Informality punishes budget

A recent report of the High Council of Justice (HCJ) for the 2010 budget sheds light on the way the government revenues leak from the tax evasion. The most shocking number is that of the VAT tax.

According to HCJ data, Albania has 26.330 registered businesses that should pay VAT. In 2010, only 5069 of them paid the VAT, or 19.2%. This means that almost 81% of the businesses did not pay the VAT obligations.

The ways in which they escape this payment are several. According to the HCJ, almost 20% of them do not declare VAT at all, 29.1 declared zero VAT for the entire year and others declare excess credit, which means that not only they do not pay, but they also request a refund from the state.

The fact that there are only 5000 businesses that declare the VAT each year is totally unexplainable and makes the administration directly responsible for a complete failure. But also, the great number of those who declare VAT zero, casts shadows of doubts for tax evasion. During the last year, the government decreased the limit of the yearly turnover, which includes the businesses of the VAT scheme. But paradoxically, the number of businesses that really pay this tax not only has not increased, but on the contrary, it has decreased.

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