TIRANA, Sept. 7 – As a new nationwide campaign against informality has already kicked off, the Albania government has proposed some new amendments to the tax procedures law, sharply increasing penalties on tax evasion.
A draft law approved by government which will have to be examined by Parliament before being turned into law envisages that big businesses with an annual turnover of more than 8 million lek (€56,000) will face fines of 10 million lek (€70,000) in case of not issuing the compulsory fiscal receipts or using cash registers that don’t comply, compared to 200,000 lek (€1,400) currently.
Fines on smaller businesses with an annual turnover of up to 8 million lek are also expected to increase to 500,000 lek (€3,500), up from 50,000 lek (€350) currently.
Businesses also face the risk of having their stock of goods seized in case of violations with fiscal receipts and cash registers.
The new draft law also envisages what Prime Minister Edi Rama has often quoted that “buyers have the right of not paying for goods and services they are provided in case traders don’t issue a fiscal receipt.”
The new legislation also foresees legal action by suing taxpayers in case of violations with fiscal receipts for a second time.
The bill also foresees no inspections on businesses whose financial reports have been audited by one of the Big Four audit firms which include “PwC” , “Deloitte” ,” KPMG” and “Ernest & Young” .
The new draft law also envisages the registration of IMEI Codes by mobile phone importers when paying customs duties. The initiative comes after the country’s Constitutional Court in late 2014 turned down on privacy grounds a government decision obliging phone users to register their International Mobile Station Identity, IMEI.
The start of the nationwide campaign against informality and tax evasion has been met with fear and rush to comply.
Some 600 groups of tax inspectors backed by police officers have started carrying out field inspections in a bid to give an end to widespread informality, estimated at around 30 percent of the country’s GDP.
The move has caused concern among businesses, which face heavy fines and seizure of goods, should they be found in breach of regulations.
The Albanian government says it targets collecting about 330 million dollars from the nationwide campaign which will last 300 days in a similar operation to the electricity campaign to curb massive thefts and collect accumulated unpaid bills which has brought an extra 100 million euros to the state coffers since its launch in late 2014, but affected household consumption.
A survey carried out by the economy ministry has shown around a third of businesses operating in Albania are not licensed at all, do not have cash registers or do not use them at all. Half of the businesses operating in Albania do not issue fiscal receipts, says the ministry.
Business representatives have hailed government’s initiative to curb informality, estimated at around 30 percent of the GDP, but say the nationwide campaign should be led without creating panic and using extreme measures.
Experts against heavy fines
Some accountants have considered the fines envisaged in the initial draft as too high and discouraging new businesses.
Sotiraq Dhamo, a renowned accountant and finance professor, considers the fines as exaggerated because of being unaffordable by most businesses.
“Fines are not meant to ruin but prevent and be affordable to pay. Otherwise, we will be under a situation when the imposed fines will be impossible to be collected,” Dhamo told local media.
Luan Bregasi, the head of Biznes Albania Association also opposes the high fines set in the new law, as promoting corruption among tax inspectors and the business community.
