Fighting informality in economy and within tax administration
The title above comes from web page of Prime Minister’s Office of Albania Mr. Edi Rama. Another title is “Tax receipt closes path of fiscal evasion”. These are, in essence, slogans of Albanian Government to combat tax evasion, which is 50 per cent according to declaration of Finance Minister Mr. Shkëlqim Cani in front of representatives of Albanian media, whereas 33 to 35 per cent of economic activity is not included in Albanian fiscal system.
According to survey made by Ministry of Finance three areas are emphasized to be major areas of tax evasion (in real tax avoidance): personal income tax, social contributions and excise tax. In fact, from inside of large commercial companies (registered as large taxpayers to tax administration), I am informed that these taxpayers are paying employees partly by banks and related to these payments these taxpayers are paying social contributions; the rest is being paid in cash in order to avoid full payment of social contributions. These companies (or large taxpayers are known as supporters of Socialist Party and Socialist Movement for Integration – the latter was in coalition with Democratic Party before election of 2013). How pity!
On 31’st August 2015, 300 representatives from customs and tax administration were in national meeting called from Prime Minister Rama, who between the others about 300 days action of Albanian Government, said that this action is one of “top priority of his Government”, continnuing: “An operation to protect the consumer and to stand by entrepreneurs who are paying taxes and against theft chain which scientifically is called informality, but in Albanian language is called to steal.”.
Prime Minister Rama and six of ministers of his cabinet are following the action and having daily meetings with tax administration managers in regional basis in order to influence on businesses which are not registered and not paying taxes, or are making tax evasion.
600 teams comprising 2 persons each from customs and tax and labor inspectorate and police forces during 300 days period of time have and are making daily checks all over the country for having or not being registered, having or not cash register, issuing or not tax receipts, having or not price’s list, having or not registered employees for social contribution purposes and having paid or not excise tax.
In the meeting of Vlora Region Prime Minister Rama declared this massive action as “Economic Revolution”.
First and second day of this massive action of Albanian Government in main commercial roads of Tirana and Durrës and Fier and Vlora, etc, small businesses closed their premises (according to them) to protest against the repressive action.
September 7, 2015 Prime Minister Rama in a meeting with business community made last warn to those businesses making tax evasion and not issuing tax receipt saying between the others “.., we are in a war …”.
But, according to Albanian media the results in so far are as follows:
n In the National Centre of Registration (QKR) are registered 18 000 businesses in so far (only for the first days of September have been registered 2 500 businesses);
n Every day are being sold 300 cash register machines;
n There are selected 500 taxpayers on whom there is a doubt for making tax evasion (in fact tax avoidance);
n Six citizens are penalized for reaction against the police forces;
n Three tax inspector from South Region of Gjirokastra are arrested for being involved in corrupted activities; two tax inspector are arrested in Lezha;
n One waiter and the manager of small business are arrested because the waiter has bit a client in response of his asking for having a tax receipt.
Something from my personal opinion:
A friend of mine said me: “Dear Mr. S. Today I bought some electro housing equipments to company “X”. The manager gave me just one sheet of paper at the top of which I saw “Preventive” but not e VAT invoice.
September 7, 2015 I personally bought some electro housing equipments and I had VAT invoice (even in English language – Sales Invoice, because the owner of the business is known as one of privileged from former government).
According to Albanian daily media, The Minister of Economy Mr. Arben Ahmetaj declared these last days “… now we are moving to the big businesses…” in oil industry, mining industry, etc. This Minister is very active in this massive action. In the past from a English interpreter, assistant of the IMF resident in Albania and after making a one year master in economy at Harvard University he was appointed for 10 month as a General Director of Albanian Tax Administration. Then he was the owner in the telecommunication business (and was accused for corrupted activities from the opposite side in that time).
Moreover, Albanian Government since came in power has made three massive actions (against the thefts of electric energy, against the laundering money in gambling industry and the last one). Voices from the coalition have made some public declaration in order Albanian Government not to be aggressive against the entrepreneurs, especially against small businesses.
Albanian Government has increased public debt more than the former Government. Albanian Custom and Tax Administration have collected less money compared to the same period of the last year. The IMF team has not signed the Agreement with Albanian Government months before. That is the real situation in so far.