Declares Vice-Minister of Finances, Florian Mima
The World Bank has made errors concerning tax calculations in Albania, said the Albanian Vice-Minister of Finances, Florian Mima. His report has been echoed by newspapers and other media over the last weeks, (Korrieri, 10.09.2009, Koha Jon묠Shqip, 11.09.2009). Mima says he has found information saying that the method that the World Bank report has used for making tax calculations in the report is functional only for big enterprises and important economies. According to Mima, it cannot work for Albania, which according to Mima’s calculations should be the lowest taxed country in the world.
The last World Bank report, Doing Business 2010, stated Albania’s total tax rate at 44.9% of the profit made by business enterprises. This was made up of a Profit tax rating up to 8% of the benefit; Labor taxes and contributions rating up to 31.9 % of the benefit, and; Other taxes rating up to 5.1 % of the benefit. According to the World Bank report they are paid in 44 payments per year and take about 244 hours (per year) to be paid off.
According to Mima, “Ʃf we were to construct an Albanian model of calculation for small and mid-sized businesses and if we were to treat the data in this model, the index that we would obtain would be 12 % of the benefit and this would be the lowest in the world” – (Koha Jon묠11.09.2009).
Data from earlier fiscal sources say that 55 % of the taxes paid by businesses in Albania are paid by important (large-size businesses) and the objective is to have 60 % of business taxes paid by these important businesses (see former Tirana Times issue).
Side-saeting on the tax question
On one side, the nominal profit tax rate listed by the Albanian government is 10 % and has been reduced from the former nominal profit tax rate which amounted to more than 20 %. The government boasts this is one of the lowest in the world, if not the lowest. The government claims to have improved the business climate and business-starting ease and to have more than halved the profit tax rate.
But, on the other side, businesses complain of real if not nominal barriers to trade and business spirit and capacities. In this debate, Korrieri (10.09.2009) quotes the vice-director of the Association of Constructers of Albania (Shoqata e Nd쳴uesve). Ilir Hebovija, representing one of the most important business associations in Albania, the Association of Constructers of Albania, says that, “The government needs money and addresses itself to those businesses as are the most visible. A reference system for prices and costs as well as other mechanisms increase the real fiscal burden”.
The reference system on prices and costs, applied by the fiscal administration in Albania has been frequently criticized and has been requested to be withdrawn by business groups who think this system to be wholly oppressive, not transparent and arbitrary. They think that what is gained nominally by an advertised tax reduction to only 10 % of the profit is lost by the setting-up of a reference system which bears higher values than market prices and is wholly uncompetitive.
Recent reports from the press inform that the government wants to upgrade lots of small businesses to mid-size. This will be done by decreasing the small-company qualification quotas from a plafond of 8 million ALL to date (nearly 59000 Euros) to 4 million ALL or 5 million ALL (nearly 29000 Euros or 37000 Euros respectively). This will cause more enterprises to be qualified as mid-sized. By way of consequence they will be upgraded into the group of enterprises which will have more restrains and more taxes to pay.
