TIRANA, Nov 23ؔhe latest Paying Taxes 2009 report published by global consultancy PricewaterhouseCoopers (PwC) completely shatters Albania’s claim to be on one of the tax heavens both in the region and the world. The tiny Balkan country ranked 143rd in the world regarding the ease of paying taxes. Albania ranked 140th in number of tax payments with 44. It ranked 95th in hours spent per year to pay taxes with 244 hours, and 129th in total tax rate (TTR) which amounts to 50.5% of commercial profits. TTR measures the amount of all taxes and mandatory contributions borne by the business in the second year of operation, expressed as a percentage of commercial profits.
This is the third Paying Taxes publication based on the paying taxes indicator from the World Bank – IFC Doing Business project. The project assesses the ease of paying taxes as part of a broader analysis of regulations relevant to domestic, small to medium sized companies in 181 economies around the world. It does so by assessing the time required for firms to prepare and file returns and pay taxes; the number of tax payments per year; and the company’s total tax liability as a percentage of commercial profits.
Albania has continued the trend of reducing the profit tax rate by cutting it down to 10%.
The reform has been hugely advertised by the government as a measure to create an attractive business environment and boost foreign investments in the country. But so have done its closest neighbours, namely Macedonia and Montenegro, which also cut down their profit tax rate to just 10%
However, the report remains one dimensional and the Albanian government seems inclined to continue its reformation of the fiscal system and improve the country’s business climate and competitiveness, at least in the key sectors of the economy. The value added tax (VAT) is expected to be cancelled for input products and machineries in the manufacturing sector, while VAT on energy prices will be reduced is expected to be reduced by half within the next two years. The creation of new administrative courts, a main request of business in the recent years, is expected to greatly reduce corruption and bureaucratic barriers that businesses usually face.
This is the third Paying Taxes publication based on the paying taxes indicator from the World Bank – IFC Doing Business project. The project assesses the ease of paying taxes as part of a broader analysis of regulations relevant to domestic, small to medium sized companies in 181 economies around the world. It does so by assessing the time required for firms to prepare and file returns and pay taxes; the number of tax payments per year; and the company’s total tax liability as a percentage of commercial profits.
Among Southeast European (SEE) countries, Bulgaria records the highest total tax time (which measures time to prepare, file and pay three major types of taxes and contributions) of some 616 hours per year. Macedonian businesses spend only 75 hours for tax procedures, the lowest value among SEE countries. In Romania, companies have to pay 113 taxes in the second year of operations, the largest number in the world
Maldives and Qatar top the list worldwide with only one tax per year, the report showed.
SEE Table (ranking in brackets)
Tax Payments TTR Tax Time
Albania 44 (140) 50.5% (129) 244
Bosnia-Herzegovina 51 (151) 44.1% (97) 428
Bulgaria 17 (52) 34.9% (55) 616
Croatia 17 (52) 32.5% (40) 196
Macedonia 40 (127) 18.4% (12) 75
Moldova 53 (154) 42.1% (90) 234
Montenegro 89 (177) 31.8% (37) 372
Romania 113 (181) 48.0% (119) 202
Serbia 66 (172) 34.0% (49) 279
Slovenia 22 (70) 36.7% (70) 260
