Within the next three years, the tax policies in the country are expected to be revised, reducing the tax exemptions as well as revising the tax rates that are currently applied.

In the Medium-Term Revenue Strategy 2024-2027, it is said that tax exemptions have damaged the state budget, which is collecting less money than it should.

“Albania collects in the budget from direct taxes on business and individual incomes, about 40-50% less than the countries of the European Union. This difference is mainly related to 3 factors: The generally low tax rates applied by Albania compared to EU countries; Exemptions from income tax for businesses and individuals; Non-reporting/under-reporting of income and profits by businesses and individuals," the strategy states.

For these reasons, the government has once again returned to tax exemptions, such as that of small businesses that do not pay profit tax and VAT, which is exempted until 2029.

The document states that in-depth analyses will be made and the possibility of returning the income tax for small businesses that are currently excluded will be considered.

"Revision of the taxation scheme of low-income businesses, applying simple taxation schemes on net profit through a certain level of expenses assumed as a percentage of gross income," according to the Medium-Term Revenue Strategy 2024-2027.

Not only the income tax but also the limited VAT rates will be eliminated. The strategy states that a detailed analysis will be made for the tourism sector, which currently pays 6% VAT.

"Based on the data, it results that for VAT declaration entities that are in the "Accommodation" and "Food and beverage service activities" sectors, which have more than Lek 100,000 of taxable sales at 6%, there is an increase in the number of taxpayers declaring value-added tax (VAT) in these bands over the years, an increase of 8% in 2022 compared to 2021, and by 17% in 2023 compared to 2022.

Also, the VAT paid over the years results in an increase, a 40% increase in 2022 compared to 2021, and a 40% increase in 2023 compared to 2022.

The main focus will be VAT, followed by profit tax and business income tax, as well as issues related to the declaration of employees, the strategy states.