TIRANA, Jan. 27 – The Albanian government has set reference wages on self-employed professionals in a move that increases their social security and health insurance contributions and is expected to be accompanied by higher service fees.
The decision comes after a last-minute amendment to the 2016 budget in late December forced the ruling majority to step down from its intention to tax self-employed professionals on social security contributions at maximum wages by setting new criteria on the kind of profession, the area where they operate, the job experience and the average wages in the public sector.
The proposal had been strongly opposed by private professionals in the law, health and engineering services whose social contribution rates were initially set to increase five-fold.
The government had initially decided in its 2016 fiscal package that self-employed professionals such as lawyers, notaries public, doctors and engineers would pay social security contributions at a maximum wage ceiling of 97,000 lek (€692) compared to starting from a minimum of 19,400 lek (€138) currently, with tax authorities hoping to collect an extra 1.1 billion lek (€8 mln). Experts expect the hike to translate into higher service fees for consumers.
The decision sparked fierce reaction and even protests by representatives of self-employed professionals who warned of bankruptcy and higher fees.
“We will go on strike and suspend all trials. There will be a boycott to all trials unless the bill is amended,” the National Bar Association had warned.
Associations representing pharmacists and dentists also opposed the increased tax burden as putting them at risk of bankruptcy.
Under the new decision made on Jan. 21, the Albanian government has set monthly reference wages ranging from 40,250 lek (€288) to 88,800 lek (€636) based on the type of profession and the area where they operate in the newly established 61 municipalities under the territorial reform.
The municipality of Tirana, the country’s biggest with a population of about 1 million people, will have the highest reference wages ranging from 52,300 lek (€375) for translation and interpreting jobs to 88,800 lek (€636) for jobs in the IT sector.
The municipalities of Durres, Fier, Vlora, Shkodra, Elbasan and Korà§a have been placed in the second category areas with reference wages ranging from 52,300 lek (€375) to 73,800 lek (€529).
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.
Under the new decision, the government has envisaged a 30 percent reduction in reference wages for new professionals during their first three years of operation and another 15 percent discount during the next three years. Pensioner self-employed professionals have been stripped of their social security and health insurance contributions.
