Government to recognize advertisements only as limited expense

TIRANA, June. 1 – The government will regulate both the way that businesses use funds allocated for their advertising programs and the amount companies spend on advertising. The Council of Ministers, using the new taxation regulations, has also decided that advertisements whose cost exceeds 1 percent of the total annual revenues of a company will not be recognized as expenses, adding to the cmpany’s fiscal burden of profit taxes. This decision affects a business’s marketing program, a very sensitive side of business operations, vital for realistically competing and acquiring market share. The decision is controversial because through marketing expenses a firm can increase its profits, which increases the tax revenues of the state as well. The measure may hurt marketing companies, which remains an emerging industry in Albania, but which has great potential in the future as marketing has become a global business strategy. Estimation of the Albanian marketing and advertising industries point to an annual spending of 15-20 million euros. The decision has been taken without any prior consultation with interest groups, such as business associations, advertising companies and the media, and it cannot be reconsidered through the parliament because it will become active within 15 days of publication in the official records. The measure has been taken as part of the plan to radically reform tax regulations, an initiative that the right wing administration has taken mid-term its governing mandate.