Fiscal package is changing again, an increase of property tax is proposed

Next year’s taxes are rising, although they have been approved in principle by the Members of the Parliament of Albania. But, it looks like until the voting of the final version of the 2018 Fiscal Package, they will change again. An example for this is tax on property. Yesterday, the minister of Economy and Finance, Arben Ahmetaj proposed to members of the parliamentary economy committee, an increase of this tax for businesses. According to his proposal, this tax would increase from 0.15% to 0.2%. 0.15% was the initial rate in the first version of the Fiscal Package approved by Parliament.

This proposal affects all premises used for economic activities and not residential premises. According to experts of the ministry of Finance, this tax is being examined by them, but it will also be examined by Parliament’s experts and it will be voted once the 2018 Draft Budget reaches parliament for its final reading. It is not yet known whose this proposal was, but given that it was presented by the minister of Economy and Finance, it means that it has been taken into consideration by government institutions. This shows that in practice, taxes of this country and budget’s items can constantly change, even after they are approved in principle. This change can even be made through a decision of the Council of Minister and not through a new bill, like the Constitution of the country stipulates. This issue prompted debates between members of the parliamentary economy committee, while a part of them considered this incentive illegal.

Government is planning to set off the rise of the new tax by exempting several categories

The government is planning to set off the increase of the new property tax for next year by exempting several different categories of the Albanian population from this tax. Let us mention the fact that the draft submitted yesterday by experts of the ministry of Finance, exempts heads of families and pensioners, those who are on social welfare or disabled people from this tax. This property tax will not even be paid by people who receive disability allowance or people who have nobody at home with a job. But, the government will also exempt from this tax people living in rural areas or urban areas and their family only consists of pensioners. Even this was an amendment that the government had included in a special draft after the approval in principle of the 2018 Fiscal Package. This also confirms the idea that until its final reading, we are expecting to see other surprises in the tax scheme.

Businesses: Tax on property should not apply to the first home

 People should not pay property tax on their first home. This proposal has been made by businesses, which have supported individuals. According to their proposal, individuals should only pay tax on their second home. It was the chairman of the Chamber of Commerce, Nikolin Jaka, who said in front of the members of the parliamentary economy and finance that such tax would stimulate individuals even more to purchase a home. Jaka also mentioned progressive taxation. According to him, this taxation should apply on the second home, third home and so on, adding that the 8% infrastructure tax on the price of sale for civil constructions doesn’t have any impact on investments.

Tax property will also apply on homes which have not been yet legalized

Tax on property will also apply on those homes which have been built without permit and not yet legalized. This is a tax obligation that does not exempt this category. This is stated by the draft submitted by the ministry of Economy and Finance as part of the discussions taking place on the new Tax Package for next year.  Yesterday, experts of this ministry have held debates with MPs of the parliamentary economy and finance economy. A part of these MPs have considered the application of such tax to this category of people as unfair. Based on the argument given by them, it is not fair that people who are waiting to receive their property certificate, to pay tax on their property.

Value Added Tax, another tax which is expected to change again

Value Added Tax is another tax which is expected to change until the final reading of the 2018 Fiscal Package by the Parliament of Albania. This seems to be the case judging by the discussions held so far between MPs and stakeholders. In yesterday’s meeting of the parliamentary economy and finance, the opposition proposed to the government a social policy, which relates to this tax. So, the opposition has proposed the reduction of Value Added Tax (VAT) for basic day to day products such as oil, bread, sugar and other basket products. But, this proposal did not find the consensus of all the members of the committee.