Government announces 2026 Fiscal Package with major changes, but without consultation

The Albanian government is preparing a new fiscal package set to take effect on January 1, 2026, introducing significant changes to several key laws of the country’s tax and financial system.
According to proposals from the Ministry of Finance released to the media, the changes will affect four main acts:

• The Law on Local Taxes,
• The Law on Value Added Tax (VAT),
• The Law on Invoices and the Circulation Monitoring System,
• The Law on Personal Income Tax.

Through these interventions, the government aims to create a fairer, more efficient, and more transparent tax system, in line with European Union standards and the EU integration process.

Relief on Infrastructure Impact Tax

Under the Law on Local Taxes, the government plans to exempt public construction projects in education, healthcare, and social protection from the infrastructure impact tax, if financed by the state budget or local government units.

This exemption aims to reduce costs for public projects, accelerate municipal procedures, and direct budgetary resources toward social investments with a direct impact on communities.
However, experts warn that municipalities could face declining local revenues if compensatory mechanisms from the state budget are not established.

Increase in compensation for Farmers

One of the most notable changes concerns VAT, where the government proposes setting the compensation rate for agricultural producers at 10%, after several years of being zero.
Compensation will be calculated on the total value of agricultural products sold over a six-month period and paid by the tax administration within 30 days of the request.
At the same time, buyers operating as “restaurants” are excluded from the scheme to prevent previously observed abuses in reporting fictitious supply transactions.

This initiative provides direct fiscal support to farmers, improving liquidity and balance in the supply chain.
In the long term, the measure is expected to increase formalization of the agricultural sector, but success will depend on the timely implementation of the reimbursement procedure, historically an area of delays in the tax administration.

Adjustment of the Electronic Invoice Law

The Law on Invoices and the Circulation Monitoring System introduces several technical and terminological updates to align with the new income tax legislation.
The terms “profit tax” and “simplified tax for small businesses” are replaced respectively with “corporate income tax” and “personal business income tax.”

Additionally, invoices issued to individuals without a business activity will now require name, personal ID, and correct address, while the electronic invoice submission deadline is extended by one day, from the 10th to the 11th.

These changes aim to increase transparency and traceability of transactions, helping reduce informality.
Nevertheless, economic operators warn of the need for technological improvements in the invoicing system to prevent interruptions and delays that could penalize small businesses.

Self-Employed Declaration as a measure against tax evasion

The most significant innovation in the package is the introduction of the Self-Employed Status Declaration under the Personal Income Tax Law.
This declaration is designed to identify cases where individuals claiming to be self-employed are, in practice, working under conditions similar to employees.
In such cases, they will be treated as regular employees, with all corresponding tax and contribution obligations.

This mechanism is considered a powerful tool against tax evasion, particularly in professional services, consulting, and IT sectors, where fictitious self-employment has been used to reduce taxes.
However, experts stress that the measure should be accompanied by clear legal guidance and objective criteria to avoid conflicts and subjective interpretations by the tax administration.

A fairer tax system, but challenging to implement

All proposed changes are expected to take effect on January 1, 2026, following final approval by the Government and the Parliament.
According to fiscal analysts, such packages represent a positive step toward modernizing Albania’s tax system, making it more comparable to EU models.

However, the main challenge remains implementation:

• the tax administration must ensure fast and transparent reimbursements,
• municipalities must manage revenue losses due to exemptions,
• small businesses require stability and fiscal predictability.

A concerning point is that the package has not been discussed at all in the Tax Council, the body intended for debate and consultation with key fiscal system stakeholders.
Experts highlight that the lack of broad consultation risks reducing the effectiveness of the reform and undermines perceptions of fairness and representation in the decision-making process.
At the same time, transparency continues to be a major communication issue, even within the Rama IV Government, reflecting a decision-making model where public information and stakeholder consultation are often limited.

Despite these challenges, if the package is accompanied by disciplined administration and real monitoring, the 2026 fiscal package could mark a significant step toward a fairer and more functional tax system, though its effectiveness will heavily depend on the government’s ability to address these structural challenges of transparency and inclusion.