Albania debates debt forgiveness to businesses

02/05/2014

Opinions are divided on a government initiative to stimulate the economy by forgiving debt owed by businesses.

By Erl Murati for Southeast European Times in Tirana -- 02/05/14

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Arben Ahmetaj, Albania's economic development minister, announces the government's decision to offer debt relief to select businesses. [Albania Ministry of Economic Development]

The Albanian government's announcement to forgive debt owed by businesses to the country's tax department in order to boost economic activity has caused a public stir about the measure's merit and likely effects.

"The decision is an [election] promise kept and a proof of our commitment to economic growth," said Arben Ahmetaj, Albania economic development, trade and entrepreneurship minister.

Ahmetaj said the government will forgive for a period of six months debts that were incurred from March to September of last year by 4,069 enterprises. The debt pertains to taxes or fines not paid in the amount of nearly 22 million euros.

The decision is based on a law endorsed by parliament in mid-April, said Zamir Stefani, head of the legal department at the economic development, trade and entrepreneurship ministry.

"With this law, taxpayers will face a new environment in conducting business -- one that will provide the proper space they need to exercise their activity in Albania. The law leads to debt relief specifically for debt that is part of tax requirements levied by the central and local tax administrations on the taxpayers," Stefani told SETimes.

Stefani said the debt relief pertains to those who have not met their fiscal obligations, or did not deliver tax coupons for the specified period last year.

But some experts, like Zef Preci, executive director of Albanian Centre for Economic Research, cautioned against the programme.

"First, [the measure] will cost 22 million euros that the Albanian citizens will pay from their own pockets," Preci told SETimes. "Second, it will negatively impact fiscal performance, but above all, keep alive the hopes of those companies that fail to meet their legal fiscal obligations and may want to seek to benefit from amnesty in the future. In addition, this demotivates the rest of the businesses as well as the Albanian citizens who pay their debts regularly."

Preci said the government should show the public how many of the amnestied businesses have appealed the allegedly unfair tax penalties and how many cases have been prosecuted.

The pre-election period has been associated with selective fines for entrepreneurs, who did not denounce tax inspectors for the previous government's fines, said blogger Aktualiteti Shqiptar.

"But it seems the change of government provided the opportunity for businesses to appeal and claim their rights," he said.

Others said the decision is motivated by political interests.

"To me, this is simply a show even though I am one of the entities indebted by the tax authorities on May 9, 2013 through two tax inspections in my shop until the date the amnesty came into being," Eri said.

But Eri also said there are many instances of businesses not insuring employees, not providing clients the required tax coupons or listing prices.

Amnesty for alleged tax penalties should not be repeated, said blogger Anisa Kushta.

"From levying fines to [awaiting] the amnesty procedures, it is a waste of time and money. It is best not to levy any fines to begin with," Kushta said.

Tarrasi said debt forgiveness is needed, but the process should be more transparent in order not to undermine that which the government wants to achieve.

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"Who are these businesses, why are their debts forgiven and what are the requirements businesses should meet to benefit from this law?" Tarrasi asked.

Still others praised the government for fulfilling pre-election promises.

"I like the fact that something promised is brought to life. It can be something small amidst all the promises, but it is fulfilled," Toni said.

When should a government offer debt relief to businesses? Share your opinion in the comments section.

This content was commissioned for SETimes.com.
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