The Kosovo Tax Administration, ATK, launched a nationwide investigation into construction businesses in response to citizens’ reports and intelligence assessments which indicated that several construction companies were employing workers without formal contracts.
This July, two episodes of Kallxo Përnime followed Kosovo Tax Administration, ATK, inspectors as they investigated hundreds of workers at high-rise construction sites in the city of Ferizaj/ Urosevac. Inspectors were verifying if workers were properly declared and if employers were paying the required contributions to the tax administration and the pension trust.
Controls of the construction industry have increased, which sees a rise in employment during the summer months, with inspections conducted aimed at finding unregistered workers and ensuring that employers are meeting legal obligations related to employment contracts and tax contributions.
According to labor law in Kosovo, every employee must have a valid employment contract signed at least one day before beginning work. Workers must also be informed about job conditions, receive appropriate training, and be medically certified as fit for work. Not meeting these conditions is a breach of labour laws.
Oversight of workplace contracts and safety regulations is shared between two institutions. The Labor Inspectorate monitors contracts, working conditions, and occupational safety, while the ATK ensures employees are registered in the tax system and that all relevant contributions are paid.
Legal amendments made since January 2024 require employers to register employees on the ATK platform at least one day before they begin work. Employees also have the right to check if their registration has been completed.
Tax evasion still prevalent
Despite the simple registration process, many businesses continue to evade their tax responsibilities. Construction sites, in particular, see a high influx of seasonal laborers, including recipients of social assistance. These workers often choose informal employment to avoid losing their state pension benefits.
“Some workers may be receiving social assistance and don’t want to be declared. Employers benefit too, because they avoid contributing to the pension fund and can instead offer the money as part of the monthly wage. Both parties have a shared interest in avoiding registration,” remarked ATK official Murat Mehmeti.
ATK inspectors are authorised by law to verify the identity of every individual present on a job site and to conduct interviews to understand the context of their employment.
Valdrin Nalli, an ATK inspector, emphasised the importance of the initial phase of inspection.
“The first step of the inspection is to gather critical information. Worker details are recorded to be verified against the ATK database. If undeclared workers are found, there are immediate consequences,” Nalli noted.
During the inspections, some workers were hesitant to provide information. One worker responded, referring to the state pension he already receives, “I’m a war veteran—my employment might cause other problems.”
Inspectors conduct interviews and data collection in a secure area within the construction zone to avoid interrupting the work while ensuring the accuracy of the information gathered.
This situation can create legal complications for businesses.
Construction sites often involve multiple subcontractors, making it essential but also complicated for inspectors to gather not just worker data but also details about the various companies operating on-site.
Once field data is collected, ATK inspectors cross check all the data in their system.