Companies pay 36 mln in extra corporate income taxes

The tax administration collected around 17.6 billion lek (Euro 123.6 million) in profit tax in the first ten months of this year, up 41 percent compared to the same period in 2013 when Albania was applying a 10 percent flat tax on personal and corporate income.
TIRANA, Nov. 25 – Medium-sized and big enterprises operating in Albania paid an extra 5.1 billion lek (Euro 35.8 million) in taxes in the first ten months of this year after the corporate income tax was raised by 5 percent to 15 percent starting January 2014.
Finance Ministry data shows the tax administration collected around 17.6 billion lek (Euro 123.6 million) in profit tax in the first ten months of this year, up 41 percent compared to the same period in 2013 when Albania was applying a 10 percent flat tax on personal and corporate income.
The shift to progressive taxation starting January 2014 when the tax burden was reduced for households but raised for businesses has also had moderate positive impact on the country’s public finances which this year are back on track with a double digit increase of 12 percent.
Finance Ministry data for the first ten months of this year show that while government lost around 1.3 billion lek (Euro 9.3 million) in personal income tax due to the application of lower rates than the previous 10 percent flat tax, benefits from the profit tax, especially from mid-sized and big businesses have been bigger after the corporate income tax was raised by 5 percent to 15 percent.
Under the new fiscal package approved in late December 2013, starting January 2014, small businesses with an annual turnover of up to 2 million lek (Euro 14,000) have been paying 25,000 lek a year in a fixed tariff. Small businesses with an annual turnover of 2 to 8 million lek (Euro 14,000 to 60,000) are paying 7.5 percent in income tax, down from 10 percent previously. The income tax for businesses with an annual turnover of more than 8 million lek was raised to 15 percent, compared to the 10 percent flat tax system in force since January 2008.
In its new 2015 fiscal package government says it will continue applying a 15 percent rate on corporate income despite continues calls by the business community to reduce it because of damaging the country’s competitiveness on foreign direct investment at a time when most regional countries apply flat tax regimes of 10 percent.
In its 2015 fiscal package, government plans to increase by 5 percent to 15 percent the withholding tax on dividends, interest rates on loans and deposits, income from copyright or intellectual property, games of chance as well as other rewards. The fuel circulation tax will increase by another 10 lek (12 lek VAT included) (Euro 0.084) taking fuel prices to among the highest in Europe. The excise rate on cigarettes will also undergo a new hike
Albanians are expected to pay an extra 16 billion lek (around 112 million Euros) in higher taxes on non-wage income, fuel and tobacco in 2015, according to the 2015 fiscal package government has just announced.