Do these represent a real shift in approach compared to past anti-informality campaigns?

Albania’s efforts to combat informality have been a focus of successive governments, with campaigns in 2015, 2018, and 2021 aimed at curbing informal businesses, wage evasion, and tax avoidance. These previous campaigns mainly included:

Tax Registration Campaigns (2015)
The 2015 campaign focused on encouraging businesses to officially register with the tax authorities. However, the results were limited as many businesses remained outside the formal sector due to concerns about the tax burden and bureaucracy.

Social Security Contributions (2018)
The 2018 efforts focused on increasing social security contributions and tackling underreporting of wages, particularly in the informal employment sector. While this was seen as a step forward, many businesses still found ways to circumvent the system.

Tax Compliance Campaign (2021)
The 2021 campaign was similar, emphasizing improved tax compliance and reduction of the informal economy. However, issues such as weak enforcement, corruption, and complexity in the tax system continued to undermine these efforts.

What is new in 2024?

While the government’s commitment to reducing informality remains steady, there are some differences in the current campaign compared to those of 2015, 2018, and 2021. These new approaches reflect both technological advancements and a strategic shift, partly driven by external pressures such as the EU integration process and Albania’s commitment to tax reforms.

Digitalization of the Tax System

One of the most significant changes in 2024 is the digitalization of Albania’s tax system, which began in earnest in 2022 and is continuing into 2025. Unlike previous campaigns, which heavily relied on manual processes and paperwork, the government has integrated digital platforms for tax files, electronic invoicing, and automated audits. This aims to increase transparency and reduce human error or corruption in tax administration.

Real-time data and monitoring
The digital system allows authorities to monitor businesses in real time, greatly enhancing the audit process. This was less feasible in previous years when tax evasion often relied on paper-based systems where tracking transactions was more difficult. This shift represents a technological leap compared to past campaigns, where digital tools were either underdeveloped or inconsistently used.

Smarter tax compliance
The use of digital platforms means that businesses can now engage in self-assessment and submit taxes online, potentially reducing bureaucratic burden. The integration of tools such as e-taxation (through the National Business Center) and e-invoices aims to ease compliance for businesses while also reducing opportunities for underreporting.

Focus on Wage Evasion

The current push to address wage evasion is more targeted and data-driven than in previous years. At first glance, the government is focusing on tackling wage evasion through more sophisticated tools like data analytics and cross-checking with social security databases.

The focus on wage evasion stems from the understanding that underreporting wages significantly contributes to the informal economy. Critics have argued in the past that the government failed to prioritize this issue, leading to widespread underreporting of wages, particularly in industries such as construction and hospitality.

The ability to automatically verify wage data with other government databases is a major improvement compared to past efforts, where enforcement of wage and tax compliance was often inconsistent.

Political Will and Public Engagement

In previous years, there was a perception that political will was lacking or inconsistent. The campaigns in 2015 and 2018 were often criticized for being superficial or failing to achieve lasting change. The 2024 approach places greater emphasis on public awareness and engagement, with efforts to educate both businesses and the general public about the benefits of formality.

This time, the government has been more active in publicly sharing its anti-informality agenda through media campaigns, emphasizing that the benefits of paying taxes—such as improved public services and economic stability—will ultimately benefit everyone. The integration of incentive-based models (such as tax reliefs for formal businesses) may further encourage participation.

Regional and EU Impact

The ongoing effort to align with EU standards has also been a catalyst for more comprehensive reforms. Albania’s ongoing EU accession process requires improvements in its fiscal system, including tackling informality, as EU institutions demand higher levels of transparency, accountability, and tax compliance. Albania’s Digital Tax System is partially modeled on EU best practices (e.g., Croatia’s real-time invoicing system).

The government’s tax reform has also been shaped by recommendations from EU bodies such as the European Commission and the OECD, which have consistently highlighted informality as a key barrier to economic development and EU integration.

What is still missing?

Despite these improvements, some of the persistent challenges from past campaigns still remain.

The first concern relates to poor enforcement of policy-driven programs and initiatives, as digitalization alone is not enough to address informality.

Enforcement of tax laws remains a critical issue. Past campaigns struggled with weak enforcement mechanisms, and if the current reforms are not backed by strong oversight and audits, they may fail to make a real impact.

The second concern involves political patronage and corruption. A major criticism of past campaigns was that political patronage and corruption allowed some businesses to avoid taxes without consequences. If these issues are not addressed on a case-by-case basis, they will continue to undermine the success of current efforts.

The third concern is business resistance to wage formalization. Small and medium-sized enterprises (SMEs) may still resist formalization due to high taxes, complex bureaucracy, or fear of tax assessments following fiscal inspections. This resistance could undermine the government’s campaign if businesses continue to see informality as a more attractive option.

The core challenges of corruption, weak enforcement, and business resistance that remain will most likely be confronted by the government’s ability to implement reforms effectively and address the root issues of informality and corruption. Thus, while there are certainly improvements, the public remains unsure whether this will lead to lasting change or is simply another campaign ahead of the 2025 elections.

Sources:

• OECD. OECD Tax Policy in Albania
• Transparency International. Corruption Perception Index – Albania
• European Commission. EU Progress Report for Albania