TIRANA, May 27 – With preparations on the 2016 fiscal package already underway, the American Chamber of Commerce in Albania, representing the largest foreign business community in Albania, has reconfirmed its stance in favour of a 10 percent flat tax regime on corporate income and dividends.
In a statement, the AmCham says the increase of the corporate income tax by 5 percent to 15 percent in 2014 and the increase of withholding tax on dividends to 15 percent this year have not improved the business climate in Albania.
“The AmCham continues thinking that a review downward of the corporate income tax and the tax on dividend is necessary. The performance of these two taxes in the past couple of years has shown that they have not achieved their goals in collecting a larger amount of taxes but instead reduced the taxpayer base,” the Chamber is quoted as saying.
AmCham argues that a cut in these two taxes would promote economic growth through reinvestment of higher profits and reduce informality which is clearly and easily identified in many sectors of the economy and increase foreign investors’ interest on Albania.
The Chamber also requests a review of the personal income tax on high income earners. “It is unfair that an employee pays more in personal income tax compared to a business which pays a fixed rate,” says the Chamber.
To make Albania more competitive to foreign direct investment, AmCham suggests extending the tax loss carryforward period from a current three years to five or seven years.
The Chamber also proposes a VAT reduction on electricity bills for business consumers after this year’s hike in prices, a cut in fuel taxes and the lift of reference prices for tobacco produced in the EU and international transport services offered by Albanian operators.
More than one year after Albania renewed its deal with the IMF supported by a Euro 334 million loan, the Albanian business community represented by the Konfindustria association also remains skeptical over the impacts the two consecutive IMF-supported fiscal packages accompanied by tax hikes have had on the Albanian economy which continues suffering crisis impacts.
“The consequences of the implementation of two consecutive fiscal packages which in essence increased taxes, clearly show that the political decision-making must change direction. Enterprises, households and the economy in general cannot handle new increases in the tax burden,” says Buxhuku.
Citing a sharp informality rate of around 50 percent of the GDP, Konfindustria suggests that the 2016 budget should be based on better fiscal administration and structural reforms promoting economic growth.
“A further increase in taxes would produce undesirable consequences for the country’s competitiveness in attracting foreign direct investment, set conditions for increased tax evasion by affecting regular business and household taxpayers, reduce budget revenues, and make domestic goods and services less competitive to the imported ones,” says Konfindustria’s administrator Gjergj Buxhuku
