Domestic VAT income declined by 48 percent due to TAP finalization

Tirana Times
By Tirana Times October 22, 2019 10:46

Domestic VAT income declined by 48 percent due to TAP finalization

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  • According to official data, only 1.85 billion euros were collected in domestic VAT, compared to 3.6 billion euros during the same period of last year

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Tirana, Oct. 22 – The finalization process of the Trans Adriatic Pipeline (TAP) project sparked issues for the economy in the country. Official data by the Ministry of Finance and Economy, show that domestic VAT income, a direct indicator of consumption in the economy, declined by 48 percent, marking the biggest downturn in the last decade. The MFE explained that the main cause of the massive decline is the finalization of the TAP project, due to the dominantly foreign subcontracting companies ceasing their activity. “The progress of VAT during the last nine months has not been at the optimal level, but this is not due to informality. The indicators of the TAP project revealed that it did not have as much impact this year as it did in the previous years since its onset. While the energy sector is also to blame as it has not performed well this year due to the lack of rainfall, the progress of TAP has also been closely linked to the subcontractors, mainly in the field of construction. Therefore, the impact of the pipeline project is observable in a bigger picture.” the General Director of Taxation, Delina Ibrahimaj, confirmed

According to official data, only 1.85 billion euros were collected in domestic VAT, compared to 3.6 billion euros during the same period of last year. During the January-September period, income fell by 22 percent, marking the worst performance in years. This trend is an indicator of how weak the economy in the country is, based on its strong dependency towards a single project. TAP is the biggest investment ever made in the Albanian economy, at an amount of 1.5 billion euros, however with its conclusion the effect also ends; Albania does not have the right infrastructure to put the gas at use, at least in the mid-term.

Dividend and local taxes add to the budget

The total income during the period of January- September, reached an amount of 2.8 billion euros, increasing by 4.2 percent on an annual basis. In comparison to the plan, the budget is short of 65 million euros. The total amount of VAT income, the main capital of the budget bringing in about 30 percent of revenue, fell by 4.4 percent as a result of the poor performance of the domestic VAT. National tax revenue also experienced a strong decline, precisely by 8.6, due to the weak progress of the mineral industry.

Income from the tax profit increased by 11.5 percent and 4.7 percent from the excise duty, while income from social security were positive, with a surplus of 5.5 percent. The highest growth rate was observed in the personal income tax at 33 percent, as a result of the decrease in dividend tax from 5 percent to 8 percent, which led businesses to quickly distribute their profits up until September. According to official data provided by the tax authorities, income from the dividend tax amounted to 90 million euros during the nine-month period, tripling since last year. Local taxes also increased by 31 percent, mainly through the collection of infrastructure impact taxes due to the construction permits given out in Tirana. However, excluding the effects of dividend and local taxes, the amount of increased income would be almost zero.

Tirana Times
By Tirana Times October 22, 2019 10:46