New bill to lower VAT threshold to 3 million lek

TIRANA, June 17 – Government is drafting a new bill that could lower the threshold for businesses paying value added tax (VAT) to 3 million lek (30,000 dollars) of annual turnover, from 5 million lek currently, according to Finance Ministry sources.
Last January, government lowered the VAT threshold to 5 million lek, down from 8 million lek, in an effort to collect more taxes and avoid informality. The move put some 17,000 small businesses in the VAT scheme.
The next decrease of the VAT threshold, which government has not announced yet when it will become effective, is expected to put the majority of small businesses in the VAT scheme.
Experts say the new measures are expected to bring a wave of price increases.
A circular issued by the General Tax Directorate obliged all businesses which submitted balance sheets declaring an annual turnover of over 5 million lek in 2008 to be automatically included in the VAT scheme this year.
However, a considerable number of businesses closed down their activities to reopen new ones only to escape the new VAT threshold of Lek 5 million.