Analysis 08 Nov 17

Resistance Grows in Albania to Rama’s Tax Reforms

Controversial reforms designed to curb the grey economy by forcing small firms to pay VAT, among other things, are coming under increasingly hostile scrutiny.

Gjergj Erebara
BIRN
Tirana
Full moon is captured above Plaza Hotel in Tirana, Albania on 14 November 2016. The Government of Albania had proposed many tax cuts for luxury hotels and adding more taxes on small shops. Photo: Gent Shkullaku/LSA

Albania’s parliament has started discussing [link in Albanian] controversial tax reforms, in a debate that has quickly expanded to include businessmen, media, unions and often hostile critics.

The IMF and many local experts advise against the planned changes, arguing that cuts in VAT on big businesses - and imposing VAT on smaller ones - will greatly complicate the work of the tax administration, possibly for little benefit.

Despite the flak, Edi Rama’s Socialist-led government has moved on with its plan, sending it to parliament.

The changes include cutting VAT from 20 to 6 per cent for four and five-star hotels and their business operations.

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