TIRANA, Jan. 27 – Albania’s Constitutional Court has left in force a suspension to the so-called heavy fines law against tax evasion until a final court ruling expected by next month with some of the court members openly citing violation of the principle of proportionality in the new law increasing fines by up to 50-fold.
In a hearing held this week, one month after the court suspended the implementation of the law following an appeal by a business association, Vladimir Kristo, a judge of the 9-member of Constitutional Court openly opposed the heavy fines and the fixed rate fines envisaged in the new tax procedures law.
“Do you think this is an achievement? This is exactly where the principle of proportionality lies. Do you know that there is court decision considering fixed punishments anti-constitutional?” Kristo argued with a finance ministry representative.
He also described the fines as too heavy and even higher than in neighboring Italy where failure to issue a fiscal receipt is punished with Euro 516 compared to almost 10-fold in Albania.
The finance ministry representative justified the heavy fines with the fight against widespread informality as part of a nationwide campaign the government launched last September.
Nikollaq Neranxi, the head of the Association for the Protection of Albanian Traders and the Market who took the law to the Constitutional Court, is hopeful the court will rule in their favor after this week’s session.
“I hope the Constitutional Court will cancel the articles which clearly punish all businesses, violate the market freedom and lead to the closure of businesses,” said Neranxi.
According to him, the new law took to bankruptcy some 2,000 during its short period of implementation from November to late December 2015 when the Constitutional Court decided on its suspension.
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 next month.
The Association for the Protection of Traders says it will also file a new complaint with the Constitutional Court on Friday, Jan. 29, exactly when some new controversial legal changes replacing fines with prison time over tax evasion enter into force.
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 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.
