TIRANA, April 1 – Albania is one of the first Balkan countries to celebrate its Tax Freedom Day, the day when the nation as a whole has earned enough money to pay off its total tax bill for the year, despite having one of the region’s highest total tax rate as a percentage of commercial profits, according to a study published by local Al-Tax Center.
The report shows Albania marked its Tax Freedom Day on March 29 for 2015 in 88 calendar days, three days later only compared to Kosovo, but earlier compared to Macedonia, Montenegro, Croatia, Serbia, Greece and Bosnia and Herzegovina which mark this day from April 2 to May 15.
While Albania has one of the lowest tax burden as a percentage to GDP, its total tax rate measuring the amount of taxes and mandatory contributions payable by businesses, stands at around 30.7 percent and is one of the highest in the region, being lower only compared to Serbia’s 38.6 percent and Greece’s 49.9 percent.
Albania applies a fixed VAT rate of 20 percent, differentiated corporate income tax of 7.5 percent and 15 percent for small and mid-sized and big enterprises, progressive personal income tax from 13 to 23 percent, social contributions at 24.5 and health insurance at 3.4 percent.
The report estimates Albania’s tax evasion at around 1 billion euros a year which is around 10 percent of the country’s GDP, considerably lower compared to other estimates ranging from 30 to 50 percent of the GDP.
“Some businesses find themselves under unfair competition compared to businesses which find other methods to avoid taxes they have to pay under the same laws,” notes the report.
At around 10 percent of the GDP Albania has the highest rate of inflows of foreign direct investment in the region, hinting a favourable business climate.
