The tax on free professions risks shrinking IT service exports and new start-ups

2024-04-26 07:23:00, Ekonomi CNA

The tax on free professions risks shrinking IT service exports and new start-ups

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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 the taxes. The imposition of a tax of 15 to 23% on free professions is expected to have a negative impact on companies or self-employed providers of these services.

Aleksandër Risilia, founder and head of the "Ritech" company that provides IT services for the US market, told the "Business Plus" podcast that the new tax rates for freelancers will affect the shrinking of the number of IT companies.

"The reduction of taxes for free professions has contributed a lot to the expansion of the IT market in Albania. Before last year's global crisis, the number of IT service companies and self-employed people increased by 40 to 50%. The imposition of taxation will have several effects. First, IT companies have a "noose around their throat" with the new taxation.

Secondly, the inclusion of taxation based on the data we have has made the services provided in Albania 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 effects are not at all positive for this sector that has been expanding in Albania for years. On the other hand, exporters of IT services, which are creating the value of skills in the Albanian market, are suffering the effects of the strengthening of the lek".

Risilia adds that the implementation of the self-employment tax will negatively affect not only the export industry of IT services in Albania, but also the interruption of the professional training of individuals to establish new innovative start-ups for the foreign market.

"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. To work for large companies it 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 impact 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 are suitable for IT, as they are the biggest contributor of individuals for the establishment of strat up in Albania", he said.

Risilia said that the industry is no longer in crisis for finding employees, the situation has returned to normal before the Covid-19 pandemic.

"After the Covid-19 pandemic, the IT sector around the world went into crisis, from which the sector in Albania was also affected. The crisis started from the second half of 2021, and even 2023 has been the most difficult for the industry.

Companies prepared for this situation and despite the fact that 2023 was difficult, staff recruitment increased by 30%. Now the situation is easier for recruitment in the IT sector, after the crisis for finding employees that caused not only massive salary inflation, but also employee movements. There was a high demand from European companies for remote employees from Albania, for this reason many of the programmers emigrated to the Netherlands or Germany.

Currently, some programmers or software engineers who emigrated are returning, because the fiscal policies of developed countries tax a significant part of their income. Net income remained low. It should be emphasized that many of them had the desire to try working and living abroad, but despite the high income, the cost of living in Europe is high," he asserts./ Monitor magazine.