Taxes in Albania are grouped into three main categories: (a) indirect taxes (VAT, excise, gambling and other indirect taxes), direct taxes (income tax, personal income taxes, taxes on capital); (b) local taxes, and (c) social and health security contributions. According to 2015 Doing Business Report for Albania, the businesses have to make 35 payments and spend 357 hours per year. The Global Competitiveness Report 2015-2016 states the tax rates and complexity of tax procedures as most problematic factors for conducting business in Albania.
Tax laws are not always enforced consistently or without discrimination. Some companies may consistently avoid paying taxes because the informal sector of the economy remains significant. There is also the perception that companies with political connections enjoy favourable treatment by the tax agencies. Despite some progress made in the modification of tax administration, such as the establishment of an e-filing tax system, corruption in tax services – particularly during tax inspections – persists, negatively affecting the business environment in Albania.
What has been done:
The Secretariat has prepared in close cooperation with business associations and based on the results of a survey it launched until mid-September, a paper on Tax Inspection with suggestions and recommendations for the improvement of this sensitive issue to the business.
Private companies acknowledge the significant measures recently undertaken by the Government, such as the new VAT Law and Customs Code, new IT system, ongoing efforts for improvements on automatic VAT reimbursement rules and procedures, designing of the new tax audit risk model, etc. However, there are still serious concerns related to the sustainability and clarity of the legal framework, implementation of tax procedures, and professionalism of tax administration, transparency and timely information of the taxpayers on the frequent legislation changes. On 5 October 2015, the Investment Council discussed the agenda item “Tax Inspection.” For more information on the Meeting materials, please visit here.