IMF advises against changing taxes

TIRANA, March.27 – The International Monetary Fund declared in a press statement that it had received proposals from the Albanian government for further changes in tax rates. The IMF is currently evaluating these proposals, but they will be discussed in detail during the upcoming IMF review mission to Tirana scheduled for April 25-May 8.
The IMF expressed a belief in the Albanian tax system as an overall sound system. The statement commented that any further reduction in tax rates should first focus on the social security contribution rates.
In a second step, one could envisage parallel reductions in the top personal and corporate income tax rates. Any reduction in the VAT rate should only be considered last. Any such reduction in tax rates should be undertaken only at the backdrop of sustained improvements in revenue collection. The IMF confirmed its intent to work with the government in a constructive way, conditional on that the already agreed medium-term fiscal path is not weakened and based on international best practice.
The statement closed with a strong recommendation against changing tax rates half way through the year. This is particularly important for the corporate income tax, which is an annual tax. It also reiterated the fact that there are many other variables that remain much more important for an improved business climate than the corporate income tax rate.