New package of reforms to increase production, employment

TIRANA, March 6 – Three months ahead of the general elections, the Albanian government has approved a new package of reforms aimed at increasing production and generating employment. Speaking in a government meeting on Wednesday, Prime Minister Sali Berisha said the new fiscal package which lifts VAT and customs tariffs on a series of products and machinery on industry, agriculture, farming and fishing was vital to keep the Albanian economy growing.
“After analyzing the general effect of the global, European and regional crisis, we reached the conclusion that interventions in two main directions are needed so that the Albanian economy keeps growing. Firstly, the promotion of production through the removal of every tax and tariff and secondly the intervention to promote employment. By completing the list with the new VAT scraps on every kind of VAT and customs tariffs for these machinery, equipment, inputs and products I believe we are giving a major boost to production in Albania,” said Berisha.
Lifting VAT on imports of machinery and inputs destined for agriculture, and paying taxes to private companies hiring newly graduates are the new initiatives Prime Minister Sali Berisha has announced ahead of the June 23 general elections as he seeks a third consecutive term with his Democratic Party.
Berisha says the 20 percent VAT will be lifted on every machinery and equipment destined for agriculture, livestock breeding, as well as fertilizers, seeds and saplings. He said the measure was aimed at supporting farmers by establishing new spaces for the creation and consolidation of small agricultural businesses.
To further boost employment among youth, the Prime Minister says he will strip private employers of social security contributions and cover expenditure for the qualification of newly graduates.
According to INSTAT’s 2009 labor force survey, some 21.9 percent of Albania’s youth are unemployed, and 70 percent of all young workers are exposed to informal employment.
Prime Minister Sali Berisha had earlier undertaken another step to reduce the tax burden for people receiving low wages. The 10 percent personal income tax, launched in 2008 as part of a flat tax reform, will also be lifted for monthly wages of up to 30,000 Lek (Euro 210). The proposal by the Prime Minister comes soon after the ruling Democrats approved last December a new fiscal package which lifts VAT on investments in priority sectors, reduces taxes on coffee importers and tightens measures against informality.
Government had earlier decided to lift the 20 percent VAT on imports of machinery and equipment as well as cement and steel for the construction of hydropower plants. The 20 percent VAT on imported machinery and equipment will be lifted only for investments of Lek 50 mln (Euro 351,000) or more.