TIRANA, Oct. 6 – One month after the start of a nationwide campaign against tax evasion, the American Chamber of Commerce has described the operation as rather aggressive and appealed on the government to be more positive especially in inspections to small businesses which account for the overwhelming majority of 90 percent of total enterprises in Albania.
Speaking in an interview with News 24 TV, Mark Crawford, the president of the American Chamber of Commerce in Albania, suggested a friendlier business climate and simplified procedures and incentives for businesses.
“We welcome the government’s campaign, we have asked for this operation, but you cannot catch water with fists, there are lighter forms with buckets. If this will be a deep reform, there should be a positive and not hostile attitude,” said Craward.
The AmCham president warns continuous inspections are causing panic especially among small businesses.
“If they carry out a lot of inspections stifling small businesses this is a barrier to the economy. There is perspective about small businesses which employ a lot of people and pay taxes but procedures should be simpler because small businesses don’t have time to waste with tax inspections every day,” added Crawford.
Small businesses with one to four employees accounted for 90 percent of total businesses in Albania in 2014 with around 101,025 enterprises, according to state statistical institute, INSTAT. The majority 70 percent of them employ only a single person.
The AmCham says the government should also focus on other factors promoting growth rather than tax collection and fines.
“I have always been skeptical with the harsh campaign because small businesses are not full of money and we cannot squeeze water out of stone. We need to grow the economy from inside, the circulation of money by promoting banks to provide credit, attracting foreign investors and establishing links with international markets. Reducing informality is not only a goal in itself because we will have a small and poor economy where people pay taxes,” he said.
Crawfard also criticized the involvement of police forces in all the government’s operations as inefficient and not creating a positive attitude.
While the Albanian government is working on its 2016 budget and fiscal package, the American Chamber of Commerce in Albania has appealed for a review downward of taxes on profit, dividend and personal income as an incentive giving the business community more room to develop and increase registration numbers.
“The current tax level leads to tax evasion, reduces the country’s competitiveness in the region and does not lead to higher business registration numbers, reducing the number of taxpayers as a result,” says the AmCham magazine in its latest issue.
While key taxes such as the personal and corporate income taxes remained unchanged, defying businesses calls for a return to the flat tax regime after the corporate income tax was raised by 5 percent to 15 percent in 2014, the tax burden in 2015 further increased by raising the withholding tax on dividends and rents and capital gains to 15 percent, increasing the circulation tax on fuel and imposing higher excise rates on tobacco. Since 2014, the personal income tax is being collected under a progressive system, increasing the tax burden on high wages. In addition, electricity prices rose for business consumers and around three-quarters of household consumers.
