TIRANA, Sept. 3 – If the corner shop owner forcefully shoves a receipt in your hand and makes sure you don’t leave without it this week – take it – or authorities could fine you 7 euro. The business owner faces a 500 euro fine or confiscation of all goods, depending on the status the business has with the tax authorities.
As a massive and highly-publicized government campaign against informality kicks off, it has been met with a rush to comply out of fear for many businesses that were not following the fiscal rules. Others have closed up shop altogether.
Authorities say 600 groups of tax inspectors backed by police officers have started carrying out field inspections.
They want to end widespread informality, estimated at around 30 percent of the country’s GDP, officials said.
The Albanian government says it targets collecting about 330 million dollars from the nationwide campaign which will last 300 days.
It is a similar operation to the electricity campaign to curb massive thefts and collect accumulated unpaid power bills. The power campaign has brought an extra 100 million euro to the state coffers since its launch in late 2014.
“The fight against informality will be the focus of this third 300-day period in office and will harmonize the operations of customs and tax administrations, the Labor Inspectorate and State Police, as well as with prosecutors, consumers and businesses” Prime Minister Edi Rama said Monday in a televises speech ahead of the start of the nationwide campaign.
He added, “In its final goal, this is of course an operation which targets reducing taxes and increasing wages but on a very solid basis without infringing on the macroeconomic stability and the fiscal consolidation process we have undertaken with determination in cooperation with the IMF and other financial institutions.”
However, the operation has caused some concerns among businesses fearing fines and seizure of goods.
The immediate effect was that businesses are insisting that customers take their tax receipts even for products such as vegetables, which were often sold without receipts in the past. Some shops simply kept their doors closed while they sorted the tax registration status.
Long queues were reported this week at regional and national registration centers as business owners lined up to wither register their businesses to avoid penalties or to officially close their existing businesses to avoid having to pay any more taxes.
Many small informal family business owners say they will close down claiming they cannot afford buying costly tax registers and pay taxes at a time when consumption has reduced and competition is tougher.
A survey carried out by the economy ministry has shown around a third of businesses operating in Albania are not licensed at all, do not have cash registers or do not use them at all.
Half of the businesses operating in Albania do not issue tax receipts, according to the ministry.
Business representatives have hailed the government’s initiative to curb informality, but say the nationwide campaign should be led without creating panic and using extreme measures.
“The business community must be considered a partner and inspections against informality should be carried out without damaging the partnership with fair businesses,” said Nikolin Jaka, the head of the Tirana Chamber of Commerce.
The Albanian economy registered sluggish growth rates of 1 to 2 percent in the past three years and is projected to grow by 2.7 percent in 2015 affected by the escalating crisis in neighboring Greece, the country’s second trade partner and the host of about 500,000 Albanian migrants and poor recovery in top trading partner Italy.
The government of Prime Minister Rama has said it will not give up on its pressure to stop fiscal evasion.
Rama and his ministers said that all businesses should get licensed, mainly focusing on the small businesses, the retail shops, coffee bars and similar operations, or they will be closed down and their tools will be confiscated.
Rama urged residents to take the receipts or face the 1,000 leks (€7) fine.
The prime minister, known for his PR flair, had coffee with the tax administration head Tuesday in downtown Tirana, paid up and took the receipt. His official cameraman made sure photos were taken from all angles and placed on social media.
Rama said obeying the tax laws is a patriotic duty because it all goes into government coffers from where it increases salaries, pensions and public investors.
In 2010, another campaign pushed small businesses to purchase and use cash registers. But many shops have had them, but not used them to avoid paying taxes.
Despite the authorities’ efforts to collect more taxes they had failed to meet targets this year, a result that has put them in hot water with the International Monetary Fund. The IMF mission ended discussions in June without an agreement, temporarily suspending its lending program.
