TIRANA, Dec. 23 – Albania’s Constitutional Court announced this week it has suspended the implementation of some newly-adopted legal changes that would increase fines on tax evasion and other informal economy offences by up to 50-fold. The court said the suspension would be valid until it makes a final ruling on a complaint filed by a small businesses’ association.
The legal changes were challenged in the Constitutional Court by the Association for the Protection of Traders and the Market late last November few days after the new legal changes became effective.
Several other business associations had warned of taking it to the Constitutional Court because of the “disproportionate” penalties to income and offences committed.
“Such administrative actions are a huge and excessive burden to the operators and also violate the freedom of commercial activity and private property,” said the association led by former MP Nikollaq Neranxi when it filed the complaint.
The association claims the changes to the tax procedures law run counter to the country’s constitution and the European Convention on Human Rights.
Hailing the court’s decision to examine the so-called ‘tough fines’ law, Nikollaq Neranxi, the head of the Association which submitted the complaint with the court, said the suspension was good news for all enterprises in the country.
“We hope some common sense has remained in that institution and the law is cancelled considering that the majority in Parliament decided to punish business to non-existence. The battle continues,” wrote Neranxi on social networks.
The new changes to the tax procedures law envisage fines of up to 10 million lek (€71,000) on big businesses operating in the wholesale trade for not issuing tax receipts, compared to a previous 200,000 lek (€1,411). Fines on small businesses have also increased 10-fold from 50,000 lek (€353) to 500,000 lek (€3,529) starting Nov. 12.
Arben Malaj, a former finance minister, also hailed the court decision to suspend the implementation of the law.
“This decision is a critical step to the challenge of the country’s democratic governance, the governance within the constitutional limits of separation of powers and checks and balances and respect of the principle of proportionality,” Malaj wrote in a comment.
Two of the country’s leading business associations, the Tirana Chamber of Commerce and Industry and the American Chamber of Commerce in Albania, had warned the new law which increased fines on tax evasion by up to 50-fold violated the principle of proportionality.
“The tax procedures law has multiplied fines without taking into account the proportionality of the violation by enterprises and without previously going through a stage that would qualify, educate and sensitize entrepreneurs on the way of doing business,” Nikolin Jaka, the head of the Tirana Chamber of Commerce, had earlier warned.
The business community has also strongly opposed new amendments to the Criminal Code which replace fines on tax evasion with prison time.
The ruling Socialist Party-led coalition has proposed some harsh amendments to the Criminal Code removing fines on smuggling and informality and envisaging only imprisonment of up to ten years for imports, exports and transit of illegal goods.
