TIRANA, Oct. 21 – While the key corporate and personal income tax will remain unchanged even for 2016, the Albanian government is planning some changes in the property and hotel accommodation taxes as new changes to the current tax system after major reviews in the past couple of years.
In its 2016 fiscal package, the Albanian government says that apart from buildings and agriculture land, it will also tax land classified as available for construction. While the tariff has not been decided yet, sources quoted by local media say every land owner will pay taxes despite using or not using the property.
The new fiscal package will also levy a fixed 140 lek/person (€1) tax on hotel accommodation compared to 5 percent of the fee currently due to abuses with issuing fictitious tax receipts.
The Albanian government has also pledged to revise downward the value added tax on tourism, currently at a fixed 20 percent rate, to 10 percent to increase the competitiveness of this sector compared to regional countries which apply differentiated rates of 6 to 10 percent.
With little space left for new tax hikes in the 2016 budget, the Albanian government says it is preparing to introduce a comprehensive reform of the property tax by the creation of a fiscal cadastre that will consolidate existing data.
“We commit to introducing a valuation-based property tax by end-2017. The reform will be undertaken in consultation with the Fund’s technical assistance. As a first step, we plan to introduce a fiscal cadastre to assess tax for each property by end-2016,” the Albanian authorities have informed the IMF.
A working group has been established and different options are being reviewed in consultation with technical assistance from the IMF.
Currently, there is a small annual tax payable on property in Albania. The amount varies depending on the size and location of the property
Finance Minister Shkelqim Cani has assured there will be no new tax hikes for 2016 .
“There will be improvements in some fiscal policies, especially in improving administration but there will be no interventions in the key laws of the fiscal system,” Cani has said.
According to him, the ongoing campaign against tax evasion launched last September will increase the taxpayer basis which in the mid-term will create space for lower taxes and higher public investments and wages.
In their suggestions to the 2016 fiscal package, Albanian and foreign business communities have called on government to revise downward key taxes and review the costly customs scanning concession which has increased costs.
The American Chamber of Commerce in Albania has appealed for a review downward of taxes on profit, dividend and personal income as an incentive giving the business community more room to develop and increase registration numbers.
While key taxes such as the personal and corporate income taxes remained unchanged, defying businesses calls for a return to the flat tax regime after the corporate income tax was raised by 5 percent to 15 percent in 2014, the tax burden in 2015 further increased by raising the withholding tax on dividends and rents and capital gains to 15 percent, increasing the circulation tax on fuel and imposing higher excise rates on tobacco. Since 2014, the personal income tax is being collected under a progressive system, increasing the tax burden on high wages. In addition, electricity prices rose for business consumers and around three-quarters of household consumers.
Albania’s customs administration says it has drafted some legal changes to a new costly scanning concession in the country’s customs points that will eliminate double payments for importers and exporters, especially during customs transit.
Starting Sept. 7, Albanian businesses are being charged for scanning services offered by U.S.-based Rapiscan concessionaire €22 for declarations of more than 1,000 euros with customs authorities and euro 5 for declarations of less than 1,000 euros. The scanning, intended to curb smuggling and tax evasion, has been made compulsory after a review of the concession contract reducing the initial 2013 tariffs.
