Anti-Informality Action didn’t Meet Expectations in First Month

Anti-Informality Action didn’t Meet Expectations in First Month

TIRANA, August 22

In July 2019, value-added tax and national taxes registered a decrease

The income that the administration has collected by taxes and customs, in July 2019, that coincides with the start of the action against informality was a total value of Lek39.2 billion, according to fiscal statistics published by the Ministry of Finance and Economy. Compared to the same month of 2018, the income had a minimal increase of 0.9%. Taking into consideration the inflation, which is around 1.5% and the economic growth of 2%, the real income is in fact in decrease.

The poor performance of last month was affected by the value-added tax, whose income registered a decrease of 3% compared to July 2018, reaching the total value of Lek12.6 billion. The value-added tax is a direct indicator of the consumption in the economy of a country, and even though the month of July is supposed to have a big consumption because of the summer tourist season, it didn’t reflect in the budget. Also, last month the national taxes (mainly annuity), decreased by 30%. Even though this was the first month of the action against informality, sources by the finances confirmed that it is still early to expect for clear results, and the effect will be more noticeable when are collected the data at the end of this month.

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January-July 2019, gave better performance, thanks to income tax and local tax   

In total, for the first 7 months of 2019, the income of the budget was Lek265.3 billion, with an increase of 3.7% on an annual basis. The main effect of this expansion gave the income tax, which contributed to 55% of the total income. The income tax, for the period January-July 2019, were up by 25%, reaching the value of Lek26 billion. The main reason is the lowering of the tax, from 15% to 8%, where it was included the undistributed dividend of previous years, which the subjects had a deadline to distribute it until 20 August 2019.

The income of value-added tax, the most important indicator in the budget, decreased by 3% during the first 7 months of 2019, registering the value of Lek78.4 billion. The decrease came as a result of the decrease of the internal value-added tax. A while ago, the Ministry of Finance and Economy, confirmed that they have noticed a fall of declarations by the private businesses and this was one of the reasons, that the action against informality started last month. Meanwhile, the businesses have confirmed that the lowering of the threshold of the value-added tax, from Lek5million to Lek2 million, effective since March 2018, has increased further the evasion in the small subjects, which don’t receive a bill in order to not surpass the threshold of value-added tax.

During January-July 2019, the income by the internal value-added tax was down by 13% compared to the same period of last year. Also, the income by health and social insurance were up by 5.6% and 6.2% respectively. Lastly, the better performance gave the income by the local power too, affected by the local tax, which was up by 30%, as a result of the income by the infrastructure tax, where the city of Tirana gave a high number of construction permits.


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