TIRANA, Feb. 3 – The finance ministry says it has lifted an ordinance changing the way VAT is applied on oil prices in an effort to increase competition among retail fuel stations. Under the new ordinance replacing a previous one issued in 2008, the 20 percent VAT on fuel will be applied only on wholesale oil companies, slightly easing the tax burden to retail points.
However, experts remain skeptical such a measure will have a real impact on oil prices in Albania, which are among the highest in Europe due to the high tax burden applied on them. Experts say the difference in oil prices from the new ordinance is expected to lower fuel prices by only a negligible 1 lek (Euro 0.007). They blame the situation on the high tax burden and lack of competition in fuel imports, which account for the overwhelming majority of the country’s needs.
The Albanian fuel market continues remaining highly concentrated with only two operators currently involved in imports and serving as distributors to other companies.
Oil prices in Albania stand at an average of 165 lek/litre (Euro 1.19), down only 14 percent compared to last June when fuel prices embarked on downward trend after a slow-down in manufacturing in China and Europe and increasing supply from North America.
The depreciation of the Albanian national currency against the US dollar which since May 2014 has lost around 20 percent has also had an impact.
Data published by GlobalPetrolPrices.com this week show Albania’s diesel prices stood at Euro 1.11/litre, higher than Macedonia’s Euro 0.79/litre, Montenegro’s Euro 0.98/litre.
Starting January 2015, the circulation tax, currently at 17 lek/ litre, has increased by another 10 lek (12 lek VAT included) taking it to 27 lek litre (Euro 0.19), not to mention the excise tax at 37 lek/litre, the carbon tax at 1.5 lek/litre on petrol and at 3 lek/litre on diesel, VAT at 20 percent, and other customs duties which make fuel prices in Albania among the highest in the region and Europe despite the country having one of Europe’s lowest GDP per capita.
