By Ardit Bejko
TIRANA, June 26 -The Albanian government has announced it will partially cancel tax debts owed by some businesses. At the same time, it will introduce a fiscal amnesty to boost the economy and inject more money into the market. Further, Minister of Finances Ridvan Bode has said that experts from the Ministry of Finances are currently working on the draft of the amnesty.
Implementing the bill would cost the government ALL 14.6 billion, while it would bring in revenues of over ALL 29.5 billion. The draft of the amnesty includes only those companies that have not been issued administrative sanctions for past due tax bills and those that have not been notified of any sanctions issued.
The draft: The details
Three main categories will be exempt from their tax commitments. The first category includes those businesses that are behind in their fiscal and customs payments. The companies that fall into this category will be exempt from fines, interest, and any principal they had to previously pay. The amnesty for this category will cost the government ALL 6.5 billion. The Ministry of Finances expects to receive ALL 5.8 billion in return.
Other companies, whose payments are past due, will be given a partial amnesty. If the companies pay within three months from the day when the bill comes due, they will not have to pay any fines and only 50 percent of the interest. This relief will cost the state ALL 7.2 billion, but it will raise revenues of ALL 23.7 billion. The draft also provides relief for companies that have not paid customs fees for imported cars. Those companies that pay the fees within the three-month grace period will be exempt from any fines and interest.
The second amnesty category includes all companies and individuals who own cars but have not paid either the vehicle registration, road taxes or both. Some 160,000 car-owners will benefit from this assistance if they pay the fees and register their vehicles within the three-month grace period.
The third group to receive tax help are those companies that are late with social security and health insurance payments. The draft provides a 100 percent elimination of fines and a 50 percent decrease in interest if payments are made within the three-month grace period. It is believed the government will have to excuse debts of up to ALL 900 million.
The amnesty: Reactions
The business sector hoped for something more than just a one-time amnesty from the draft, although the business sector was among the first to support the idea of fiscal relief. The Chamber of Commerce and Industry (CCI) of Tirana has created a task force to draft a new document that would regulate the assets of companies. The draft is not a fiscal amnesty, but rather a “legalization of the assets,” according to Gjok Uldedaj, Chair of CCI Tirana.
Uldedaj said the legalization was a very important process. “For many years, the companies [operating in the market] have not had accurate listings of their assets on their balance sheets,” Uldedaj said. “There should be a regulation of these assets and resources which had not been declared.” Uldedaj said the current situation was both the businesses’ and the government’s fault.
The Chamber’s initiative would be a regulating reform, and not a mere “fiscal amnesty, a term that harms the business,” said Uldedaj.
Zef Preci, president of the Albanian Center for Economic Research, said the amnesty was a delicate path that might lead to a more stable budget. “If the government takes cautious steps, and follows a legitimate path, it can gain additional financial sources for the budget and more stability of the entire fiscal system for years to come,” Preci added.
The amnesty: The origins
The idea of a fiscal amnesty dates back to 1999, when then-President Rexhep Meidani proposed, for the first time, the implementation of tax relief. Although supported by the Governor of the Bank of Albania, Shkelqim Cani, Meidani’s proposal was rejected by national and international institutions.
In 2002, the world-renowned economist and strategist, Vladimir Kvint, recommended the socialist government, lead by Fatos Nano, implement the amnesty. Kvint had calculated that the budget would realize revenues of some $6 billion from an amnesty.
The new government of Sali Berisha, which came to power after the 2005 elections, set the enforcement of tax collections as a priority, saying that they would work to find and penalize those privileged by the socialist government. In 2005, Minister of Finances Ridvan Bode said that unpaid taxes and fees added up to $400 million. The same year, the newly appointed Head of Albanian Customs, Perparim Dervishi, said companies owed the state ALL 2.5 billion in customs fees.
It was only in May 2007 that fiscal amnesty started to be discussed in political and business circles. Konfindustria sent an official request to Prime Minister Sali Berisha asking the government to implement the amnesty. Since then, experts have discussed the issue, dividing themselves into two opposing camps. Most of the experts expressed their concerns that a full fiscal amnesty would become a penal amnesty, relieving some companies from the consequences of their illegal activities.
