ANNUAL REPORT ALTAX FISCAL TAXATION INDEX AFTI 2025

The ALTAX Fiscal Taxation Index for 2025 — 64.3/100 — is more than a number. It is a synthesis of an entire year of efforts, reforms and challenges in one of the most sensitive areas of state functioning: how public money is collected and spent.

The Albanian fiscal system in 2025 has demonstrated the capacity to collect revenues without raising taxes — a rare political advantage that must be used strategically. It has also demonstrated the ability to consolidate debt in a challenging global context — an achievement that will influence public financing costs for years to come. But it has also shown the limits of a system that bases its equilibrium on form over substance: the numbers are good, but the internal structure of tax fairness needs restructuring.

KEY ACHIEVEMENTS 2025:

✓ Public debt at 53.04% represents a historic low, after five years of uninterrupted reduction from the 74% level in 2020

✓ Collections reached a record level of 754.6 billion lek without increasing taxes, demonstrating the untapped potential of the existing tax base

✓ Digitalization through DIVA 2025 and fiscalization contributed to reducing evasion and easing compliance costs for most businesses

✓ The improvement in the rating by S&P to BB level signals increased international confidence and affects the reduction of the cost of public debt

✓ Tax administration, with a rating of 76/100 for efficiency, remains one of the strongest structural points of the fiscal system

CHALLENGES FOR 2026:

✗ Pronounced structural inequality, where the increase in TAP of +24.8% against only +2.7% of the profit tax indicates a disproportionate burden on human labor

✗ “Fiscal Peace” not conditioned by strong anti-evasion measures risks weakening compliance and undermining fiscal justice in the long term

✗ Public spending grew by +10%, faster than revenues (+6.2%), creating pressure on fiscal sustainability and a risk for debt consolidation after 2027

✗ Compliance costs remain problematic, as DIVA 2025 added administrative burden for freelancers and individuals with multiple incomes, highlighting the need for simplification

✗ Property tax remains outdated and underdeveloped, representing an important but still untapped source of fair revenue

This situation creates the essence of the challenge for 2026 related to the transition from administrative efficiency to sustainable fiscal justice.

The deep difference between the growth of TAP (+24.8%) and profit tax (+2.7%) is not only an economic indicator, but a signal for the perception of justice in the system.

In parallel, the growth of expenditures faster than revenues and the risks associated with fiscal amnesty indicate that the current stability requires further consolidation to avoid deviations in the medium term.

The cost of compliance for certain categories and the underdevelopment of property tax also remain obstacles to a more balanced and inclusive system.

In this context, the real narrative of fiscality 2025 is that of a system that is reaching operational maturity, but that requires ongoing structural deepening.

The fiscal system has entered a phase where it should no longer be measured only by how much it collects, but also by how it distributes the burdens and how it builds fiscal trust.

The ALTAX Observatory recommendation is that the focus should shift towards improving the EDF component, through corporate tax reform, rigorous amnesty regulation and increased fiscal transparency.

The fiscal system has the potential to move from a model that is working well in numbers, to one that should become even fairer, more reliable and sustainable, making the objective of European integration not only achievable, but also supported on solid institutional foundations.