World Bank experts have expressed skepticism today regarding the reduction of the VAT threshold from 5 to 2 million leks to the small business
During the presentation of the Regular Economic Report for the Western Balkans, Hilda Shijaku, Bank's expert, said the administrative burden to collect VAT on small business is low, while the benefit that may come from this initiative is low.
Bank experts stressed that they have no information on rising business costs.The World Bank's position is more or less in line with that of the International Monetary Fund, which claimed earlier that incorporating these businesses into the scheme will create more burden on the administration and will distract, rather than focus on large enterprises. This can affect the reduction of income.
IMF Permanent Representative to Albania, Jens Reinke, said that "after numerous estimates by our tax experts, we have strongly advised the government against lowering the VAT ceiling from the current level. Small enterprises account for half of all businesses, but bring only 2% of taxable transactions. Expanding the VAT system will be a very heavy burden on the sources of the Tax Department. Informality and tax evasion may increase and tax administration efficiency is likely to fall. Small businesses may also face an increased burden of requirements for reporting." he said.
However, the government continued its plan and the VAT for small businesses began to be implemented on April 1, causing numerous dissatisfaction with small businesses, which have sometimes closed the shades in a form of protest.
While Finance Minister Arben Ahmetaj insisted that the VAT scheme that includes small businesses is an important step in the fight against informality. According to the minister, this reform does not focus on generating income from small business, but the accuracy of large business declarations.