Businessman Artur Shehu breaks his silence: I am a long-time land owner in Zvërnec, I don't know the investors at all
Albanian businessman Artur Shehu spoke on the Opinion show...
Albanian businessman Artur Shehu spoke on the Opinion show...
Eduard Milushi, a software engineer by profession, unable to afford the prepayment of tax worth 1,250 euros/month, calculated by the tax administration, according to the declarations of 2023, is considering the possibility of transferring his business to Kosovo or to Estonia.
"Out of 20 working days per month, despite the fact that a self-employed person works day and night, unlike an employee with fixed hours, 10 days I have to work to repay the obligation of 1,250 euros per month and 10 days for expenses.
So I do a job that does not provide me with profit. For this reason, I am studying the possibility of opening a business NIPT in Kosovo, where the tax is 10%, or in Estonia, where fiscal facilities are offered".
Eduardi raises the concern that with the new law, his income is taxed 100%. He explains that despite the fact that he spends a significant amount of income as a function of work, it is impossible for him to document the expenses from the foreign online platforms for which he performs services.
"With the new income tax law, I was taxed 100% for the declared income, since I declared zero expenses, since I had no tax liability.
Even if I wanted to declare the expenses, with the nature of the work I do, it is impossible for me to document them through invoices. Over 90% of my expenses are online for marketing services on Google, for hosting on the Amazon platform, or Instagram.
None of these platforms issue invoices to NIPT Albania. Again, I asked these platforms for the issuance of invoices for the recognition of expenses, all of them have affirmed that they do not have an agreement for their issuance with Albania", he affirms.
IT is a sector that requires businesses to be coherently updated with innovation in order to remain in the market. Therefore, according to Milushi, IT professionals spend a large part of their income on online courses or paying for the use of new applications.
"Using the simple model of ChatGPT costs at least 20 euros per month. In my work I use ChatGPT to generate marketing models and I spend 200-300 euros per month.
Payment for domains is 12 euros per month. I have 30 pieces. The average cost of 50 euros per month is for 1 server, where data and customer applications are kept for using the web server. I own 10 servers.
With the profession I do, even the recognition of the a priori expenses of 30% defined in the law do not serve me, as they are more than that".
The 41-year-old self-employed as an IT professional says that he is waiting for the decision that will be taken by the Constitutional Court to take the decisive steps.
So far, the new law has been appealed four times to the Constitutional Court. First in February by the DP parliamentary group, another lawsuit in March was sent by accountants and auditors (IKM and IEAKA), then massively complained by 400 different professionals.
The fourth lawsuit was filed by the Association of Driving Schools. The Constitutional Court has decided on June 18 to hold the first hearing of the first 3 lawsuits.
The revision of the installments or the change of the tax rate by the Constitutional Court remain the only hope for a number of businesses, who claimed that they are facing economic difficulties (75% of respondents, while only 25% said they had the ability to pay) and not prepared to prepay tax 1,000 or 1,400 euros per month.
With the adoption of the Constitutional Court's decision, the vast majority of entrepreneurs contacted by "Monitor" said that they too will "seal" the decision-making for closing the activity or continuing, for leaving or staying in Albania.
According to the results of Monitor's survey of 613 freelancers, the groups most affected by the legal changes for the taxation of freelancers are expected to be financiers (accountants, legal auditors and economists).
In second place are the businesses of the IT sector. 22.8% of respondents who expect to be negatively affected by the new law work in the field of information technology.
Negative effects are also expected from 22.9% of respondents who make up the group of research service providers, consultants, marketing, official translators, engineers.
9.7% of lawyers, notaries and jurists who make up the fourth group of respondents also expect negative effects from the implementation of the law, followed by the group of doctors and dentists, which took 5.1% of respondents, further is the group of real estate agents and real estate appraisers with 4.8% of respondents and 0.8% of businesses that include tour guide providers.
The results of the survey clearly showed the negative perception of the implementation of the new income tax law.
Of the 613 businesses surveyed, 96% of them answered that the application of the progressive tax would have a negative impact on their activity. Only 3% said it would have no impact, while the choice for a positive effect or no impact was less than 1%.
The largest group of respondents who warn of negative consequences in their activity are the businesses of free professions, such as accountants, legal auditors and economists (consisting of 34% of respondents who expect negative effects).
Accountants and economists estimate that the progressive taxation of free professions does not solve the problem of evasion and informality of the economy. They expect the new taxation to stimulate the growth of cash circulation.
