The administration of taxes belongs to the central and local tax administration. The Albanian Central Tax Administration of 2012 includes General Tax Directorate and Regional Tax Directorates. The Albanian Local Tax Administration includes all the tax offices of municipalities. The Central Tax Administration administer indirect and direct taxes, national taxes, and social contribution collection.
The Local Tax Administration administers all the local taxes as: taxes on property, on infrastructure, on hotels and tax on agricultural land.
The overall level of the staff of the tax administration is based on a model, which ensures that the report personnel / taxpayer to be higher in control than in other functions and higher in Large Taxpayer Directory, than in the Tax Regional Directories. The structure of directories on the regions has been simplified over the past two years and now consists of 14 regional directories and 24 service agencies. These public employees have to deal with more than one hundred and twenty thousand taxpayers, which include the small and medium taxpayers to large taxpayers.
The tax administration is composed based on functions as: anti corruption, internal audit, tax appeal, and is based on:
– Operational functions – services for taxpayers, assessment of tax returns and VAT refunds, tax arrears collection,tax audit, tax investigation and
– Supporting activities for operational functions – technical issues, legal office, education and training, international relationship.
The headquarter includes 14 Directories and 12% of total employees of tax administration;
The regional tax directories are 13 and Large Taxpayer Directorate and include 88% of total employees of tax administration.
The composition of tax administration based on gender issue is near to 50% – 50%.
The mission of the taxation administration is to contribute the tax revenue to pay for the government’s public expenditures through effective and efficient collection of taxes, insurance contributions and other duties. In addition, we supply information to support the development of the Government’s economic policies.
With a view to attaining these goals, the taxation administration assists taxpayers through high quality services so that they can be voluntarily in compliance with the law and their obligations and duties. Simultaneously the taxation administration acts against those whose behavior does not meet the requirements of the law.
The total tax revenues collected for 2011 were € 1.21 billion, from which € 821 million as tax revenues and € 400 million as social contributions. The result from tax audit and tax investigation operations resulted with more than 144 million euro tax dues and fines.
The tax revenues structure consist in social contributions with 32%, P.I.T. with 17%, V.A.T. with 16%, C.I.T. with 12%, excises with 10% and other taxes with 11%.
In line with international best practices, tax administration has established a Directory for large taxpayers to manage the problems of a small number of taxpayers, whose payments constitute the largest tax revenues (50.2% of all tax revenues in 2011).
Large Taxpayers Directory administers 800 taxpayers. Since 2009, taxpayers are classified as “large” when they have an annual turnover in excess of the amount of 180 million Albanian Lek (1.5 million euro), number of employees and level of investment or capital.
One of the main goals of the creation of LTD is to strengthen the expertise on staff in order that the tax agency to increase its ability to have the same skill level as well as private sector consultants engaged by large taxpayers. Productive Large Taxpayers Units effectively achieve this through:
– Providing the most qualified personnel to work in the Large Taxpayers Units
– Employees holding the same position for a sufficient time to have the opportunity to acquire skills to a level much higher (and if necessary through “isolation” of Large Taxpayers Units from policies or practices of regular rotation staff)
– Creation of control units specialized in certain industries, and
– Creation in many of them specialized units for technical advice that create expertise about complex problems and serve control units.
As in other countries, the problems encountered during the process of administering match:
– Cross-border transactions between related parties and transactions in countries with tax benefits not in accordance with the principle of neutrality in transactions (transfer prices)
– Complex structures and intro-group transactions associated with the realization of tax benefits unrelated to the economic substance of business
– Problems to avoid taxes (e.g. overseas entities, hybrid entities, the executives of foreign tax credit, insurance within the group)
– Customs to include rights for exceptions, incorrect classification of goods, assessments and importer of high value)
– Method of working certain tax matters which ensure internal control and / or external.
– The degree of control that businesses have on their tax processes
– Distortions and inconsistencies in market valuation
– Classification Office (hybrid or not)
– International Arbitration
– Assessment of fuel
– Problems with permanent business center
– Structured financing
– Transactions for the importation of losses
– Agreement to use abusive trust cash values in life insurance policies to provide benefits from public assistance
– Inter-corporate financing that uses guaranteed payments
– Agreement for intermediate foreign tax credit
– Tax evasion through the use of contracts with option for compensation of foreign currency
-Agreement abroad for delay compensation
– Earnings from the sale of assets
That’s a summary of Albanian tax administration, the tax branches and their developments during 2012.