Albania proposes major VAT changes in 2027 fiscal package

The Albanian government has proposed a new fiscal package for 2027 that introduces significant changes to the Value Added Tax (VAT) system. A primary measure is the reduction of the VAT rate from 20% to 6% for 54 essential food items, including bread, flour, milk, eggs, rice, meat, and vegetables. This move aims to ease the consumption burden on low-income families.

To balance the budget, the general standard VAT rate is proposed to increase from 20% to 21%. Additionally, the VAT rate for the tourism sector is expected to rise from 6% to 10%. The package also includes a plan to lower the mandatory VAT registration threshold from 10 million lekë to 5 million lekë in annual turnover, a change expected to bring approximately 17,516 new taxpayers into the system.

While the government argues these measures will formalize the economy and expand the tax base, some economic analysts and business organizations have expressed concerns. Critics suggest that the increase in the standard rate and the lower registration threshold may offset the benefits for consumers, and they question whether the food price reductions will actually be passed on to the public or absorbed by traders.