The new system the Socialist Party has proposed foresees progressive taxation of up to 10 percent for monthly wages of up 140,000 (Euro 978) and 13 to 22 percent for wages from140,000 lek to more than 300,000 lek (Euro 2,095).
TIRANA, May 28 – Opposition leader Edi Rama has clarified that the Socialist Party intends to apply progressive taxation only on personal income tax and dividends but not on company’s profits. Speaking at a conference organized by the American Chamber of Commerce in Albania this week on the country’s 2013-2017 economic perspective after next June’s general elections, Rama said only the 10 percent profit tax would be preserved from the current 10 percent flat tax on personal income and corporate taxes introduced in 2008 by the ruling Democratic Party.
“We are not in favour of progressive taxation when it comes to company’s profits,” said Rama adding that profit tax will be cut for small businesses and remain at 10 percent for big businesses.
“We have elaborated on the value of progressiveness as a value which clearly separates us from the other side and we will implement this in a classic way on the personal income tax and dividends,” said Rama, also leaving open a possible review of the profit tax on big businesses.
“In the first 100 days in power we will study the 10 percent profit tax for big businesses but only in cooperation with businesses,” added Rama, claiming that businesses in Albania pay 22 percent in profit tax if bribes and barriers are taken into consideration.
The Socialist Party says 95 percent of Albanians will save money from progressive taxation and has also made available an electronic calculator on its website where citizens can calculate how much they currently pay in personal income tax and how much they will pay under the Socialists. The new system the Socialist Party has proposed foresees progressive taxation of up to 10 percent for monthly wages of up 140,000 (Euro 978) and 13 to 22 percent for wages from140,000 lek to more than 300,000 lek (Euro 2,095).
The Socialist Party also says it will lift the 20 percent value added tax on a series of basic products and reduce VAT on agricultural inputs.
The Socialist Party leader says he intends to resume cooperation with the IMF to draft a new growth model based on production, services and rural development which he says will create 300,000 jobs.
Ahead of the June 23 general elections, the ruling Democratic Party has lifted the 10 personal income tax only for people receiving monthly wages of up to 30,000 lek (Euro 210) and says it will continue applying the 10 percent flat tax on personal income and corporate taxes as a successful reform increasing the country’s competitiveness.
Under a recent law, private sector employers who hire young men and women aged from 16 to 30 years old have had compulsory monthly social security and health insurance contributions covered by government in case they employ them under six-year contracts. Social security contributions currently stand at 24.5 percent, of which 15 percent is paid by employers and 9.5 percent by employees. Meanwhile, health insurance contributions are at 3.4 percent, shared by 1.7 percent between employers and employees. Government has also halved annual car taxes and lifted the 20 percent VAT on imported machinery and equipment for investments of Lek 50 mln (Euro 351,000) or more.
