“There has been enough time and there is still time for businesses to catch up with citizens in this process,” said the Deputy Finance Minister Alfred Rrushaj
TIRANA, Oct. 17 – Despite skepticism and low interest by businesses applying to benefit from the fiscal amnesty, government seems determined not to extend the deadline for its implementation beyond December 31, 2011. Presenting the latest data on fiscal amnesty, in force since May 2011, Deputy Finance Minister Alfred Rrushaj said in a recent press conference he didn’t see any reason to postpone the deadline.
“There has been enough time and there is still time that businesses catch up with citizens in this process,” said the Deputy Finance Minister.
Data show that individuals have been most active in efforts to benefit from the fiscal amnesty, legalizing their undeclared revenues under a 3 percent fee, and reassessing their property under a 1 percent fee. In five months, individuals have legalized 400 million lek of cash and had 30 billion lek of real estate reassessed by paying only 300 million lek. An estimated 14,000 individuals are reported to have benefited from the property reassessment process which under normal conditions is made under a 10 percent tax imposed on the difference of the sale and purchase price. Meanwhile, businesses have reassessed property worth 14 million lek, paying 418,000 lek, under a 3 percent fee.
With only two and a half months to go before the deadline expires, the process for the tax and customs administration seems much slower with only 14 billion lek pardoned or around 20 percent of the total amount. The tax administration has forgiven 33,734 cases worth 3.6 billion lek with businesses paying 35.3 million lek for 448 cases. Meanwhile, the customs administration has pardoned a total of 10.7 billion lek of which 1,456 businesses have benefitted by paying only 18.6 million lek.
Business skepticism
Businesses seem indifferent to the amnesty law which failed to get the necessary votes 3/5 majority of votes to turn into full amnesty. Under the amnesty law, businesses will have their tax and customs debts pardoned until December 2008. They have to pay 30 percent of the principal for 2009, and 50 percent of the capital for 2010 to have their fines and penalties forgivenOnly businesses connected to current and former public office holders and those whose origin of capital is not legal business, i.e criminal activities and trafficking, are excluded from the law on the “legalization of capital and the pardon of part of tax and customs debts.”
Accounting experts justify businesses’ doubts about the advantages of declaring hidden monetary amounts and assets. The Institute of Accounting Experts says that one of the most controversial issues is the fact that the law states that if false self-declaration is identified in the future, businesses will lose their amnesty benefits.
The Tirana Chamber of Commerce and Industry shares the same concerns over the amnesty’s guarantees. Nikolin Jaka, the Chamber’s head, says that although on a self-declaration basis, businesses still face the risk of penalties during inspections by tax officials.
This is confirmed even by Deputy Finance Minister Alfred Rrushaj who says that the spirit of the amnesty is self-declaration, and businesses should be aware of this, acting in time, before the audits start. “When that happens, and the business has not self-declared things properly, and is found to be in evasion, there will be penalties,” Rrushaj said in an recent meeting with AmCham representatives.
“The spirit of the law says all are entitled to benefit. Those who have not yet dealt with any administrative acts that expresses obligation, can benefit from self-declaration, but the latter can not be without limitation and without any control, because otherwise it would clearly open the way for abuse. Imagine a taxpayer who knows well that it might have 300,000 leks of outstanding liabilities. It may self-declare 100,000 leks and say that my self-declaration for this period is 100,000. If I automatically link to the 100,000 lek sum, there would be evasion on the 300,000 leks,” said Rrushaj.
In this case, government has decided that one can self-declare and pay 50 percent of the principal, but only if the self-declaration is accurate and nothing is hidden. If a subsequent audit of the tax for that period notes there have been violations of the law, then the benefits will no longer exist.
Asked if the amnesty covers cases such as when the audit officials go to a business in 2011, and the audit is done for the 2008, and a fine is given that period, Deputy Minister Rrushaj told AmCham representatives that is not included in the amnesty. “The law provides for the forgiveness of tax liability identified, but unpaid by the taxpayer until the end of 2008. Second, what the law provides for is self-declaration, that a taxpayer knows what is hidden, so there is no need to wait for 2011 (I would not advise them to wait) to declare that he knows he has not declared. It is possible that during the remainder of 2011, before the audit officials show up at the door, that the business can declare something and submit the declaration form. At this point, it pays 50 percent of the principal.”
Regarding the supervision of bank deposits, the part that is about preventing money laundering, this legislation makes no deviation from current law, and the protections set by law provide for the prevention of money laundering.
“A subject who has money in the bank knows it is subject to supervision in regards to money laundering. We all know that banks report to the relevant agencies and if the agencies have observed irregularities or potential criminal acts, they have begun or will begin their portion of the proceedings. This law does not make any deviation from what the current law provides. What we say is, we do not want the money of those who have committed crimes. Their money will be subject to under the law and the Criminal Code. We want to protect the money of Albanians that is gained by honest business, but that over time have not paid all the taxes and fees.”
Asked about the possible penalization of companies which have been correct with tax authorities from this practice Deputy Minister Rushaj said “It is clear that an amnesty of this type represents a moral problem, that of peace among all stakeholders of a given society. There are discussions everywhere, whether it should or should not be done. And the main question is whether it is fair to the category of businesses that have followed the rules. I would say that there is no place in the world that has not gone through this debate when offering this. At the end of the day, it has been decided to offer a fiscal amnesty. Given the moment, given the history of business development, all these have decided to undertake this initiative. This move in this country has something special in that it has been demanded with a lot of tenacity by the business community.
