TIRANA, Nov. 8 – Albania’s tax burden slightly increased in 2017 while paying taxes remained one of the region’s most time-consuming, according to the 2018 Doing Business report published by the World Bank.
The 2018 report shows Albania’s total tax and contribution rate measured as a percentage of profit slightly rose by 0.4 percent to 37.3 percent in 2017, when it remained the second highest among the six EU aspirant Western Balkans economies.
Only Serbia, the region’s largest economy, had a higher tax rate estimated at 39.7 percent of profit. Total tax and contribution rates, which includes profit or corporate tax, social contributions and labor taxes paid by the employer, property and turnover taxes and other municipal fees and vehicle taxes, ranged from as low as 13 percent in Macedonia, to 15.2 percent in Kosovo, 22.1 percent in Montenegro and 23.7 percent in Bosnia and Herzegovina.
The slight increase in Albania’s total tax rate was a result of hikes in local government fees and vehicle taxes which have seen an increase in the past couple of years, especially in Tirana, the country’s largest municipality.
Albania’s total tax and contribution rate is composed of 14 percent in profit tax, 18.8 percent in labour tax and contributions and 4.4 percent in other municipal fees and vehicle taxes.
Albania 2018 Paying Taxes ranking remained unchanged at 125th out of 144 countries with a medium-sized company having to make 35 payments a year and spend 261 hours a year, 32 working days, considerably above the Europe and Central Asia average.
Albania also ranked poor in the post-filing index, a Paying Taxes sub-indicator measuring the time to comply with a VAT refund, obtain a VAT refund, comply with a corporate income tax audit and the time to complete a corporate income tax audit.
“In Albania, it takes 37 weeks to receive a VAT refund which is obtained only after an audit is completed. A three months carry forward period is included in the total time to receive a VAT refund,” says the World Bank.
The high tax burden, corruption and inefficient judiciary are the main concerns facing local and foreign businesses in Albania complaining of Albania being uncompetitive to other regional countries applying flat tax regimes of about 10 percent.
Since 2014, the corporate income tax and the withholding tax on dividends, rents and capital gains have increased by 5 percent to 15 percent, making the tax burden in Albania one of the region’s highest and the key concern for the business community in the country.
Albania lost seven places to rank 65th among 190 economies in the 2018 Doing Business report, lagging behind almost all regional competitors which made considerable progress over the past year, according to a World Bank report.
Albania’s ranking in this year’s flagship World Bank report, a reference point in foreign investors’ decision-making, was negatively affected by deterioration in key indicators such as getting electricity, paying taxes and enforcing contracts overshadowing last year’s major progress when Albania climbed 32 steps to rank 58th among 190 global economies.
