Government says small business threshold kept unchanged at 8 million lek in annual turnover, while the VAT threshold for small businesses will be 5 million lek turnover. Move will please large retailers, who have complained of unfair competition by smaller stores.
By Tirana Times Staff
TIRANA, Dec. 22 – Yielding to pressure, Prime Minister Sali Berisha said this week the threshold that determines whether a company is considered a small business for tax purposes will remain at 8 million lek in annual turnover. The government had earlier said it wanted to lower it to 5 million.
However, the Value Added Tax will shift to the lower threshold, despite the fact that it was one of the main reasons small businesses opposed the threshold change.
Mr. Berisha said the move meant the government was responding to the concerns of municipalities, which handle some of the fiscal revenues from small business taxes, while the VAT threshold change would offer a fairer competition.
“The small business threshold remains at 8 million lek annual turnover. All this type of business will pay, without exception, are small businesses taxes to municipalities and communes,” Mr. Berisha said in a press conference. “In order to protect businesses, and to combat evasion, the VAT threshold will be reduced for all businesses with annual turnover of more than 5 million lek.”
Reduction of the VAT threshold for small businesses came after lobbying by large retailers that have supermarkets in Albania, which see unfair competition by smaller stores that sell the same items but don’t have to charge VAT.
Representatives of large businesses have officially requested that the VAT be applied to all businesses, regardless of status, considering it part of a fair market economy.
The prime minister said the government’s work in this area aimed to fight informality and offer fair competition.
Reacting to the government’s move, the head of the country’s largest municipality and at the same time Albania’s opposition leader, Edi Rama, said the decision to keep the threshold as is would not help small businesses.
“There was no relief from the decision, simply the government backing off from the wrong decision,” Mr. Rama said.
The central and local governments have been embroiled in a tug war over the split of income from small business taxation. Some of it goes to local governments directly, while another portion is managed by central tax authorities.
