Konfindustria against WB recommendations

TIRANA, Oct. 22 – Albania’s business community represented by the Konfindustria association some of the latest tax recommendations by the World Bank run counter to the Albanian reality. The Konfindustria association says the World Bank’s simultaneous requests for an increase in taxes through progressivity and a reduction of informality run counter to each other when it comes to an economy where informality rates are at around 50 percent and state institutions are professionally weak and have problems with the control of the territory.
“An increase in taxes under such circumstances would unfairly affect businesses and fair citizens as happens with the payment of electricity bills,” says the association.
The Konfindustria estimates that at a time when the Albanian economic growth for 2013 is expected to range between 1 to 2 percent, when lending is at its lowest historical levels and tax evasion is at high levels, the right way to overcome the temporary difficulty in the Albanian public finances would be a mix of the fight against tax evasion, an increase in the taxpayer basis and promoting domestic and foreign investments through low tax policies.
“All regional countries, of which EU members Bulgaria and Romania which compete in the attraction of foreign direct investment apply the 10 percent tax on company income. Meanwhile, Montenegro is applying a 9.5 percent tax rate,” says Konfindustria.
Konfindustra says that elements of progressivity can be applied only in legally limited markets which because of limited competition exceed average profits.
In its 2013-2017 programme, government says “the profit tax on big businesses will be at a higher rate compared to the current level in order to reflect the principle of fair taxation and the need for big companies to contribute more than small businesses which operate through self-employment. Personal income tax will be changed into a progressive scheme, by increasing the fiscal burden on higher wages and lowering it for the lower and mid-wages. There will also be new legislation regarding transfer pricing in accordance with OECD models.”