Investment Council discusses business concerns regarding VAT Refund

November 23rd, 2016

Chaired by the Minister of Economic Development, Tourism, Trade and Entrepreneurship, Ms. Milva Ekonomi, it was held today the IC Meeting with the agenda item, “On VAT Refund”.

Timely VAT refund, as per business requirements, has been problematic for long, creating difficulties in liquidity for companies in export and investment. Legal fiscal changes in the past two years have aimed ease of the VAT refund process, especially for exporting companies which export over 70% of their sales (the applicable law foresees automatic refund for these companies).

IC Chair, Minister Ekonomi emphasised latest improvements to the tax procedures. “The Albania Parliament has lately adopted the Law on Tax Procedures, consulted during preparatory phase with the business, by including as well a range of IC recommendations. In total, 37 tax procedures have been improved, a part of which, with the objective to change in whole the behaviour of the business and the attitude of the tax administration toward the business”, said Minister Ekonomi.

The Minister mentioned also the payment of late obligations toward the business, which amount up to 72.5 billion ALL in 2013, of which until end of 2015 around 18 billion ALL was VAT refund only.

During the discussion, Minister Ekonomi encouraged Tax Administration to keep high reporting standards to facilitate access to information of the business. Meanwhile, public services have been improved from the use of e-services. Communication with the business, through platforms such as Investment Council, has enabled businesses to report their real situation and concerns, and improvement of around 37 tax procedures comes exactly from the communication with the business. “This communication should be kept alive and forums such as Investment Council or NEC, should be used exactly for this purpose“.

Investment Council continued the meeting with the presentation of an analysis on the situation of VAT refund during 2013-2015, with the consultation of various businesses, chambers of commerce through the country as well as based on the findings of an online survey with the participation of 77 businesses, 80% of which with exporting activity. The findings and recommendations consist mainly in the necessity to meet the deadlines foreseen by the applicable legal framework, ease of the procedural burden (audits) for tax administration and business, transparency of the internal procedures (risk, etc.) in addressing VAT refund cases,  fiscal education of the taxpayers and increase of transparency of the tax administration.

In general, IC Members expressed appreciation for the improvement of the Tax Administration work, especially in regards to the VAT refund issue. However, it is required to raise as soon as possible the effectiveness of the use of the risk tax system, heading toward the automatic refund for all the exporting companies which export above 70% of their sales and for businesses without risk.

Deputy Minister of Finance, Mr. Ervin Mete, highlighted that there are some obvious improvements, based also on the results of the Survey, where 72% of business respond having received VAT refund. Meanwhile, Mr. Mete informed that the risk system will be entirely functional beginning next year, bringing further improvements to the work of the tax administration and business climate.

To date, IC has provided in total 45 recommendations, discussed in the previous meetings of the Council. Some of the (fulfilled) recommendations deal mostly with the area of tax procedures, made concrete lately with the approval of some changes on Law for Tax Procedures, approval of the Law on Bankruptcy and other actions of the Government in the framework of food safety or transparency increase toward the business.

Present in the meeting were representatives of the business, World Bank in Albania, Delegation of European Commission, European Bank for Reconstruction and Development, Deputy Minister of Finance Mr. Ervin Mete, representatives from the GTD, GCD, etc.

Recommendations of the Investment Council on VAT Refund will be submitted to the Prime Minister’s Office and Ministry of Finance for further action.

Investment Council is supported by the Ministry of Economic Development, Tourism, Trade and Entrepreneurship and EBRD – Italian Technical Cooperation Fund.

EBRD