TIRANA, Oct. 19 – One out of five businesses inspected in the first 16 days of October was engaged in tax evasion, the tax administration has unveiled following the launch of a new nationwide campaign against informality.
Tax authorities say they conducted field inspections into 6,778 businesses, punishing 21 percent of them, some 1,423, for tax violations.
Authorities say they identified 323 informal workers who were put in the compulsory social security and health insurance system and closed down 212 companies not registered at all with the tax administration or caught failing to issue tax receipts for a second time.
Tax authorities say they also advised thousands of businesses urging them to self-correct and benefit from the partial tax amnesty that fully pardons only pre-2011 tax and customs debts. Fines and late-payment for the 2011-2014 are also pardoned on condition that full taxes, tariffs and social security contributions are paid until the end of December 2017.
Inspectors also identified some 810 businesses, apparently operating as small businesses below the 5 million lek (€37,000) VAT threshold to avoid paying the 20 percent VAT and the profit tax. Damage to public finances identified in the first two weeks of inspections is estimated at 170 million lek (1.25 million), 30 percent of which imposed in fines for alleged violations.
In a meeting with senior tax officials in early October few days after the launch of the nationwide campaign, the American Chamber of Commerce in Albania representing some of the biggest foreign and Albanian businesses complained about prolonged on-site audits by tax inspectors, holding back the normal running of business operations.
Since early 2017, Albania’s general tax administration has made available a hotline to assist businesses with tax related enquiries. Businesses can phone 0800 00 02 to get information on electronic filing, tax legislation and services offered by the tax administration.
Trained call center operators will be available to answer enquiries from Monday to Thursday from 09:00 to 20:00 and Friday and 16:00.
The Socialist Party government has announced a new campaign against informality and measures to further ease doing business procedures starting October 2017 in a carrot and stick approach following a tougher stance at the beginning of its first 2013-2017 term. The initiatives comes as the center left Socialist Party led by Prime Minister Edi Rama was reconfirmed for a second term out of the June 25 general elections, in a stronger mandate allowing it to rule without sharing power with allies.
The Socialist Party Albanian government has reconfirmed its intention to include small businesses in value added tax system as part of its renewed campaign against informality, saying that only handicrafts traders and municipal-run markets will be excluded from the 20 percent VAT. The reform is expected to trigger a hike in consumer prices starting next January and put a considerable number of small businesses engaged in retail trade at bankruptcy risk following already fierce competition by supermarket chains involved in the VAT system.
Under the current progressive tax legislation, enterprises with a turnover of up to 5 million lek (€37,000) are stripped of profit tax and VAT.
Businesses with a turnover between 5 million lek to 8 million (€59,000) pay a 5 percent profit tax and have to issue VAT receipt while businesses with a turnover of more than 8 million lek pay a fixed 15 percent corporate income tax. The 15 percent corporate income tax, one of the region’s highest, has been one of the main concerns for the business community after Albania abandoned its 10 percent flat tax regime in 2014.
