TIRANA, March 4 – Albania’s Constitutional Court has turned down a heavy fines law increasing fines on tax evasion by up to 50-fold as running counter to constitutional principles.
Under a decision made last week, the Court cancelled 8 out 11 controversial articles in the newly amended tax procedures law in late 2015. The legal changes were challenged last November by the Association for the Protection of Traders and the Market which claimed “disproportionate” penalties to income and offences committed. The Court had earlier suspended the implementation of the law until a final decision.
The new changes to the tax procedures law envisaged 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 were set to increase 10-fold from 50,000 lek (€353) to 500,000 lek (€3,529) starting Nov. 12.
Commenting on the court decision, Nikollaq Neranxi, the head of the Traders Association who took the law to the Constitutional Court, described it as a victory for the business community.
“My battle is a battle to protect market freedom, I have no other intention,” said Neranxi, a businessman and former MP.
Last January, the Court hinted it could turn down the law 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.
“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?” Vladimir Kristo, a judge of the 9-member of Constitutional Court 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.
Government representative justified the heavy fines with the fight against widespread informality as part of a nationwide campaign the government launched last September.
Several other major business associations had described the legal changes as severe and not helping improve the business climate.
The Traders Association has also challenged as unconstitutional some legal changes replacing fines with prison time over tax evasion which is being examined by the Constitutional Court and most recently some tax hikes by Tirana Municipality at the Tirana Administrative Court.
