Gov’t looks to end tax favors for banks

TIRANA, Oct. 18 – With the local banks registering good profits even in the midst of the global economic crisis, Albania’s Ministry of Finance is looking to revise the fiscal framework that gives tax advantages to the banks.
In the latest fiscal package being prepared by the ministry, it proposed that banks can no longer deduct bad loans from balance sheets, and therefore must pay 10 percent on that amount in taxes
This significant change for banks is being discussed with business associations in
the consultation process before being submitted to the government for approval.
“This mitigation measure for banking companies has been in force with the aim of promoting the development of the banking sector the second level in Albania,” the ministry says. Now that the system has gained strength, support is no longer needed.
Overall, the tax system for banks has not suffered significant changes in recent years, giving banks the opportunity to operate freely, as the formal sector economy, where almost every action performed is recorded and monitored.
The banking sector, which at first seemed like most affected by economic crisis, in fact resulted in considerable increase in profit for the year 2009. And since 2010 is considered a positive for banks, which essentially had the government purchasing bad debt from them.