The World Bank’s appeal for Albania: Careful with VAT for small businesses and PPPs!

The World Bank’s appeal for Albania: Careful with VAT for small businesses and PPPs!
The World Bank has declared yesterday that experience in Albania has shown that not all concessions have resulted successful and that they may present risks, therefore they must be monitored. Meanwhile, as far as Value Added Tax for small businesses is concerned, the World Bank says that focus is lost on large businesses. What’s more, it also increases costs for tax administration

 In Albania, there should be more transparency as far as concessions are concerned, especially the ones relating to projects outsourced through Public-Private Partnership (PPP). But, at the same time, authorities should also be cautious when including small businesses with annual turnover over 2 million lek a year, in the new Value Added Tax (VAT) regime, because this will not only lose focus on large businesses, but more money will also be needed for tax administration dealing with this category of businesses.  These are the two main points of criticism that the World Bank has recently addressed to the Albanian government following the publication of the periodical report on Western Balkans, warning that economic growth will slow down this year. “The government must endeavor to improve the business climate and reduce the high public debt, which is threatened by concessions.  Experience in Albania has shown that not all PPPs have resulted successful and out of these experience, we could filter out a number of threats which can be repeated. To minimize these threats, there needs to be an improvement of the selection, monitoring and assessment framework of PPPs”, said Hilda Shijaku, chief economist of the World Bank in Albania. “Albania should provide more transparency for concessions. Authorities need to clarify what the government’s strategy is for investments and what the priorities are. They should also find ways of selecting projects which are outsources and ways of managing these contracts”, Maryam Salim, head of the World Bank for Albania stressed on this. Meanwhile, as far as Value Added Tax for small businesses is concerned, World Bank representatives said that it will not generate lots of revenues, while the administrative burden for tax authorities will be heavy.

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