Analysis of tax revenues to clarify the results of fiscalization, 2023

Analysis of tax revenues to clarify the results of fiscalization, 2023

In 2022 (11-month), the average tax revenue ratio [1] to GDP in Albania is calculated at 0.8 percentage points (p.p.) more compared to 2021, reaching a weight of 26% of GDP [2].

While the GDP in 2022 is calculated to have increased by 3.7%, unlike in 2021 where the growth of the economy was 8.5%.

Although the tax-to-GDP ratio [3] also increased in 2021 (by 1 p.p.) compared to 2020, this was in the context of a broad recovery of tax revenues and GDP in nominal terms [4].

Total tax revenues in nominal terms, January – November 2022, are 494.7 billion ALL (4.2 billion Euros). The annual trend of tax revenues is expected to reach about 550 billion ALL (4.7 billion Euros) after calculations according to multi-year averages and corrected with the inflation rate.

Of the total tax revenue, Customs have collected 16.7% more revenue than in 2021. Tax authorities [5] have collected 14.9% more revenue than in 2021.

In the structure of tax revenues in 2022, the biggest increase is observed in the ratio of VAT to GDP, which weighs in the state budget as much as 9.2% of GDP with an increase of 0.7 p.p. due to the increase in inflation.

The only other increase was in the ratio of profit tax to GDP, which weighs in the state budget as much as 2.2% of GDP with an increase of 0.3 p.p. But also, personal income tax (labor and capital tax) was in the same ratio as 2.2% of GDP, with an increase compared to 2021 by 0.1 p.p.

All taxes, duties, and other contributions in 2022 [6] (including local taxes and duties) are less by 0.1 p.p. than in 2021 in relation to GDP.

In the comparative analysis between the weight held by the revenues from the General Directorate of Taxes (DPT) and the revenues from the General Directorate of Customs (DPD), it appears that:

the tax administration has collected 53% of the total tax revenue [7]
customs administration has collected 41% of the total tax revenue
the local tax administration collected 5% of the total tax revenue
the administration of social contributions collected 1% of the total tax revenue

Who is the biggest VAT contributor in 2021 and 2022?

VAT revenue in 2021 (11-month) is the main and largest budget revenue (38.8% of total tax revenue) with a nominal value of ALL 166.6 billion.

The General Directorate of Taxes has collected 49.7 billion ALL (29.8% of all generated VAT).

The General Directorate of Customs has collected 116.8 billion ALL (70.2% of all combined VAT).

Revenues from VAT in 2022 (11-month), the coming year of large revenues and the largest revenues from the budget (38.8% of total tax revenues) [8] with a nominal value of 192.4 billion ALL.

The General Directorate of Taxes has 51.5 billion ALL (26.7% of all generated VAT).

The General Directorate of Customs has 140.9 billion ALL (73.3% of all combined VAT).

Meanwhile, from the VAT collected by the General Directorate of Taxes, ALL 15.57 billion have been refunded to businesses, which have overpaid VAT at customs or from purchases within the country.

In the years 2020 – 2022, on average, 2.6% – 3% of the subjects of the total taxable persons [9] requested a refund.

The requested amount is on average 11% to 15% of the total VAT collected from taxes and customs. In 2020, 76% of the amount requested by businesses was reimbursed. In 2021, 111% of the amount requested by businesses was reimbursed. In 2022 (11-m) 70% of the requested amount was reimbursed.

The excise duty collected in 2021 (11-m) in the amount of 46.6 billion ALL was collected based on the import of 561.7 thousand tons of fuel, 2,648 tons of cigarettes, 8,268 tons of coffee and 46.5 thousand hectoliters of beer.

The excise duty collected in 2022 (11-m) in the amount of 48.6 billion ALL was collected based on the import of 508.8 thousand tons of fuel, 2,886 tons of cigarettes, 7,056 tons of coffee and 46.6 thousand hectoliters of beer.

From the comparison between excise duty collections for the main imported goods between the 2 years, it appears that although there is a decrease in fuel imports by 52.9 thousand tons less (9.5% less), as well as coffee by 1,212 tons (15% less), a small impact on excise duty could be from an additional 238 tons of cigarettes (8.9% more).

But, in a more in-depth analysis, taking into consideration the excise duty paid by local producers of beer, alcoholic beverages, wine, other excisable goods, it is observed that 2 billion Lek excise duty collected more in the 11th month of 2022 is found that it comes precisely from the internal excise tax.

How much is it estimated that fiscalization has influenced the reduction of informality?

In the absence of analysis and communications for transparency of fiscalization results, experts and partners of the network of professionals have carried out a simple comparison.

In an analytical perspective of the effect estimated by the fiscalization instrument[10] for the year 2021 and 2022, which can be verified from 2021 to 2022 through VAT collections, but also partly from the excise duty on excisable goods, the revenues collected in the account of the DPT are only 1.8 billion lek more in 2022.

We only analyze the internal VAT revenues, since the effect of import fiscalization has no impact on the informality of the economy, beyond the smuggling argument. Meanwhile, the impact from the exclusionary and facilitating fiscal policy has not changed in these two years and in this comparison is taken as an identical and constant impact.

However, in 2022 there is an average inflation rate that is 7.4% on average and this rate was used as a corrector of VAT revenues, which are transferred to the prices of goods and services consumed.

If we look at the two years, the effect of fiscalization does not have an impact of more than 0.2% on the increase in total income from consumption taxes.

This assessment, based on our calculations and considering the projection of VAT revenues for 2023, shows us that the entire process of fiscalization, which is distributed at the end of 2022 for all Albanian taxpayers, cannot yet be considered successful.

In 2023, supposing for the fight against informality to be in the same focus as anti-corruption, it remains that in the framework of transparency and accountability we have a changed situation, where the whole ordeal of several years of fiscalization is productive in the context of cost analysis and benefit.

[1] Central taxes, national taxes, customs duties, social contributions, as well as local taxes, duties, and fees
[2] https://www.imf.org/-/media/Files/Publications/CR/2022/English/1ALBEA2022004.ashx, faqe 34
[3] The tax-to-GDP ratio measures the size of a country’s tax revenue compared to its GDP. The higher the tax-to-GDP ratio, the better the country’s financial position. The report shows the government’s ability to finance its spending. A higher tax-to-GDP ratio indicates that the government can cast a wider fiscal net.
[4] Nominal value refers to the current price, without considering inflation or other factors compared to real values.
[5] including social contributions
[6] Excise duty, national taxes, social contributions
[7] including social contributions, which are then transferred to the social insurance account
[8] In 2022, the VAT ratio on total tax revenue is the same as in 2021
[9] http://gazetashqiptare.al/2023/02/01/perfundon-fiskalizimi-12-pak-te-bizneseve-aktive-tatimet-105000-biznese-leshojne-fatura-te-fiskalizuara/
[10] The fiscalization process is based on the authentication of transactions through the issuance of electronically signed electronic invoices. The business must be equipped with a certificate issued by AKSHI. This document is renewed every year and is integrated, both in the fiscal device and in the software program. The annual fee of the electronic certificate is 4,000 ALL, in addition to the costs of installation, internet, electronic equipment, available employees and financier.

Share this post

Leave a Reply


error: