World Bank and IMF have proposed a new strategy for the management of public finances during 2014-2020 period. According to WB, there are several changes that should be made in order to increase the income taxes for businesses, the enlargement of the basis of VAT, changes in the excise and personal income tax.
Based on the analysis of World Bank according to the collection of incomes by Albanian government, only for the 53% of consumption VAT is applied. These data show that the war against fiscal evasion must intensify. Also the report suggests the increase of VAT for corporations. According to specialists, there is a high potential for the increase of incomes derived by corportation’s income taxes, since there are many companies that hide their earnings.
Recommendations given by the World Bank and IMF report:
– The necessity to enhance VAT
– The application of VAT for imports
– Application of VAT on the sale of new builidings (VAT is applied at the rate of 0% on new build Albanian property)
– Income tax to increase with 20%
– Government must improve the collection of incomes derived from cigarettes, fuel, coffee and alcohol’s excise.