TIRANA, July 28 – The EU Commission has warned the Albanian Government about several issues that may arise from the adoption of the fiscal amnesty draft law, recommending that it is reconsidered before it is approved by the Parliament.
Based on a report by the EU Commission, currently not available to the public, the local media report that nine main issues were found during their assessment of the draft law on “Fiscal and Penal Amnesty for Subjects of Voluntary Declaration of Assets”.
The EU Commission finds that the repatriation of assets should occur via international bank transfers rather than implying that cash could be moved physically. If earnings are abroad, their transfer above a certain limit needs to be declared at the customs office at the border. There is a risk that the draft law would create a “window of opportunity” for fiscal evasion and laundering of foreign money.
Furthermore, the Commission warns that the draft law risks ensure undue impunity to subjects holding illicit wealth.
The report finds that no adequate consultation with stakeholders took place before the draft was submitted to parliament and as such, the government’s urgency does not seem to be justified. The draft lacks a necessary assessment of the expected assets to be formalised and expected revenues to be generated.
Furthermore, the scope of the amnesty goes beyond that of similar legislation implemented in other countries. Therefore, the government should target only tax evasion committed by persons liable to be in Albania.
The report also notes the vagueness of the draft law which could lead to further issues. According to the EC, such tax amnesty would be very difficult to implement as the definition of assets includes elements such as immovable property in Albania and outside of Albania, cash held in the national or a foreign currency, digital currency, valuable items of gold or precious stones. It is difficult to guarantee that 1) those do not proceed from criminal activities; 2) are declared by their actual (beneficial) owner and; 3) result from income which does not belong to a tax period that is either still subject to tax declaration or subject to an already notified tax audit.
The report recommends the Albanian government to first build a professional fiscal administration, which would block opportunities for money laundering and corruption. That being said, there is no clarity given on the way that the Anti Money Laundering Law will be implemented or on the functioning of the Special Unit that will implement the law.
Finally, EC suggests that the fiscal amnesty should be combined with increased enforcement against non-compliant tax-payers, so that that it remains credible and avoidd the unfair competition from those who have maintained their assets outside the system until now.
The IMF has also advised against the tax amnesty proposed by Rama’s government earlier this year “as it might undermine tax compliance.” According to the IMF, the government needs to establish effective systems to detect tax evasion and to prevent opportunities for money laundering and corruption.
The Albanian Parliament is expected to vote on the fiscal amnesty draft law in the upcoming weeks.
The amnesty will last up to 1 year, divided into three time periods of four months.
During the first four months, the obligation to deposit money is foreseen to be 5 percent of the total, during the second period it may be 7 percent and during the third, it may be 10 percent. However the numbers will be discussed further with stakeholders and parliamentary committees.
With this initiative, Albanian passport holders can legalize undeclared property received or owned and related tax liabilities associated with formation/acquisition and usage of such property.
