Paying Taxes 2017: Albania continues to lag behind regional competitors

Tirana Times
By Tirana Times November 30, 2016 11:04

Paying Taxes 2017: Albania continues to lag behind regional competitors

TIRANA, Nov. 30 – Albania slightly improved its ranking in paying taxes but continued underperforming even among regional competitors with a higher tax burden, according to the Paying Taxes 2017 report published by the World Bank and the PwC audit firm following the flagship Doing Business 2017.

The report ranked Albania 125th in the ease of paying taxes among 190 global economies, worse than neighboring Macedonia, Kosovo and Montenegro which have much lower tax burdens, and even lagging behind countries with a higher total tax rate such as Serbia and Turkey among EU aspirants. Bosnia and Herzegovina was the region’s poorest performer, ranking 139th.

Albania’s ranking was negatively affected by the time it takes a medium-sized company to comply with tax authorities and the number of tax payments.

Although making paying taxes easier by introducing a new online system for filing and paying taxes, businesses in Albania still need to make 34 payments a year and spend 261 hours a year on paying taxes, one of the region’s highest.

At 36.5 percent of profit, Albania’s total tax rate is slightly lower only compared to Serbia’s 39.7 percent.

The total tax rate in other regional EU aspirant economies ranged from a record low of 13 percent in Macedonia, 15.2 percent in Kosovo, 22.2 percent in Montenegro, 22.6 percent in Bosnia and Herzegovina.

Albania’s total tax rate is composed of 14.1 percent in profit taxes, 18.8 percent in labor taxes and contributions and 3.6 percent in other taxes such as municipal fees and vehicle and fuel taxes.

The post-filing index, a new sub-indicator in the Paying Taxes study measuring the time to comply with a VAT refund, obtain a VAT refund, comply with a corporate income tax audit and the time to complete a corporate income tax audit, showed Albania ranked 97th among 190 economies, leaving behind only Turkey and Bosnia and Herzegovina among EU aspirants.

“Everyone benefits if tax systems are well-understood and are effective and efficient. To achieve this, systems need to minimize the administrative burden that they place upon governments and taxpayers while raising the revenues that are needed to fund public services,” say World Bank and PwC experts.

Since 2014, the corporate income tax and the withholding tax on dividends, rents and capital gains have increased by 5 percent to 15 percent, making the tax burden in Albania one of the region’s highest and the key concern for the business community in the country.

Albania climbed 32 steps to rank 58th among 190 global economies in the latest Doing Business report to score its best ever ranking, but yet lagged behind some of its key regional competitors offering lower taxes and easier procedures.

Tirana Times
By Tirana Times November 30, 2016 11:04