TIRANA, Sept. 22 – 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.
The Chamber, representing the biggest community of foreign investors in Albania, has also reiterated its request for easier tax procedures, calling on government to make it easier to do business through avoiding bureaucratic procedures and increasing business access to appeal procedures.
The AmCham has forwarded 20 proposals on the 2016 fiscal package with high taxes as its top concern. Specific industries like tobacco, cement and telecommunications brought data to justify their demands, referring in practice to problems that occurred over the past year in their relations with the customs and tax administrations.
“The tax collection performance of the past two years has shown that the goals are not being achieved (i.e. a higher amount of taxes is not being collected). In fact, the taxpayer base has actually shrunk. This review would boost economic growth through reinvestment of a higher income ‘in the hands’ of businesses and the scale of tax evasion, which can be clearly and easily seen in the market in many sectors of the economy. It would increase interest in FDI with tax levels equal or similar to other countries in the region,” says AmCham.
The Chamber has called for a review of the tax rate on personal income on wages so that the tax rate can be less progressive. “It is not right for an employee to pay personal income tax more than a business that pays simplified profit tax or profit tax, or partners or shareholders who pay a lower rate of tax on dividends,” says the Chamber.
The Chamber also requests an increase in the fiscal period for loss carry-forward from 3 years currently to 5 or 7 years, based on the best experiences in the region.
Commenting on the garment and footwear industry, locally known as the faà§on, the Chamber says the 2014 package of fiscal incentives are not having positive effects.
“There were considerations that garment and shoe producers would get fiscal incentives, but that did not happen. In fact, there were changes that aggravated their situation. Increasing energy prices have caused problems for the sector, and we propose that VAT on energy decrease from 20 to 6 percent.”
The Chamber also proposes a reduction in the rate of the circulation and carbon taxes on fuel to reduce the impact of higher fuel prices.
“In the best interest of the Albanian economy and to improve the competitiveness of domestic industry and increase the country’s attractiveness for foreign direct investment, we suggest the revocation of indirect taxes on fuels, when they are used in industry. This would be in line with the EU directive for excluding these cases from excise.”
The rate of VAT for strategic sectors such as the telecommunications and electronic services should be set at 10 percent, proposes the Chamber.
Other requests by the AmCham, include removal of fines for failing to declare on time and an amnesty for past fines imposed for such failure.
The Chamber also suggests liberalizing the issuance of electronic VAT invoices.
“Using handwritten invoices in the digital age creates unnecessary costs for business and the use of this approach is totally anachronistic and unnecessary. Albania may be the only country in the world that applies such a method for sales verification.”
The Chamber also suggests that excise fiscal stamps for alcoholic beverages and minced tobacco should be placed on the products at customs warehouses in Albania rather than by the supplier abroad because of cheaper costs of doing it in Albania and creating new jobs.
“Putting the fiscal stamps on by the supplier, hinders exports, as our fiscal stamps are not recognized abroad and have to be stripped off the product for export. This leads to the loss of export rights for elsewhere in the Balkans.”
The Chamber also expresses concern over the application of reference prices in international transport.
“The application of reference prices for international transport by means of internal orders of the customs administration places an unjustified and abusive burden on subjects equipped with the proper fiscal documentation on the real cost of the international transportation of goods. It is abusive for subjects equipped with proper documentation, and is seen as abusive compared to the real cost of international transport of goods,” says the Chamber.
Speaking about the 2016 fiscal package in a recent interview with local media, Lorenc Gjoni, the executive director of AmCham said government should consider meeting its revenue targets by increasing the taxpayer basis and not taxes.
Commenting on the campaign against informality he said “AmCham Albania supports efforts to bring more businesses from the informal into the formal economy, but warns that government measures need to be applied with care and clear goals in mind.”
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.
