Businesses hopeful of presidential veto over new ‘chamber’ tax

Tirana Times
By Tirana Times October 12, 2016 14:12

Businesses hopeful of presidential veto over new ‘chamber’ tax

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  • "The time when membership to associations and organizations was compulsory under the leadership's guide, belongs to another page of the Albanian history, a page which the Albanian people turned once and forever 26 years ago. It is unimaginable that today, 26 years on, the tarnished and much despicable image of Professional Unions is coming back," business associations say in their letter to the president

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TIRANA, Oct. 12 – More than a dozen foreign and Albanian business associations have come together to oppose as unconstitutional a newly adopted law that makes it compulsory for businesses to register with public run regional chambers of commerce and pay an annual membership fee which they describe as a “hidden tax.”

In an open letter to President Bujar Nishani before he has his final say on the law, representatives of 18 foreign and Albanian business associations including the American Chamber of Commerce, the Foreign Investors Association, the National Chamber of Garment and Footwear Producers and the Albanian Association of Banks, call on him to refuse decreeing the law which they say severely violates constitutional and moral principles.

“There’s a legal issue as the recently approved law runs counter to the constitutional spirit expressed in article 46, point 1 of the Constitution which determines participation in associations and organizations as a right and not obligation for citizens. In the meantime, the Civil Code which regulates the functioning of associations, determines that participation in these organizations is on a voluntary basis and members are guaranteed the right to leave anytime,” the associations say in their letter to the president.

Business representatives say there’s also a moral issue with the compulsory registration of businesses in state-run chambers of commerce 26 years after the collapse of communist regime and its centrally planned economy.

“The time when membership to associations and organizations was compulsory under the leadership’s guide, belongs to another page of the Albanian history, a page which the Albanian people turned once and forever 26 years ago. It is unimaginable that today, 26 years on, the tarnished and much despicable image of Professional Unions is coming back,” they add.

While the President can use his veto to bring back the law for reexamination in Parliament, the ruling Socialist Party-led majority which controls three-fifths of the 140-seat Parliament can easily approve the law by 71 votes under its current version if it doesn’t reflect to make it come into force and the President can do nothing in this case.

Business associations are also expected to address the Constitutional Court in case neither the President, nor the ruling majority do not reflect their concerns.

Earlier this year, the Constitutional Court, turned down a heavy fines law increasing fines on tax evasion by up to 50-fold to (€71,000) as running counter to constitutional principles and “disproportionate” penalties to income and offences committed. The Court also cancelled as incompatible some late 2015 legal changes that set reference wages on self-employed professionals increasing social security contributions by three times.

The reaction comes after the ruling Socialist Party-led majority approved in late September some controversial changes to the law on “chambers of commerce and industry” making it compulsory for all businesses to pay annual membership fees ranging from 100 lek (€0.71) to 100,000 lek (€715) based on their size starting next January. The bill, which had been submitted to Parliament since December 2015, but whose approval in Parliament had been delayed because of strong opposition by the foreign business community, was okayed by 69 votes in the 140-seat Parliament.

The legal changes came after the compulsory membership of businesses in chambers of commerce was lifted in 2007 and after public chambers of commerce and the Union of Chambers of Commerce and Industry of Albania have been facing financial trouble due to low membership, risking their membership in international and regional chambers.

Mark Crawford, the AmCham president, had described the compulsory membership in a public chamber through an annual fee as a hidden tax which increases business costs and also puts into doubt their independence.

“If a chamber depends on the state budget or a government decision to attract members this means they are not independent but rely on government decisions. How relevant is their criticism in this case?” Crawford has doubted.

High taxes were the top concern for the business community in the latest AmCham Business Index which hit a four-year low in 2016.

Taxes were the second most problematic factor for doing business for 21.3 percent of respondents in Albania in 2016 after corruption, according to the latest Global Competitiveness report published by the World Economic Forum, a Switzerland-based think tank.

Tirana Times
By Tirana Times October 12, 2016 14:12