Personal income tax lifted for low salaries

TIRANA, March 27 – Majority MPs approved this week some changes to the personal income tax law stripping people who earn up to 30,000 lek a month from their 10 percent tax obligation. Deputy Finance Minister Alfred Rushaj said some 220,000 people receiving low wages would benefit from the changes which automatically provide them an extra wage. Its impact on the state budget will be at 2.5 billion lek.
Opposition Socialist Party MPs described the government initiative as electoral stressing the need for a full progressive taxation system.
Deputy Finance Minister Alfred Rushaj said some 220,000 people receiving low wages would benefit from the changes which automatically provide them an extra wage. It’s impact on the state budget will be at 2.5 billion lek.
Under the newly proposed scheme by Prime Minister Sali Berisha, all employees receiving up to 30,000 lek in monthly wages will be excluded from their 10 percent personal income tax. Under the current people receiving up to 30,000 lek (Euro 210), pay 2,000 lek in personal income tax as the first 10,000 lek is tax-free. The proposed changes foresee that wages higher than 30,000 lek will be taxed by 10 percent under the current scheme.
Some 158,000 people employed both in the private and public sector are expected to benefit from the scrap of the personal income tax for wages of up to 30,000 lek which will cost the state budget around 2.2 billion lek or USD 22 million.
The 10 percent personal income tax was launched in 2008 as part of a flat tax reform.
Albania has been implementing the 10 percent flat tax on salaries and corporate taxes since 2008 in an effort to improve business climate and attract more foreign direct investment. The opposition Socialist Party has proposed a full progressive taxation system to replace the 10 percent flat tax in an effort to lower tax burden for people with low income.