Draft law with up to 50-fold increase on business fines sparks debate

Tirana Times
By Tirana Times September 22, 2015 15:57

Story Highlights

  • Finance Minister Shkelqim Cani described the measures as necessary to support the nationwide campaign against informality that the Albanian government has launched
  • Opposition Democratic Party MP, Ridvan Bode described the proposed measures as repressive toward the business community and coming at a time when government has failed to meet its revenue targets.

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TIRANA, Sept. 21 – Government-proposed changes to the tax procedures law, which increase penalties on tax evasion up to 50-fold,  sparked debate at the parliamentary economic commission this week, with the opposition describing them as repressive and punitive and with members of the governing coalition also expressing concern.

The new changes envisage fines of up to 10 million lek (€71,000) on big businesses operating in the wholesale trade for not issuing tax receipts, compared to 200,000 lek (€1,411) currently. Fines on small businesses are also envisaged to increase 10-fold from 50,000 lek (€353) to 500,000 lek (€3,529).

Tax inspectors can also sue the taxpayer in case of repeated violation with tax receipts, says an amendment to article 121 of the tax procedures law.

Finance Minister Shkelqim Cani described the measures as necessary to support the nationwide campaign against informality that the Albanian government has launched.

Opposition Democratic Party MP, Ridvan Bode described the proposed measures as repressive toward the business community and coming at a time when government has failed to meet its revenue targets.

“The whole of this proposed package only deals with the increased repression and punitive measures on households and businesses. There is a clear relation with barriers set on market entry,” said Bode, a former finance minister.

The penalties were also opposed by some MPs of the Socialist Movement for Integration, the ruling Socialists major coalition partner.

“I think the tendency to increase fines will not bring any improvement to the Albanian economy but will ruin business,” said Gjovalin Kadeli, a SMI MP.

The amendment allowing customers not to pay if they are not provided tax receipts, also sparked fierce debates.

In the new draft law, the Albanian government has also proposed that big businesses operating in the wholesale trade will be banned to engage in retail sale starting April 2016.

Penalties on uninsured workers have been unified to 500,000 lek (€3,528) for both SMEs and big businesses. Reporting lower than the real wage has also been made punishable with 500,000 lek.

The new draft law also envisages what Prime Minister Edi Rama has often quoted that “buyers have the right of not paying for goods and services they are provided in case traders don’t issue a fiscal receipt.”

The Albanian government has also proposed some harsh amendments to the Criminal Code removing fines on smuggling and informality, removing fines and envisaging only imprisonment of up to ten years for imports, exports and transit of illegal goods.

The changes, which have been proposed under a draft law approved by government and require a qualified majority of 84 votes in the 140-seat Parliament, come at a time when the Socialist Party-led coalition has launched a nationwide campaign against informality.

Under the current Criminal Code, smuggling of excise goods is punishable by fines or imprisonment of up to seven years but if the new amendments are approved perpetrators risk no fines but only up to seven years in prison.

“Carrying out illegal commercial activity or conducting commercial activity not registered with tax authorities, failure to declare employees and issue fiscal receipt is a criminal offence and is punishable by up to three years in prison,” says the new article 180/a proposed as an amendment to the Code.

The tax administration will also have to be careful as failure to collect taxes within the legal deadlines is made punishable by up to seven years in prison.

Tirana Times
By Tirana Times September 22, 2015 15:57