TIRANA, Sept. 30, 2022 – International representatives in Tirana increased pressure Thursday on the Albanian government to ditch a proposal to provide fiscal amnesty to undeclared income from abroad, which experts say would open a backdoor to funnel more dirty money into the economy.
Albania’s Socialist prime minister, Edi Rama, appears unwavering in his plan to offer amnesty and legalize funds for individuals who declare up to 2 million euros in cash assets, taxed at 7 to 10 percent, without having to disclose the origin of the money. Those who go through the process would be guaranteed protection from any criminal or administrative penalties related to not having declared the assets and their origin.
Rama called a meeting with the EU, U.S. and U.K. ambassadors on Thursday to discuss the matter, and then chose not to attend himself by sending deputies, raising eye-brows in the process.
But the message he would have received in person at the meeting was made clear in a public statement by the Delegation of the European Union which reiterated that “the EU has serious concerns about the current draft law on fiscal amnesty” proposed by the government. The European Commission had previously also expressed serious concerns about the proposal, calling it a “substantial reputational risk for the country.”
U.S. Ambassador Yuri Kim chimed in on the topic during a talk show interview on Thursday night, saying it was a “terrible argument” to say dirty money was circulated in the West too.
“If you went down that direction, you would be putting into jeopardy Albania’s membership bid to become a member of the EU. And this is a country that will benefit tremendously from being a part of the EU,” U.S. Ambassador Kim said.
On Wednesday, Rama reconfirmed his determination to move forward with his initiative, saying “the fiscal amnesty will be done,” making it clear that despite being ready to listen to the remarks of international representatives, at the end of the day, his duty was to Albanians.
“We are persistent, yes and patient to clean all those corners from any kind of dust or optical illusion that there is dust there and then everyone will have their own conviction, but I want to repeat one thing: I am here elected by the Albanians, I do not represent any other country, nor am I here as an expression of the will of any other people, to be very clear,” Rama said.
Rama added the amnesty is aimed at releasing into the economy the funds that Albanian migrants have made abroad over the years through hard legal work but that it was done off the books or never reported to tax authorities.
”We are a country of migrants, who are heroes and have a lot of money under the mattresses,” Rama said in a television interview in April.
Local and international experts, however, have raised concern the move would also benefit individuals in possession of funds coming from criminal or otherwise illegal activities. Albanian authorities have failed to explain the math of how migrants working cash jobs, most of which don’t pay much, can build up assets of up to 2 million euros with their savings. Strong questions have also been raised about the ability of the institutions to prevent members of criminal networks from benefiting from this initiative, despite the established restrictions.
Albania is a candidate country for EU membership, and in July it received the green light for the official start of membership talks, a process aimed at aligning the country with European standards.
Rama said his proposal was unrelated to the EU integration process.
“We don’t want to do something that goes against any framework related to EU norms, principles, values and concepts,” he said.
The European Union spoke publicly about the proposed amnesty at the end of June at a meeting of the Subcommittee on Trade, Industry, Customs and Taxation between the EU and Albania. It expressed “serious concerns,” according to the minutes of the meeting, adding the initiative “would weaken Albania’s anti-money laundering controls, while doing little to increase the capacity of the tax administration to improve future compliance with tax requirements.”
It added: “Furthermore, because non-tax residents, including Albanians living in the EU or the Western Balkans, fall under its scope and are required to import cash in order to benefit from the amnesty, the current draft of the law raises serious concerns for member states of the EU and other partners, as well as a substantial reputational risk for the country”.
The political opposition is also against the proposal, but there are worries some MPs might act independently to support the initiative.
Democratic Party MP Jorida Tabaku said “the amnesty is not an initiative that serves Albania and Albanians.” She appealed to her colleagues from the opposition “to be clear and firm in their acts.”
“The time has come for them not to hide and oppose the fiscal amnesty law. A vote in favor of that law is a vote for Albania away from the EU and for a country that is even more dishonest toward its middle class,” Tabaku said in a statement.
The Socialist Party proposal has also faced strong opposition by the International Monetary Fund, the American Chamber of Commerce in Albania and many economic experts.