"As an economist, I believe it will greatly increase informality. I am not against the tax, but on a lower scale, as there are businesses that make 20,000 euros of turnover per year, there are businesses that make 100,000 euros of turnover per year, they are not equal, and it is not always related to business skills, as it is not structured market with clean competition and "equal" rights in Albania.
I think that rather informality should be fought, with regular tax controls, market analysis, not damage to business", assesses one of the surveyed economists.
Even new businesses expect negative performance up to the risk of closure due to increased evasion from increasing cash flow.
"This law will cause a lot of fiscal evasion and price increases that many businesses will not be able to afford, like me, a new business. Many businesses will start operating, with cash therefore tax evasion will increase. Personally, I haven't even opened the NIPT for 6 months, and now I'm thinking of closing it", says a young accountant from Durrës.
Of the total respondents of the survey, 89% of them said that the imposition of profit tax on free professions will increase evasion and informality, and only 3% stated no.
For most accountants, the imposition of the tax was expected, but for them it is the incorrect way of applying the law that worries them.
"I think that it is not an individual issue, but of the whole society, since it is not simply a question of a tax amount which we obviously have a civic obligation to pay, (and at this point I believe that not only me, but many professionals of in our field, such as: financiers, accountants, certified accountants, legal auditors, professors, etc., have admitted that the removal of the tax years ago was wrong, but it is a law, which has many other problems .
If a law affects a business, whoever it is, it directly affects my work, that I am not in a position to give a dignified consultation to the interested party, but I have to tell him that I do not understand why the legislator thought it in this form?
We play the role of an educator of taxpayers, explaining to them the logic of setting the tax. But in this case, we have nothing to explain to them.
Establishing a tax rule should benefit everyone. So the state gets what it deserves, the business pays what it needs without creating additional costs in the management of taxes and duties.
Such is Article 58, where, in addition to increasing the cost of management, it creates uncertainty in the cases covered by this article, placing the business in what is called "legal uncertainty".
Withholding tax in B2B relations for certain types of income that a resident taxpayer or a non-resident taxpayer with permanent headquarters in the Republic of Albania realizes is a meaningless tax burden, where there are no winners, only losers.
Even though argued papers have been made by professionals in the field and not by the business, which has been affected by this fiscal burden, there is no response or reflection against them.
The state in its role, as a regulator in various fields, must love its people and treat them with respect and dignity, whether when setting and receiving taxes, as well as in their redistribution. One feels a hatred and arrogance, not only in the approved laws, but in how the tax administration serves them in training.
We feel attacked from every aspect, so not only will we pay unfair taxes, but we can't do our job well, which is much more difficult than the tax itself", argues the manager of an accounting office in Tirana.
In recent years, the market of IT services in Albania for the self-employed who provide services to third parties has expanded due to the competitiveness of tax reduction.
For many of the businesses in the IT sector, with the establishment of higher tax rates than Kosovo or other countries such as Estonia and Georgia, Albania loses its competitiveness and strategic position in the Balkans to provide innovative services for Europe and the American market at a low cost.
Therefore, after the 15% taxation, there are many people who have a passion for engineering, as self-employed, who are already looking towards the states of the region or further afield for opening a business, due to more favorable fiscal policies.
According to the survey, 23% of the respondents were thinking of closing the activity, where 17.5% of them said they would close or suspend the activity, while another 5.4% said that in addition to closing the business, they would leave the country . Kosovo, Estonia, Georgia were the most considered choices for business transfer.
"The reason I returned in 2016 from Italy was the fiscal easing policies foreseen until 2029. With the new law, the prepayment installment was 1,200 euros per month, an obligation that I did not foresee that would start this year.
I am currently considering the possibility of transferring NIPT's business to Kosovo, as according to the calculations, the obligation I have to pay is 5,000-6,000 euros less per year", says the 44-year-old self-employed for technology services.
There are many self-employed in the information technology sector who are considering the possibility of transferring businesses to neighboring countries, due to more favorable fiscal policies.
"Personally, if the law is not revised, I will close the activity in Albania and consider registering elsewhere, where taxes are lower, e.g. in Kosovo or North Macedonia, but why not in a little more distant countries such as Georgia, which has a tax of only 1%, which is very attractive for foreigners to do business", said one respondent in IT" .
"In the event that for some reason this will not be possible, then most likely I will simply not continue, as self-employed, but will apply in another state to start work, as a part-time employee. complete", claims another software developer from Fieri.
Aleksandër Risilia, founder and manager of the "Ritech" company that provides IT services for the US market, explained earlier for the "Business Plus" podcast, that the increase in taxes contributed a lot to the expansion of the IT market and with the new taxation they become more expensive services.
"Based on the data we have, the services offered in Albania have become more expensive than in Kosovo and North Macedonia. This will stop the growth of companies and the self-employed in this sector, but also their contraction".
The change in taxation is expected to have more effects on start-ups in IT, since according to Risilia, it puts difficulties in their professional training.
"We are not yet ready to be a big start-up market, as all similar markets, such as in Poland and Romania, which have passed this stage, initially started by offering services to foreign companies.
Working for big companies means increasing professional skills. This has led to the fact that many individuals, who previously worked with large foreign companies, have been professionally trained to create start-ups, as it is very difficult to set up innovative start-ups with global influence if you do not have the skills.
Skills are acquired by working for large companies. Therefore, it is very necessary that the adoption of fiscal policies is suitable for IT, since they are the biggest contributor of individuals for the establishment of start-ups in Albania", he underlined earlier.
Even from the self-employed in education or in the field of official translation, price increases or business closures are expected.
This category of businesses together with research, consulting, marketing, engineering service providers accounted for 22.9% of survey respondents expecting negative effects.
"We teach foreign languages, how much can you put the value of a language course? In other words, our business is a service, which is not included in the necessity, so if we raise the price, the number of customers will decrease, so we are still at a loss", affirms NA teaching foreign languages ??in Tirana.
"This law sinks the middle class. The impact on the state budget is insensitive, while our daily lives are ruined for us freelancers. Our income goes directly to supporting our families.
The prices of food, rent, and fuel have jumped without any control, while the tax takes away the possibility to afford our daily life", says a translator in Tirana.
Lawyers warned earlier that their involvement in progressive taxation will hit them for the second time, after the changes to the new judicial map for the redistribution of courts come into force, which would be reflected in the increase in fees.
Lawyer Përparim Caca claimed for "Monitor" that due to the high tax, the fees for court representation by lawyers have increased by an average of 15 to 20%.
"Specifically, if previously the fee for representation in civil trials cost from 45,000 ALL, it has now become 60,000 ALL (a 33% increase), he says.
The tax is expected to have a negative impact, especially on young women who are in the first steps of entrepreneurship.
"I am a young lawyer by profession and my income is not high enough to be taxed at 15%. I think that there should be some exceptions to this tax, for example, here I am talking about my personal experience.
I am a young lawyer and I have had my office for a year, the market is very tough and the clientele is very difficult to grow. For young lawyers, for example, at least an exception should be made from this tax for the first 5 years, so that we also have the opportunity to stay in the market", says a lawyer from Elbasan.
According to the results of the survey, 38% of respondents said that they will be forced to raise prices, 26% stated that they will sacrifice net profit, and 4% stated that they will reduce operating expenses.
With the new law, the net profit of businesses is taxed at rates of 15 and 23%, calculated from the difference between annual income and expenses.
The calculations of the tax administration for the 9 installments and prepayments were based on the declarations of businesses for the income and expenses of the year 2023.
The law included for the first time the recognition of expenses a priori. For commercial individuals and the self-employed with a turnover of 10 million per year, in the free professions the a priori recognition of expenses was at the rate of 30%.
The application of the law resulted in the fact that the business was not given the opportunity to choose the special regime for the recognition of a priori expenses, provided for in the law, in the first year of implementation.
"Many freelancers have problems documenting expenses. For example, a lawyer is not aware of fuel expenses, where at least 10 liters of fuel per day, or 60,000 ALL per month, are spent on transportation to the courts.
For this profession, only the expenses for the chancellery are known, which are in low values.
Also, the decision to pay tax in advance, when none of us knows how much income we will make for the coherent year, is wrong. The law on income tax completely affects the middle class", says lawyer Përparim Caka.
Regarding the recognition of expenses with declarations for 2023, many businesses claim that they have declared them low, due to the difficulties they encounter in documenting them, as well as the lack of tax responsibility.
While the economists claimed that they were informed that the deduction of fixed expenses, which could not be declared through the old declaration forms, due to the impossibility of the model, would be applied as a deduction by the tax administration.
After the calculations of the tax prepayment installments by the tax administration, it has been clarified that the a priori expenses of 30% will be applied, after being selected as an option by the businesses, for the profit declarations of the year 2024, which are carried out on March 31, 2025.
Lawyer Përparim Caca said that it is expected that there will be an increase in fees up to 20% for other services provided, such as by dentists, psychologists, etc.
The group of doctors and dentists accounted for 5.1% of respondents who expect negative effects from legal changes.
"It damages my professional development. It hurts my family's economy. Business to close. Buying a house, my dream in Edi Rama's drawer", says a surveyed dentist from Tirana.
The free professions that will be taxed at the rates of 15 and 23% were classified into 26 types of activities, which included 180 service provider business categories, according to the decision that came into force in December.
The list of free professions included the activities of IT services, accounting, lawyers, education, doctors, real estate, news agencies, employment agencies, sports, tourism operators, etc.
Ervin Demirxhiu, broker of the "Perla Real Estate" real estate agency, estimates that the tax at these rates will reduce the quality of service and increase informality.
"Services are businesses, both profitable and fragile, it seems as if every income is profit, but in reality there are many costs, salaries, rent, taxes, marketing fees, etc.
Every tax, tax, money that is stolen from us, translates into missing investments, less employed people, less investments made to increase capacities, going outside the borders, etc.
If we pay more taxes, it certainly inhibits us to develop further, or to become competitive in the markets, then of course informality will flourish even more, and the services that we would perform, would are offered by realtors, unlicensed qualified persons, where they will become the subject of conflicts and disputes between sellers and buyers".
Other respondents from this sector predict a more difficult situation. "I risk that the 12 employees who are under my management will remain unemployed with me.
The reason: the profit tax that is being billed to me is fixed to my annual net profit as an employer", claimed a real estate consultant from Tirana.
As for the operators of tourist guides, the concern is not about the impossibility of payment, but about the moral damage caused by corruption and mismanagement of taxes.
In contrast, many of the contacted businesses, mainly IT, claimed that they are studying the possibility of transferring the activity to another country that favors them with fiscal ease, while young entrepreneurs such as lawyers, accountants or economists find it more reasonable to close the activity ./ Monitor.al
Tourism has become the sector that is feeding year after y...
Today, May 19, 2024, in the foreign exchange market, the A...
Albania has a history of transition characterized by high ...
Today, on May 18, 2024, in the foreign exchange market, th...
Medicinal plants, tomatoes, cucumbers, peppers, olives, wa...
The project for the construction of the Muriqan-Lezhë ...
Government work, although it continues to be a favorit...
Today, on May 17, 2024, in the foreign exchange market, th...
The yield of 15-year bonds fell significantly at this week...
Today, May 16, 2024, in the foreign exchange market, the A...
The Albanian economy is expected to grow by 3.3 percent in...
Albania is the country that had the best tourism perfo...
The majority of CEOs in Albania (62%) think that the local...
12-month bond yields fell at this week's auction. Accordi...
Today, on May 15, 2024, in the foreign exchange market, th...
Among the most financed investment projects in 2023 were t...
The Energy Regulatory Authority (ERE) announced that there...
Remote banking (home banking), via the Internet or mobile ...
Chronic diseases are increasing rapidly, as funds for reim...
Today, on May 14, 2024, in the foreign exchange market, th...
The next case broadcast on the show "Stop", this Thursday,...
The case published this Thursday, June 4, on the show "Sto...
The protests of recent days related to the situation in Zv...
The case addressed this Wednesday, June 3, on the show "St...
The Special Board of Appeal (KPA) decided this Monday ...
The KPA vetting decided this Thursday to dismiss the p...
Suela Salavaçi, a prosecutor in the Prosecutor's Offic...
The Special Board of Appeal reinstated the prosecutor ...
A convict was found dead today in the premises of the Pris...
Several images provided by CNA show the area where this mo...
A quantity of explosive material exploded this morning at ...
The Head of the State Police, Skënder Hita, expressed his ...
For many children and teenagers, the long summer holidays ...
Witnesses in Lozhan, Maliqi, have shared details from the ...
Albania is facing an unprecedented demographic transition,...
On Thursday, our country will be affected by unstable weat...
Russian President Vladimir Putin said the war in Ukraine c...
An extraordinary story of survival has been recorded in Ne...
The Peace Implementation Council in Bosnia and Herzegovina...
John Bolton, the former national security adviser to US Pr...
Korça is ready to open the summer season with one of the c...
Two years after his passing, the renowned Korçë poet Skënd...
The Ethnographic Museum of Berat has opened its doors to v...
The story of Harilla Bakalli is one of the most chilling t...
The government aims to transform the country's industrial ...
Kursi i këmbimit të euros me lekun ka rënë më tej këtë jav...
Profit margins in the construction sector have increased s...
The Transparency Board, at its meeting today, decided to i...