New changes to car import, taxation enter into force

TIRANA, Aug. 16 – Starting from next September, no customs duties will be applied for imported cars whose owners will only have to pay the 20 percent value added tax. The changes to the national taxes approved by Parliament last July have already been published in the Official Gazette and will be in force from August 24.
The new fiscal package also introduces a new tax system for cars and increases carbon tax by 5 lek per liter starting from next September. The carbon tax for diesel, currently at 3 lek/liter will increase to 8 lek/liter while the carbon tax for petrol will rise to 6.5 lek/liter, up from 3 lek/liter currently, replacing the current traffic tax.
Starting from January 2012, the carbon tax will increase by another 2 lek/liter or 7 lek compared to current prices, says the Finance Ministry. The government expects to collect an additional 375 million lek from carbon tax in the last four months of this year.
The current annual traffic and registration taxes car owners pay have been replaced by a new formula similar to that of import in customs procedures. The new draft law excludes cars produced within the past three years from their annual taxes but applies a progressive coefficient of 0.18 for cars older than 3 years and a +0.01 coefficient for each year before.
Meanwhile, the excise tax on some poor quality diesel products (Mazut and solar) will increase to 37 lek/liter.
The new fiscal package also foresees lowering excise tax for domestically produced beer to 12 lek from 30 lek currently starting from next September.
The changes approved in the final parliamentary session last July for this year come one week after the majority also cut the spending by 18.3 billion lek (183 million dollars) for the remaining half of this year in an effort to keeping the budget deficit at 3.5 percent of the GDP and the high public debt levels at 60 percent of the GDP.
The bill received only the votes of the ruling coalition’s deputies while the opposition lawmakers continue their parliamentary boycott over election disputes. Although some taxes are lifted, the increase in some other excise taxes for low quality oil products and the increase in carbon tax is expected to bring extra revenues to the state budget in the last four months of this year.
Meanwhile, the customs tariffs for clothes and shoes imported from the European Union, currently at 10 percent, will be lifted. The law, expected to enter into force starting from January 1, 2012 is expected to lower clothes prices in the domestic market by 12 percent if the VAT is included.