MFE and IC Address Roundtable on VAT Subsidy and Informality

TIRANA, April 26

The Value Added Tax (VAT) subsidy and the fight against informality in the sectors of agri-processing, footwear and manufacturing, and exports were the focus of a roundtable held by the Ministry of Finance and Economy (MFE) in cooperation with the Secretariat of Albania Investment Council.
Representatives from 20 companies joined the open discussion led by Minister of Finance and Economy Anila Denaj.

They highlighted the need for VAT subsidies at the appropriate time. Thus, it could help to avoid companies from running into bottlenecks concerning payment execution. Moreover, representatives from the footwear and manufacturing sectors asked for a possible subsidy on income tax and social security contributions in cases of late VAT subsidy.
Further on, the effects devaluation of the Euro was among the main issues ranked by the companies attending the roundtable.
In the meantime, there was a request doe re-including the in the industry of aromatic and medicinal plants and herbs in the national and international grant schemes such as IPARD Like or IPARD 2 and more state grants.
They also raised issues such as too many payments for additional fees, staff training, environmental permits, potable water tests, electric power systems, etc.

Regarding the fight against informality, the business representatives said that fair business practices make the best ally for the government. Hence, they asked for the establishment of a working group through the Investment Council Secretariat or MFE, for making possible for businesses to raise issues in a structured way.

On her part, Minister Denaj said that MFE drafted a plan on quarterly VAT subsidies based on the First-In, First-Out (FIFO) principle.
She added that informality is a factor which has limited the state budget. Thus, more awareness is needed within the business community regarding the issue, but also for initiating a dialogue on suitable economic models.

Minister Denaj confirmed that the issues and proposals raised in the roundtable would be forwarded to relevant instances and experts. Various development partners have expressed their willingness and they are already supporting MFE to undertake an analysis of the fiscal policies, where it will be seen the impact of each fiscal policy. The minister invited businesses to contact IC Secretariat or her directly for the various issues they face.

IC Secretariat informed that this roundtable is held in the framework of monitoring business concerns tackled by the IC since 2015 (tax inspection, VAT reimbursement and informality). In the 2018 IC Survey (with 350 surveyed companies), it was noted a reduction in the business perception (compared to 2015-2017) on informality, an emphasis on the need for developing formalization strategies either at the firm level or at the sector level, for example, companies in the tourism sector confirm that “informality brings informality.” In addition, this roundtable proceeds the setting up of working groups by the IC, to discuss in further details systemic issues, tackled also by the Investment Council.

Investment Council has now a four-year experience of direct consultation on main business concerns either through individual consultations with the business and public (central or local) institutions or through annual surveys conducted to measure the progress of some important factors of doing business (tax administration, VAT reimbursement, informality).

News Source/Photo Credit: IC