The American Chamber of Commerce in Albania (AmCham) on Thursday called on the government to reconsider proposed tax increases for 2027 submitted for parliamentary approval, warning they could undermine the country's competitiveness and deter foreign investment.

The proposed changes include raising the dividend tax to 15% from 8%, the standard value added tax (VAT) rate to 21% from 20%, and certain reduced VAT rates to 10% from 6%, AmCham said in a statement.

"Easing the cost of living and supporting citizens, particularly the households most exposed to rising prices, are important objectives. However, achieving them must go hand in hand with maintaining a healthy business climate, encouraging investment, and creating sustainable jobs," AmCham said.

Furthermore, AmCham argues it is important that changes to fiscal policies be made after carrying out a comprehensive analysis of its economic and social impact, an assessment of the expected costs and benefits, and a genuine consultation process with the business community.

Higher taxes could reduce funds available for reinvestment, increase operating costs and push up consumer prices, while weakening Albania's attractiveness to foreign investors, AmCham said. "Our concerns are further compounded by the manner and timing of the introduction of these proposals. Changes with such a broad impact, which are expected to take effect from January 1, 2027, leave businesses a limited period to analyze the consequences and adapt."

While the introduction of a reduced 6% VAT rate for a category of basic food products aims to ease the cost of living, raising the standard rate from 20% to 21% and certain reduced rates from 6% to 10% may lead to higher prices for a wide range of goods and services, AmCham said. "To the extent that these increases are passed on to consumers, additional household expenses may diminish or partially offset the expected benefits of the VAT reduction on basic food products."

On Wednesday, the association of Italian-owned businesses in Albania, Confindustria, also called for the withdrawal of proposed increases in corporate profit tax, dividend tax and standard VAT, arguing that the measures could undermine investor confidence and raise business costs. Confindustria also opposed an initial proposal to raise corporate profit tax from 15% to 17%; however, this was removed from the final proposal submitted to parliament later in the day.

"AmCham further believes that financing social policies and increasing budget revenues should rely, first and foremost, on broadening the taxpayer base, reducing informality, and improving the efficiency of tax administration, before increases in tax rates are considered," AmCham said on Thursday.