishtmarihuana dhe heroinë)

në kg

Municion i ndryshëm(copë)

Armë të ndryshme(revole dhe pushkë) në

copë

Arme te ftohta, pajisjepërcjellëse të ndaluara

(në copë)

10.649

Table 7 – The comparison of prohibited goods 2012/2011

2012 ANNUAL REPORT

As noticed customs has achieved to discover the amount of different narcotics and weapons meanwhile lower quantity is on different munitions and calibres.

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Offences Customs offences are selected based on Customs and Excise Code 03/L-109 that entered into force on 11.11.2008 and as well based on the Law 04/L-099, on amending and supplementing the Kosovo Customs and Excise Code 03/L109, where by the new law, for offences based on article 276 the administrative fine being previously from 5,000.00 up to 10,000.00 €, it is now from 500.00 € up to 10,000.00€.

During 2012 Customs has managed to seize 1007 cases, on which offence fines were enounced in value of 1,333,477.29€ and confiscation of goods in value of 1,045,939.55€.

From the above mentioned subjects 12 of them are initiated in the Investigations Sector for penal procedure and 36 are suspended in absence of violating elements.

About the decisions issued by Customs for violation cases, 216 subjects in procedure have submitted appeals besides the Appeals Review Sector, 205 of them are refused, while 11 subjects were approved.

From the Board of Appeals the notification was received about the review of 18 appeals from year 2008-2009, from which 3 subjects were cancelled, as well as the penalty was deducted being based on the Law L-04/099.

2012 ANNUAL REPORT

On previous years offences on which fines were not paid, 505 execution suggestions were made beside the competent courts where the value of due fines is 1,734,214.98 €.

Below is the comparative table:

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Table 8 – Customs violations

The table clearly shows that legal changes in application of offences has entirely resulted successful even if the number of cases was reduced the fines were as well reduced, while the amount of confiscations has marked an increase, which means that Customs now has implemented more quality based offences even though as a total they are just few.

Whereas, the goods which were mostly captured in violation are listed in the following:

?Gold jewelleries: 133.52 kg?Vehicles: 160 ?Clothes in value of: 43,594.30 €?Medications in value of: 65,737.80 €?Cell phones: 1556 in value of 75,483.86€ ?Foodstuffs: in value of 46,734.05 €?Naphtha derivatives in amount of: 42969 litres valued 22,312.18 €?Livestock in value of: 78,359.10 €?Cigarettes: 1 423 140 pieces and 574 kg raw tobacco.

Investigations

Customs in the investigations aspect has continued with cases from the previous year but has also initiated new cases. During this year customs officials have managed to localize and close a small workshop for alcohol counterfeiting, where after the request made to the prosecution the owner was arrested. During 2012 we initiated 48 new cases. Also, as a result from investigations we practiced 40 penal charges under the based suspicion on fiscal evasion in value of 24, 3 million €.

With the judge's warrant on preliminary procedure during 2012 we raided commercial and private facilities as well. Around 28 operational actions were realized, in which case, smuggled goods, and with no origin were confiscated. As a result from investigations we processed 6 requests for collection of customs debt in value of 845,508.26 euro. Under the fiscal evasion suspicion 90 cases remain under investigation.

In the below submitted diagrams a comparison of statistics and results between 2012 and 2011 is shown:

2012 ANNUAL REPORT

KOSOVO CUSTOMS23

Protection of Intellectual Property Based on legal provisions from Law 03/L-170-2010 and the Administrative Instruction 07/2010, Kosovo Customs has undertaken actions which resulted satisfactorily during this year. It is worth to mention that one of the satisfactory results is prominence and strengthening of cooperation with the business community and this is noticed by applications submitted in Kosovo Customs, were yearly requests on application for action has increased and now customs calculates 40 applications in total for 141 trademarks.

Kosovo Customs being a member of the Intellectual Property State Council has provided a special contribution during this year in organizing joint seminars in awareness of business community.

Also, Kosovo Customs by active participation has provided a special contribution in drafting the Strategy against Counterfeiting and Piracy 2012/2017, where within the strategy are foreseen the objectives in need to be realized by all institutions that play a role in counterfeiting and piracy combat.

4036

36

28

16

6 5

11

0

2012 2011

Kallëzime penale tëngritura

Bastisje me mandattë Gjyqtarit të PP

Operacione nënudhëheqjen e

hetuesisë

Kërkesa për inkasimpërmes sektorit të

AJ

Arrestime dhe fletarrestime

Table 9 – Review of investigations exercised by Kosovo Customs

2012 ANNUAL REPORT

In frame with the protection of society, customs in collaboration with other specialized agencies has liquidated different goods.

