Taxes 2018, business sector makes its proposals: How will they change

Taxes 2018, business sector makes its proposals: How will they change
Next year’s tax package must be carefully drafted. This is the appeal that this category addresses to the political class, while the 2018 Tax Package is being discussed in Parliament now. Thus, small and large sized businesses have submitted their proposals as to how this package can be an efficient package without being a big burden for their private activity, before MPs give the green light to the approval of this package. So, the Association of SMEs has recommended a reduction of Value Added Tax to 12% as opposed to the current rate of 20%. It looks like for this category, it’s not enough that the government has exempted from the VAT scheme businesses with an annual turnover smaller than 20 million lek, but it demands more concessions regarding this tax, namely, a reduction of this tax to 12%. In this case, business argue that many countries of the region are applying a low VAT rate of up to 10%. On the other hand, this category of businesses is asking the government to exempt from taxes for a two year period any new business which will start up next year. Meanwhile, another request relates to the tax on business properties. The business sector is requesting for this tax to be calculated as 0.7% of the property value. Meanwhile, small sized businesses are also asking for the fee for the maintenance of their cash tills to be lifted and for the payment for social contributions to be reduced by 40%. On the other hand, another business organization such as the American Chamber of Commerce has submitted 23 comments and recommendations as to how the 2018 Tax Package could change.

This chamber goes even further by including in them proposals that relate to taxes which have not been included in the package, such as “the introduction of an excise for used IT equipment which are imported to Albania”, or “the lifting of customs procedures for spare parts with a value of up to 100 euros”. Furthermore, as far as VAT is concerned, this organization says that businesses which are very small, should not be included in it. “We are concerned about the capacity of the tax administration for the management of a large number of subjects which are part of the VAT scheme. The cost for the management and control of these subjects must be justified with the revenues that they generate for the budget”, businesses say. They also add that “the tax administration must not focus its attention on the small taxpayers”, but according to them, “the biggest losses for the budget are caused by large businesses”. “In this case, the best solution would be to classify businesses based on profit”, they further recommend.

CRITICISM

Too soon for a property tax based on the market value

It’s too soon for Albania to have a property tax based on the market value and not on a fixed rate. This is the opinion of the business sector concerning the new tax which has already been included in the 2018 Tax Package. Rejecting this tax, the business sector argues that currently, living standards in Albania are very low compared to other countries of the region, where this tax is applied as a percentage of the market value. This is why this tax should not be applied and should be left as it is. “It would be a burden on every Albanian household. It would reduce consumption and it would have a negative impact on the economy. Before such steps are taken, there should be an analysis of the livings standards to determine whether or not Albanian households can afford such tax”, the business sector says on this.

DEBATE

Local authorities: Uncompleted properties should be taxed

With the new property tax based on the market value, uncompleted properties should also be taxed. This proposal was made yesterday by the Municipality of Tirana as part of the debate between local government authorities on the 2018 Tax Package. So, agreeing to this tax in principle, this municipality is asking for this tax to be applied to properties under construction, as a way to address the problem relating to the fact that the construction of many properties has not been completed. “Our cities have been filled with unfinished buildings, which have never been completed. Up until yesterday, the law required municipalities to issue a modest fine for the extension of the construction permit, but the government has envisaged our proposal to impose the equivalent of 30% of the property tax on these buildings at the moment when the deadline for their construction permit has expired. This means that they start to pay tax on property”, the mayor of Tirana said.

RECOMMENDATIONS

Manufacturers: We want property tax for the activity of our sector to be 0.05%

Even the Albanian Manufacturers Union has submitted yesterday 9 proposals and suggestions regarding the new tax package. So, they demand that the new tax on property for properties used for manufacturing, to be 0.05%. On the other hand, they ask for excise on fuel raw materials to be lifted, while, as far as extra proposals are concerned, the manufacturing industry is also requesting the lifting of customs charges for raw materials that this industry uses, the reduction of the tax for several plastic products and the lifting of VAT on the import of machinery and equipment that national manufacturers use.

 

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