Investment Council Meeting – Consultation of the Draft-law “On Invoices and the System for Monitoring Transactions”

Tirana, Thursday, 29 August 2019 / Albania Investment Council (IC) held a special meeting at the request of IC Chair, Minister of Finance and Economy, Ms Anila Denaj with the topic of discussion: Consultation of the Draft-law “On Invoices and the System for Monitoring Transactions.” Participated in this meeting the Minister of State for the Protection of Entrepreneurship, Mr Eduard Shalsi, Deputy Minister of Finance and Economy, Mr Elton Haxhi, Director of the General Tax Directorate, Ms Delina Ibrahimi, as well as other senior representatives of public institutions, the business community (AmCham, FIAA, DIHA, Confindustria Albania, UCCIAL, Vodafone, A.E.D.) and development partners (EBRD, EU Delegation, IFC). The meeting was also attended by about 30 observers, representatives of foreign embassies in the country, chambers of commerce, business associations and agencies operating in the area of economic development, etc.

In her opening speech, Minister Denaj emphasized the importance of this draft law, which aims at establishing a new system of invoicing and monitoring of transactions carried out by the business in the country. Among other things, the main purpose of this draft law is to reduce the level of informality in the economy, by fighting unfair competition and increasing the efficiency of tax administration.

Minister Shalsi commended the wide consultation undertaken for this draft law and underlined that the working group set up for the implementation of this important project should find ways to simplify the understanding of the draft law, e.g. what ‘fiscalization’ would mean for a small, medium or a large business.

The draft law foresees that starting from 1 January 2020, all transactions between businesses and customers will be reported to the Tax Administration in real-time based on the new technology system. Starting from 1 January 2021, e-invoice becomes mandatory in transactions with public bodies (B2G), while from 1 July 2021 e-invoice becomes mandatory in business-to-business (B2B) transactions.

Representatives of the business community and development partners in Albania reinforced their support in principle of this important initiative as part of the efforts made for formalization of the economy, while they raised several issues about the draft law, which are summarized as follows:

1. The deadlines for implementing complex fiscalization procedures seem to be very tight, especially as regards the entry into force of fiscalization for B2C transactions. The implementation of fiscalization procedures is complex, while the capacities of the small business, in particular, to absorb this development within such a short period is limited, and the institutional capacities to administer it are also debatable.
2. The implementation of the law requires the adoption of a considerable number of by-laws that are not yet prepared and consulted with the stakeholders. These bylaws are often even more important than the law itself, as they regulate specific procedures with a direct impact on certain categories of businesses. Failure to consult and discuss them in a timely manner can undermine the proper and efficient implementation of the law and its positive purpose of enabling business formalization through various technological options.
3. There is no proper cost-benefit analysis that would make clear to all the parties, the business on the one hand and the public administration on the other hand, the practical effects of this law.
4. Many articles of the draft law need more compliance with a number of laws such as the one “On VAT” and “On Tax Procedures” to avoid overlapping in deadlines and procedures. It was also considered necessary to consider the different business models that have a specific regulatory framework and require further discussion at the technical level.

The IC Secretariat underlined the importance of good capacities of the tax administration to properly implement the procedures provided for by this law, as well as the importance of consulting the by-laws that are expected to be published afterwards.

Head of General Tax Directorate, Ms Ibrahimi explained that within November 2019 it is foreseen the training of tax administration to be involved in the implementation of this law and stated that the cost-benefit analysis of this draft law will be published on the state public consultation website.

Minister Denaj informed the IC members that the deadline for consulting this draft law has been extended until 15 September 2019 and upon completion of all the consultation process, the Ministry of Finance and Economy will work on consolidating all the comments collected during this process to improve respectively this draft law.

Full meeting materials will be published soon on the IC website. For more information, please visit us again.