TIRANA, March 25 – Three months ahead of the general elections, Prime Minister Sali Berisha has accepted a perennial request by tourism operators to reduce the 20 percent value added tax and pass a law that excludes investments in mountain tourism from taxes for seven years. In a meeting with tourism operators in Durres last weekend, Berisha said he supported the idea of reducing VAT on several tourism services including hotels considering the successful experience of regional countries. “I agree with the proposal and discussions to lower it to the minimum level will start soon,” said Berisha.
Zak Topuzi, the head of the Albanian Tourism Association (ATA) said Albania’s fix tax rate of 20 percent on tourism makes Albanian tourism less competitive compared to regional countries where VAT on tourism is below 10 percent.
“Analyzing the issues the private sector faces, and following the experience and policies of neighbouring countries, we argue that the need for stimulating fiscal policies and a reduction of VAT in hotels is a necessity,” said Topuzi.
The opposition Socialist Party has already announced its plan to reduce VAT on tourism to 7 to 12 percent.
During the past few years, the Albanian Tourism Association (ATA) has repeatedly demanded a cut in the value added tax (VAT) from 20 percent to 8 percent and a decrease in accommodation taxes paid to local government units from 5 to 1 percent. According to Albanian tourism operators, high taxes are being reflected on additional costs and more Albanians choosing to spend their holidays abroad because of competitive and often lower prices. Tour operators are also worried about the presence of urban waste in coastal areas, as well as relatively high prices of bank transactions, electricity and oil. “We are not competitive with regional countries considering that the current VAT rate is 20 percent at a time when 20 out of 27 regional countries have a VAT rate lower than 10 percent,” ATA representatives said earlier. Registration of the tourism businesses with the National Registration Center, a rating system for hotels, higher state funds on tourism, better promotional campaigns and waste management were some other requests ATA made to the Tourism Ministry.
Albania lost six places in the 2013 Travel and Tourism Competitiveness Index, ranking worse to its regional competitors mainly due to poor business environment and infrastructure. The report published by the World Economic Forum surveying 140 global economies ranked Albania 77th, compared to 71st a couple of years ago, with a total score of 3.97 on a 1-to-7 scale, sandwiched between Ukraine and Armenia, leaving behind only landlocked Serbia, Bosnia and Herzegovina and Moldova among European countries.
Car taxes
Prime Minister Berisha also asked Transport Minister Sokol Olldashi to halve the annual taxes on used cars. “This is a concern raised by many citizens and at the same time provides a solution to an injustice which punishes those who can’t afford having a new car,” said Berisha.
In late Sept. 2011, a new law unblocked the sales of second-hand cars whose transactions had dropped by 25 percent during the first eight months of 2011.
The removal of customs duties was accompanied with a new taxation system based on cars’ age, the engine capacity and the kind of fuel they use. The new law excludes cars produced during the past three years from their annual taxes but applies a progressive coefficient of 0.18 for cars produced in 2009 and a +0.01 coefficient for each year before. The tax is calculated by multiplying the car’s engine capacity (cc), with a progressive coefficient starting at 0.18 and a fixed tariff of 25 Lek for diesel cars and 20 lek for petrol ones. The new formula sharply increased taxes for cars older than 10 years and kept annual taxes for newer cars at the same or slightly lower levels.
After a sharp increase in late 2011 following legal changes lifting customs duties, car imports slowed down in the first three quarters of 2012 when they rose by only 7 percent, according to data published by state Institute of Statistics, INSTAT. Data show some 30,386 cars, mostly second-hand ones, were cleared through customs in the first nine months of 2012, compared to 28,391 during the same period in 2011. Having to pay only 20 percent in value added tax, some 51,894 cars were imported in 2011, more than treble compared to 2010.
