Albania, New income tax law
02/12/2013

Every monthly salary above 90.000 ALL will have fewer taxes that now. Those who are paid more than that, will pay more than before. This includes not only monthly salaries, but also rents and other activities. The Ministry of Finances published the progressive tax scheme that will be applied in 2014.

The Ministry of Finances has decided for the income tax progressive scheme, which will apparently be with four levels. People with monthly income under 30.000 will pay no tax, same as it is now. Monthly salaries between ALL 30.000 to 100.000 will pay 15%; 10.000 to 150.000 20%, and over 150.000 is 25%.

Lower monthly salaries than ALL 90.000 profit from the tax decrease. There’s no change for taxes at 90.000, while those over this will pay more taxes. Salaries over 150.000 will pay even more. Salaries of 250.000 monthly will pay 20.000 more every month.

During the electoral campaign, the now ruling party promised to reduce taxes for 96% of citizens. According to the Ministry of Finances, in 2012 there were 35.000 individuals pay more than 90.000, and they are 8% of the employees.

This tax system includes not only salaries, but all other incomes, such as rents or other activities. The number of affected people is bigger than this.

On the other hand, the new tax system damages individuals and businesses who pay taxes regularly and who have declared everything, and favors tax evaders, employers who declare smaller salaries than what they actually pay to their employees, a phenomenon that is widely spread in the Albanian job market. Experts say that exactly due to this effect, the progressive tax pressures individuals even more to tax evasion.