UNMIK-JIAS Fact Sheet
Central Fiscal Authority

The Central Fiscal Authority (CFA) is the JIAS department responsible for the overall financial management of the Kosovo budget and the budgets of the municipalities that together form the Kosovo Consolidated Budget. The CFA is also responsible for the budget process and preparation, treasury functions, revenue analysis, tax collection and customs administration. The Authority implements policy guidelines formulated by the Interim Administrative Council (IAC) and is to remain intact after UNMIK hands over its responsibilities to a successor administration.

Key policy objectives are:

• Allocating committing and tracking funds for public sector spending through an automated system, thereby enhancing accountability and government financial operations.
• Introducing and collecting taxes on wages, businesses, sales and imports.
• Recruiting and training Kosovar staff in functional areas such as tax and customs administration, budgeting, revenue analysis and treasury management.

The UNMIK CFA Co-Head is separately responsible for maintaining bank accounts for financial transactions linked to the Kosovo Consolidated Budget. Together the UNMIK and Kosovar Co-Heads are charged with ensuring that the composition of the staff of the CFA reflects a gender balance and the multi-ethnic character of the communities of Kosovo.

Functions

The CFA develops the Kosovo Consolidated Budget and presents it to the IAC for approval through the UNMIK Deputy Special Representative for Economic Reconstruction Recovery and Development (Deputy SRSG). The SRSG issues regulations to adopt the approved budgets. Relatedly, the Authority ensures that budgets of the municipalities are developed, approved and executed by the Municipal Administrators in a manner consistent with the parameters of the Kosovo Consolidated Budget. It participates in the coordination of donor activities undertaken by international and governmental agencies, and NGOs. It also reports to the IAC on expenditures and revenues of the Kosovo Consolidated Budget. The CFA also develops and runs the customs service and tax administration.

As a policy adviser, the CFA makes recommendations to the IAC on issues such as:

Formulating an overall fiscal strategy for the Kosovo Consolidated Budget

Developing a public revenue and expenditure programme for the Kosovo Consolidated Budget.

Formulating policies for raising and collecting direct and indirect taxes, customs duties, excise taxes, sales tax, service charges and donor contributions.

Establishing internal audit arrangements for the Kosovo Consolidated Budget.

Managing bank accounts of the Kosovo Consolidated Budget.

Activities

The CFA functions according to international standards as a finance ministry. Its proposals for the consolidated budget for 2000 were enacted by regulation in December 1999 and became operational in January 2000. In April 2000, the budget was modified to accommodate the new JIAS departments and to show the civil registration process as a special project.

The CFA's customs service collects a 10 per cent duty on virtually all imports. humanitarian goods accounting for most of the few exemptions. It levies excise taxes on 15 categories of goods ranging from 10 per cent on soft drinks to 50 per cent on fuels and spirits. A sales tax of 15 per cent applies to all goods sold in Kosovo.

The tax administration introduced a Hotel Food and Beverage tax of 10 per cent on gross receipts of hotels and restaurants with turnovers exceeding DM 10,000 per month. This alone is expected to earn DM 11 million for the budget during 2000. Meanwhile revenue is slowly increasing from taxes levied during vehicle registration.

A business tax, conceived as a presumptive tax on profits and coming into effect on 1 July 2000, will take a small, fixed amount from every business, the amount depending on its type and location in Kosovo. This will be replaced eventually by a profits tax applicable from 1 January 2000. A wage tax is also foreseen for implementation during the year.

Training has begun for 40 new tax inspectors who will play a key role in the process for dissolving the parallel tax collection systems that evolved in response to the previous governmental regime.

Co-Heads

Kosovo Co-Head: Mr. Ali Sadriu (LDK)
Born in 1950, Mr. Ali Sadriu graduated from the School of Economics of Pristina University in 1974. His professional career included serving as financial director of the University's Medical Faculty from 1977 to 1980, when the faculty was the central authority governing all Kosovo's clinics. He was the financial director of the National Bank of Kosovo from 1980 to 1990, when it was the only bank authorized to deal in foreign currency transactions. Mr. Sadriu has also been an active member of the LDK and was imprisoned several times by the Yugoslav federal authorities for his political activities. He was last arrested in January 1999, immediately prior to the NATO air campaign. Mr. Sadriu lives in Pristina with his wife and five children.

UNMIK co-head: Mr. Alan T. Pearson
Mr. Alan T. Pearson, an Australian citizen, has been the head of the Central Fiscal Authority since its creation. Before joining UNMIK, Mr. Pearson served as a director of the Barents Group of KPMG, a leading authority on government budgeting and financial management. He has provided technical assistance in reforming budgeting and treasury systems to the Governments of Croatia, Hungary, Kazakhstan, Slovenia, South Korea, Sri Lanka, Turkey, Ukraine and the Palestine authority. While with KPMG, Mr. Pearson completed a project that involved reviewing and reforming the World Bank's procurement system. He also served as an adviser in the Public Expenditure Management Division of the IMF. In the Department of Finance in Australia, he previously developed and implemented a number of reforms in budgeting, accounting and financial management. This included developing and producing appropriate legislation and an accounting database for the Commonwealth Government. Born in 1944, Mr. Pearson is a graduate of the University of Melbourne with a degree in Physics and the University of Queensland with a degree in Macroeconomics. He received his graduate diploma in Professional Accounting from Canberra University.

Budgeted staffing strength
330

Office location
Dardania Building