Confiscated medications with overdue period of use which are gathered in the Customs warehouse since year of 2002 until month of October 2010 were checked during donations by the University Clinical Centre of Kosovo (UCCK) commission. In the liquidation process, for control and surveillance included were MH, (Ministry of Health), MESP (Ministry of Environment and Spatial Planning) and pharmaceutical agency KMA (Kosovo Medicines Agency).

During this year Customs along with FVA inspectors, has liquidated 71609 litres of alcoholic drinks accumulated in the warehouse since 2007 waiting for procedures completion. All of the foodstuff and hygiene products received in the warehouse during 2012 after being checked by FVA inspectors have been liquidated, in total 342 subjects with weightiness of 86870 kg (aerated drinks, meat and meat products, dairy products, hygienic products etc.)

Confiscated goods as protected trademarks besides Customs being verified as violating the property right are liquidated (clothes, sports shoes, mobile phones etc.)

Also a part of these goods are donated mostly for the University Clinical Centre of Kosovo, more precisely customs donated in 23 cases confiscated goods consisting of medical equipments, medical material and 720 litres of medical alcohol.

KOSOVO CUSTOMS 24

Liquidation of goods

2012 ANNUAL REPORT

Organization

Collection of customs duties (customs taxes, VAT and Excise tax) is one of the customs responsibilities, but customs role is evolving toward an agency for protection of society and an important part of the chain of security.

KOSOVO CUSTOMS25

Internal organization is done in a hierarchical manner, divided into 5 directories, 18 customs stations, 5 customs internal offices and 56 operative units, where 592 customs officials and civilian staff perform their duties. The organizational hierarchy is adapted every beginning of the year toward the needs and challenges. The internal organization tends to stylize as much as possible a better management concept with low cost in order to have savings on public expenses. During 2012 the customs cost efficiency was 0, 04 cents on collection of 1 euro. Therefore, it can be mentioned that Kosovo Customs is the institution that spends in minimum and returns in maximum.

In February 2012 the organizational scheme has been approved for year 2012 according to the staff number of 622 officials and the planned budget for the corresponding year.

2012 ANNUAL REPORT

Table 10 – Ethnical Structure in Kosovo Customs

Roma

Ashkalia

Agyptian

3

2

3

0.47%

0.30%

0.47%

Commensurate to the organizational scheme for 2012 during this year few modifications in some Customs Departments/ Sectors / Offices were done:

- Department for Customs Procedures was created, - Change of designation for Department of Intelligence and Investigations into

Operational and Investigative Department; - In the Director General's Private office the Strategic Planning was functionalized; - De-activation of IBM Department was done;

KOSOVO CUSTOMS 26

New units

- During 2012 the Strategic Planning office was functionalized in frame of D i r e c t o r General. Another necessary administrative standard has been reached by this and by European Commission recommendations in order to advance the Customs strategic planning capacities. Strategic planning was used to define priorities and customs actions for the fiscal years 2013-2015. The Customs strategic planning 2013-2015 is designed to address the strategic planning efforts for Directories, Departments, Sectors and different units within Kosovo Customs. This plan shall enable development of effective strategies by establishing strategic priorities necessary to reach the Customs mission and to enhance the organizational performance. The 2013-2015 strategic planning also addresses the standard recommendations required by the EU Blueprint for Customs, Conventions and Declarations for functioning of Customs Administrations, laws and directives from DG TAXUD as well as emerged documents on support to development and modernization of Customs Administrations.

- The new Sector on Gambling (Central Department); as a result of excise tax application on gambling, customs has set up a special sector in order to confront with this challenge.

- Legislation and Advice; Systems Management and Projects and Applications (IT Department) change of FAST designation into Anti-smuggling.

- According to the Director General the decision was taken to create the Customs Offences Sector within the Operational and Investigative Department.

Training

Customs in frame of developing strategy has set up the customs official being in the first line of customs duties performance. Trainings mainly are formed according to the time imperative and in accordance to the time needs and requests. Customs bases the trainings in the framework planning which is precisely concentrated in the achievement of aimed results, during development phases in attempt to avoid situational arrangements and management:

2012 ANNUAL REPORT

?Application of mid-term training framework for 2012-2014, according to priorities and the budget for 2012.

?Realization of training activities is based on the training calendar for 2012. Completion according to the budget, developments and Kosovo Customs competencies.

?Coordination of different national and international projects on increasing human / professional capacities in Kosovo Customs.

?Updating and review of training plans, commensurate to legal provisions and other normative acts. Development of new modules in standard frameworks, conform to the KC needs.

?Continuation of completion and administration of training files and those individual electronic of the staff.

?Continuity in offering support in all of the phases, in order to provide training and professional development, commensurate to requests, purposes and accessible objectives for Kosovo Customs and work partners, according to the real plans and progresses.

