Association of Builders letter to Rama/ Fiscal prices will increase income tax on the sale and purchase of houses and infrastructure tax

2023-09-12 07:49:00, Aktualitet CNA

Association of Builders letter to Rama/ Fiscal prices will increase income tax

Illustrative photo

The Association of Builders of Albania, in a letter addressed to Prime Minister Edi Rama, requests the review of a series of construction laws, as they have increased the tax burden on the sector.

Among the main issues analyzed by the Association of Builders that increase the tax burden on both individuals and builders is the entry into force on July 28, 2023 of the decision to increase fiscal prices.

In addition to the effects of the property tax increase, the decision to increase the reference prices, according to the Association of Builders, will also increase the income tax liability for cases of sale and purchase transactions, even for those individuals who have carried out revaluation of houses.

"In the conditions where VKM no. 457 entered into force with the publication in the Official Gazette no. 112 dated 28.07.2023, for areas where the reference price has increased, the change will have an immediate effect on the finances of individuals and legal entities, owners of real estate.

But at the same time, the reference prices provided for in this VKM are used to determine the reference price for the effects of the tax application for the transfer of ownership provided for in the Law "On Income", thus giving an immediate impact on individuals who will carry out real estate transactions, including those who have recently carried out the revaluation according to Law no. 90/2019 "On the revaluation of real estate", it is quoted in the letter.

The Association of Builders emphasizes that the change in the reference prices according to this Decision gives an immediate impact on the construction activity, since these prices serve as the main factor for determining the value of the tax in infrastructure and in monetary values ??replacing the tax 3 % of the contribution to social housing (according to the practice adapted by the Municipality of Tirana with VKB No. No. 105, dated 25.10.2019) and consequently also on Income Tax.

The Association of Builders proposes that the entry into force of the decision with the increased fiscal prices be gradual or that the application against the developers is only related to projects that start and end after the entry into force of the decision.

A serious concern for the construction sector is the contribution of the private sector (limited only to the construction sector) in social housing to the extent of 3% of the functional construction surfaces owned by the investor/developer. Since this law contradicts the Constitution, the Association of Builders suggests its repeal.

The Association of Builders also requests the revision of the infrastructure impact tax, especially in Tirana, where they identify the level of 2-6% as more appropriate and propose that the method of its calculation be oriented towards cost.

Regarding the real estate tax draft law published for consultation by the Ministry of Finance, the Builders' Association suggests that it is necessary to make a new cross-sectoral review, since the tax in the form that is conceived in the new Draft Law presents a lot of ambiguity for the form of its calculation, application and collection.

Regarding the legal framework for public procurement; the concession; PPP, according to the builders, legal provisions should be adapted according to which, in case of significant price fluctuations in the international and national markets, price variations should be recognized, as provided in the yellow and red books of "FIDIK" for all public works contracts, whether they are funded by the budget, organizations or foreign funding./ Monitor magazine