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Albanian fiscal policy and 2027 budget proposals

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2026-11-01 18:58 UTC → 2026-11-04 17:29 UTC · added ~~removed~~

The Albanian government has proposed a 2027 fiscal package and a 10 billion euro budget, influenced by the political climate following student protests. The proposal includes reducing the Value Added Tax (VAT) on 54 essential food products from 20% to 6% to mitigate rising living costs, an estimated 150 million euro cost to the state. Simultaneously, the standard VAT rate is set to increase to 21%. Socialist Deputy Erion Braçe noted that the food VAT reduction, alongside the removal of circulation taxes on fuel, aims to reduce the cost of living, though he emphasized the need for mechanisms to ensure these savings reach consumers. Finance Minister Petrit Malaj presented the draft budget, which projects revenues exceeding 907 billion lek. This includes 2 billion lek from online sports betting licensing and an eighth Eurobond valued at 62.6 billion lek. To capture revenue from the digital economy, officials are planning a new tax system for influencers and online commerce. Social protection is set to receive approximately 279.7 billion lek, accounting for about 30 percent of total expenditures. This includes planned pension indexation in April 2027, a monthly bonus for low-income pensioners, doubled payments for children with disabilities, and monthly support for infants up to age five. While infrastructure, defense, and education receive significant increases, the budget for justice institutions is projected to decrease. The package has faced significant backlash from business organizations, including ~~AmCham,~~ Amcham, FIAA, Confindustria Albania, and the British Chamber of Commerce. Democratic Party Deputy Jorida Tabaku warned that the package will increase costs for small businesses and create financial insecurity for families, arguing that lowering the VAT registration threshold from 10 million to 5 million lek could drive economic activity into the informal sector.

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