Overall during this year customs has managed to train the staff which affected the progress on professionalism of customs officials within KC. During 2012 in the central level 109 training / developing activities were marked in 80 training fields, by completing the year with 1341 of trainings for customs officials.

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2012 ANNUAL REPORT

Kosovo Customs is an institution that manages in average within one year to have revenues in level of 900 million euro; therefore it has an obligation toward the citizens for this system to remain immune toward negative occurrences. Prevention and combating of corruptive practices or other negative peculiarities in customs is treated with special care.

The protection system against corruption also foresees few processes as well as eventual penalizing measures. Based on objectives and Kosovo Customs Memorandum of Cooperation with ACA and the National Plan against Corruption in Kosovo, during this year the endeavours for combating and preventing corruption are done through these actions:

?Investigation of cases reported by informers and their reporting was sent in disciplinary procedures and prosecution;

?Minimizing possibilities for corruption through activation, implementation and supervision of recommendations from the Internal Inspection;

?Occasional inspection in the field of the staff and work procedures; ?The offered support by the customs management through inspection of cases initiated

by their side; ?Development of cooperation with other sectors in discovering suspicious cases.

During this year reports were sent to ACA regarding our activities against corruption through regular reporting.

During this year we consider that cooperation with parties is increased, informers which have shown readiness in reporting suspicious occurrences. Also, the number of cases reported to the Internal Inspection by Sectors has been increased who came across with information or evidences regarding suspicious actions from the staff or clients.

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Standards and Inspection

Table 11 – Review of declarations

We continued establishing the Track Report System for wealth declarations, where 80% of wealth declarations are placed in this database. During this year we realized these activities:- We received 30 new cases in SIB;- We have completed 24 cases;- We have performed 44 recommendations;- 5 cases have been reported to prosecution; - 6 officials have been reported to disciplinary procedure; - 1 case has been reported to the Kosovo Police Inspectorate.

Kosovo Customs through the professional standards unit has handled cases which were initiated during 2010 and 2011, who has continued investigating and processing in order to solve them in the local level and Disciplinary Commissions. During 2012 except the investigation of cases in procedure, it was performed on implementation of Action Plan for Combating against Corruption in Kosovo Customs. During this year 95 customs officials were

2012 ANNUAL REPORT

interviewed in relation to potential violation of procedures. While according to the institution where the case was processed or settled we have these following records: ?Cases processed by Disciplinary Board were 9 in total, which were reviewed by the

Disciplinary Commissions and pertinent decisions have been made. 6 out of these cases are initiated in 2011 and are reviewed by DC during 2012. While 3 cases are initiated and reviewed by the Disciplinary Commission during 2012.

?From these 9 cases, 8 cases had domineering decisions, which were ratified by the Director General. While 1 case is under review by the Appeals Commission. From 8 ratified cases by DG, 5 cases are ratified after being reviewed by Disciplinary Commission and after being reviewed by the Appeals Commission, whereas 3 cases are ratified after the decision is brought by the DC, since the officials did not submit any appeal against the DC decisions.

?2 cases are settled in the local level and disciplinary measures are enounced by the Head of Human Resources Department.

?5 cases are closed.

?2 cases remained suspended from previous years, one case is from 2008 on which the court decision is in abeyance since the case is processed to the court and the other case on which investigations have been developed in 2011 we made a request for additional information through the EULEX Customs component to the Serbian Customs Administration but we are waiting for their response toward our request;

?During 2012 5 cases have been submitted to the prosecution. 16 cases in total are in the review procedure by the Court and Prosecution including also the cases which were under this same procedure from previous years.

Kosovo Customs has initiated 17 disciplinary procedures during this year. Also cases from 2011 were transferred to 2012, and customs have conducted full investigation for all these cases.

The disciplinary measures structure in total for 2012 in a list form:

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Table 12 – Review of investigations practised by Kosovo Customs

2012 ANNUAL REPORT

Depending from the nature of disciplinary violations, the disciplinary procedure which will be applied for the certain case is determined. During this year disciplinary violations on which officials were fined with disciplinary measures are 9, with 11 subjects / officials (19 measures):

- 1 case was misuse of official duty; - 2 cases with 3 subjects (officials) were suspicious for misuse of official duty; - 3 cases with 4 subjects (officials) were suspicious for negligence of official duty; - 1 case for damage of Kosovo Customs property; - 1 case for non-declaration of wealth and - 1 case for non-professional conduct.

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Expenditures

Kosovo Customs is one of the organizations that spend less in comparison to the work volume and the welfare that it generates. Kosovo Custom's budgetary expenses for 2012 including also changes that were made in the budget during this year are presented as in the following:

Table 10 –Year 2012 budget and budget expenses

Customs spent 88.23 % of the 2012 budget or expressed in figures, the budget was executed in amount of 8,130,889.53 €.

