TIRANA, Jan. 18 – With few days to go before some legal changes replacing fines with prison time over tax evasion enter into force, a business association has warned of taking the law to the Constitutional Court just as did with the heavy fines law whose implementation has been temporarily suspended under a court ruling.
The Association for the Protection of Albanian Traders and the Market led by businessman and former MP Nikollaq Neranxi says the new legal changes approved by the ruling majority further deteriorate the business climate.
“These laws will bring confusion into the market, they will slow down the Albanian economy, close businesses and stimulate their departure from Albania. Or, these laws are merely intended to create new monopolies and squeeze out of market current businesses and offer them to other people who maybe are not on the market yet,” said Neranxi.
The Association says it is determined to continue its legal battle with the Albanian government even at the Strasbourg-based European Court for Human Rights if the Constitutional Court does not rule in their favour.
Last December, the Socialist Party-led majority approved some controversial changes to the Criminal Code replacing some punishments over tax evasion with prison time. The changes requiring a qualified majority of 84 votes in the 140-seat Parliament were approved after a nationwide campaign against informality and some earlier changes increasing fines on tax evasion by a staggering 50-fold.
The amendments to the Criminal Code removed fines on smuggling and informality, envisaging only imprisonment of up to ten years for imports, exports and transit of illegal goods.
The new amendments are harsher about illegal activity and tax evasion.
“Failure to issue a fiscal receipt when a previous administrative measure has already been taken is punished with a fine or imprisonment of up to 1 year,” says the amended article 180 of the Criminal Code.
Meanwhile, carrying out illegal activity without being registered with tax authorities, without operating a cash register or issuing a fiscal receipt is punished with up to three years in prison when a previous administrative measure has already been undertaken.
A new amendment also foresees imprisonment of up to five years for the production and sale of fuel not meeting legal quality standards.
The tax administration will also have to be careful as failure to collect taxes within the legal deadlines is made punishable by up to seven years in prison.
In late December 2015, Albania’s Constitutional Court 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.
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. The Constitutional Court is expected to make a final decision over the so-called heavy fines law by the end of this month.
