Albania proposes 2027 fiscal package with tax adjustments

The Albanian government has introduced a fiscal package for 2027 aimed at increasing state revenue while adjusting tax burdens for various sectors. Key proposals include reducing VAT on 54 basic food items from 20% to 6%, while the standard VAT rate will rise to 21%. For small businesses, the VAT registration threshold will be halved from 10 million to 5 million lek, potentially bringing 17,500 new entities into the scheme.

Other changes include increasing the dividend tax from 8% to 15% and raising the profit tax for large businesses from 15% to 17%. In the tourism sector, VAT is set to increase from 6% to 10%. The government anticipates these measures will generate approximately 150 million euros in additional annual revenue and promote economic formalization.

The proposal has faced criticism from various sectors. The Bank of Albania has warned that VAT changes could exert pressure on inflation. Economic experts and business organizations have expressed concerns regarding administrative costs, competitiveness, and investment. Additionally, opposition members, including MP Erisa Xhixho, have criticized the package, alleging it will increase the burden on the middle class and exacerbate poverty, noting that the government should focus on managing existing unspent funds and addressing reported economic damages.