During 2012 Kosovo Customs has managed to save the public money spending, investments were not absent, but they are performed with full responsibility toward the citizens.

Table 12 – Comparison of budget execution between 2011/2012

It is worth mentioning once more that Kosovo Customs has built a system that saves the public money and has a responsibility on spending it.

2012 ANNUAL REPORT

Main events of the year

03.02.2012- The Integrated Border Management meeting of the Executive Board is held where achievements within the international collaboration were presented with special emphasis on increase of capacities in risk analysing.

01.03.2012 – At the border crossing point in Vermica, Customs officials have discovered over 10 kg of narcotic substances, their type was suspected to be marihuana.

10.03.2012 – During a joint control Customs and Police officials at the border crossing point of Vermica, have discovered narcotic substances in amount of 10.5 kg, on a bus travelling into Kosovo.

13.03.12 – At the Ministry of Internal Affairs the standard operation procedure on the first line official was endorsed within the Integrated Border Management.

02.04.2012 – A decision was taken regarding the simplification of procedures on companies' registration in Customs. All of the economic subjects that are registered besides the business registration agency and the Kosovo Tax Administration from this point on will be no more registered by Kosovo Customs.

23.04.2012 – Kosovo Customs signed the first phase of the protocol of collaboration with Montenegro Customs Administration, after the successful completion of the initial phase, now cooperation with Montenegro Customs moves to a higher level.

25.05.2012 – During an action performed by Customs officials in the Mitrovica region, a substantial amount of non-alcoholic drinks, alcoholic drinks, motor oils and also naphtha derivatives was discovered in total value of around 10.000 euro.

18.06.2012 – Kosovo Customs Anti-smuggling Units, while patrolling in the Mitrovica region, have discovered medications in amount of 689 packages x30 tablets of aspirin type, while attempted to be smuggled.

21.06.2012 – During a joint patrolling between Customs and Police officials, in frame of the Integrated Border Management at the border crossing point of Vermica, 894.17 grams of narcotic substances suspected to be heroine were discovered.

23.06.2012 – Within 10 days Customs officials have prevented a multitude of attempted smuggling cases at the Airport. During this period officials have discovered different goods such as: golden jewelleries in value of 8.000 euro, various Swarovski elements on fabrics with crystals, crystals to be used on textile etc, in amount of 7, 825 pieces, than not-declared monetary instruments in value of 12, 500.00 euro, sportive cloths Jako brand in value of 2, 249 euro etc.

05.07.2012 – The American Embassy through their EXBS program have donated to Kosovo Customs equipments for specialized controls and equipments that shall enable Customs units to prevent smuggling and entry of illegal goods in Kosovo. In this case a solemn ceremony was held in the Customs Directorate.

03.09.2012 – In a ceremony held at Hani i Elezit, Kosovo Customs marked the 13th anniversary

KOSOVO CUSTOMS31

2012 ANNUAL REPORT

of its foundation as well as this event was used to inaugurate the initiation of the advanced computer ASYCUDA system.

21.09.2012 – During an operation performed in Prishtina and Podujeva, Customs officials have discovered a workshop of counterfeited alcoholic beverages. In this workshop officials found different labels, empty bottles and a substantial amount of ethanol, over 250 litres.

21.09.2012 – In the frame of cooperation in the Integrated Border Management, Customs officials at Vermica border point discovered 11 different weapons parts, 5 pieces of air guns, 8 pieces of air gun field glass and 6755 pieces of various calibres cartridges.

30.10.2012 – At the border crossing point of Hani i Elezit, Kosovo Customs Anti-smuggling units discovered 43 pieces of revolvers while in attempt to be illegally moved into Kosovo.

01.11.2012 – Customs officials have managed to capture a substantial amount of gold while in attempt to be smuggled through the Hani i Elezit border point. The total of the discovered quantity was 1.5 kg of golden jewelleries, while the goods value is over 40.000 euro.

KOSOVO CUSTOMS 32

2012 ANNUAL REPORT

Trade statistics

Customs every year publishes statistics on external trade, while in this annual report the most important statistics are summarized which offer a review of overall macro-economical situation.

KOSOVO CUSTOMS33

2012 ANNUAL REPORT

The table below presents 30 countries from where Kosovo mostly imported during 2012 as well as increase and decrease of import in comparison to the previous year.

Regular import (IM4) according to customs base

Regular export (EX1) and Re-export (EX3) according to customs value

The table below presented the 20 countries that Kosovo mostly exported during 2012 as well as increase or decrease of export in comparison to the previous year.

KOSOVO CUSTOMS 34

2012 ANNUAL REPORT

KOSOVO CUSTOMS35

2012 ANNUAL REPORT

DO

GA

NA

E K

OS

OV

ËSC

AR

INA

KO

SO

VA

KO

SO

VO

CU

STO

MS

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