TIRANA, May 31 – “The private sector is not in good mood. While budget figures are optimistic, businesses report quite a different picture. They say the tax administration is suppressing them and this does not help local businesses expand or foreign investors come.”
The conclusions were made by the IMF resident representative in Albania, German economist Jens Reinke, after the International Monetary Fund approved a seventh loan tranche as part of its three-year Euro 331 million deal with the Albanian government in early 2014.
Since the launch of a nationwide campaign against widespread tax evasion in Sept. 2015, the business community has often complained over the severity of the campaign and tough penalties imposed by the tax administration. A law envisaging fines of up to €70,000 on tax evasion was turned down by the country’s Constitutional Court earlier this year over “disproportionate” penalties to income and offences committed.
“We would like economic growth to be higher so that Albanians’ lives change but a better business environment needs to be established on this,” said IMF’s Reinke.
David Lipton, the IMF First Deputy Managing Director and Acting Chair, also stressed the need for further structural reforms to improve the business environment as critical for strengthening Albania’s competitiveness.
“The focus should be on early implementation of judicial reform, strengthening of property rights, and upgrading infrastructure and education. These steps will help pave the way towards EU accession and sustainable growth,” he said.
Finance Minister Arben Ahmetaj has also recently noted the tax administration should change its mentality and that taxes cannot be collected forcefully.
“We share the same stance with the IMF that it is crucial to keep the pace of reforms in the economy and that we will still have to work on improving the business climate and that increasing the country’s competitiveness and the fast implementation of the justice reform to open up a new chapter for Albania’s European perspective remains a challenge,” said Ahmetaj.
In a meeting with investors last week, the finance minister said the new fiscal package will focus on cutting procedures and bureaucracy rather than taxes, which remain a key concern for investors along with the highly perceived corrupt justice system.
One of the amendments of this new package deals with tax inspections, which are now to be notified by the tax administration at least 1 month prior to the actual inspection, while another amendment gives to the companies the right to auto-correct themselves without any penalty.
