IMF Doesn’t Agree With Government’s Decision to Charge VAT to Small Businesses

TIRANA, October 12

The International Monetary Fund (IMF) doesn’t quite agree with the Albanian government regarding the changes to the flat rate VAT scheme for small business, Top Channel reported on Wednesday. Prime Minister Edi Rama declared during the last week that small businesses will be charged VAT while the tax rate will remain zero.
According to the media sources, IMF’s mission expressed reserves about this initiative, and it also gave arguments about this stance.
According to IMF, changes to the flat rate VAT scheme for small businesses, can create problems for the tax administration and increase the cost of tax administration thus, it will not reflect the expected revenue to the state budget.
If 70,000 small businesses will be charged VAT, the tax administration will need to review about 100,000 more tax returns at least once per year quarter.
At the same time, tax inspectors will need to scrutinize hundreds of subsidy applications from the part of small businesses and this will complicate the work of the tax administration.
This is not the first time that IMF expresses its skepticism regarding this initiative that has been discussed in other cases. In any case that the government tried to implement such initiative it faced IMF’s stance, which is the same not only in Albania but in other countries too.

News Source: TCh