Lower Value added Tax next year

TIRANA, Nov. 15 – Finance Vice-Minister Florian Mima presented to the economy Commission of the parliament a plan drafted by the corresponding administration for lowering the Value Added Tax by one percent by mid-2007. The new Vat is thus calculated to be 19 percent. A different rate of six percent will be applied to the energy sector and the Ministry is studying the feasibility of a reduced rate for agriculture as well. Starting 2008, the government has decided to apply a flat tax rate of 17 percent, despite the concerns that the International Monetary Fund has expressed in relation to this decision. VAT revenues account for the majority of all tax related revenues. The budget predicts 85.4 billion lek revenues from VAT collections for 2007. This will mean a 12.4 percent increase compared to estimated figures for 2006. Projected GDP value of Vat is 8.69 percent. The Economy Commission convened to discuss the budget, which was approved in principle by the parliament despite strong disagreement from the opposition parties. VAT was applied for the first time in Albania in 1996 and the rate was 12.5 percent. For the last eight years the tax was fixed at 20 percent.