Taxable threshold, VAT rates and revenues, 1996-2020
Based on the turnover the businesses realize, the division of taxpayers at the end of 2019 is as follows:
- 20 thousand subjects in VAT are big business with a turnover of over 8 million ALL,
- 18 thousand subjects in VAT are small business with a turnover of 5-8 million ALL,
- 10 thousand subjects in VAT will be small business with a turnover of 2-5 million ALL,
- 60 thousand entities remain outside the VAT scheme, i.e. small businesses.
Taxable threshold
The turnover threshold for the effect of meeting the legal criterion to become a mandatory subject for VAT registration has been applied in Albania since the year when the implementation began for the first time in 1996.
In a 24-year chronology, this threshold has changed 7 times.
| VAT/YEARS | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008¹ | 2009 | 2010² | 2011² | 2012 | 2013 | 2014³ | 2015 | 2016 | 2017 | 2018 | 2019 | 2020⁴ | |
| VAT rates (%) | Standard | 13 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 |
| Reduced | 13 | 10 | 10 | 10 | 10 | 6 | 6 | 6 | 6 | |||||||||||||||||
| Threshold (million Lekë) | 2 | 2 | 5 | 5 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | 8 | 5; 2 | 5; 0 | 5; 0 | 5; 0 | 5; 0 | 5; 0 | 5; 0 | 5; 0 | 2; 0 | 2; 0 | 2; 0 | |
| VAT revenues (mld. Lekë) | 9 | 16 | 29 | 30 | 38 | 41 | 46 | 51 | 58 | 65 | 74 | 88 | 107 | 110 | 114 | 119 | 117 | 112 | 124 | 126 | 131 | 140 | 144 | 132 | 113 | |
| ¹ farmer compensation rate set at 6% | ||||||||||||||||||||||||||
| ² in March 2010 the threshold for professions becomes 2 million ALL. In February 2011 the threshold for professions such as: lawyer, notary, specialist doctor, dentist, specialized dentist, pharmacist, nurse, midwife, veterinarian, architect, engineer, physician-laboratory technician, designer, economist, agronomist, expert and accountant, property appraiser, hotelier registered and approved accountant, property appraiser; as well as taxpayers providing services in economic activity in the field of hospitality | ||||||||||||||||||||||||||
| ³ farmer’s compensation rate changes from 6% to 20% | ||||||||||||||||||||||||||
| ⁴ The VAT revenues for 5 months in 2020 is 47.9 billion ALL. The table shows the projection calculated by ALTAX experts for 2020 | ||||||||||||||||||||||||||
Effects of the tax base in the last decade from the change of the VAT threshold
The reduction of the threshold from 8 to 5 million in January 2010 did not result in a reduction in the number of taxpayers in either large or small businesses. The number of VAT taxpayers after this change in the next two years increased by 6,000 new taxpayers, while the number of small business taxpayers increased by 4,700 new taxpayers.
At the end of 2013, small business consisted of 13,300 entities, while today there are 32,000 entities.Currently, from the grouping of 90 thousand small businesses, 20% of them or 18 thousand small businesses with a turnover of 5-8 million ALL are part of the VAT scheme from January 1, 2010 on wards.
With the reduction of the threshold from 5 to 2 million ALL, the small business with VAT is increased by about 10 thousand other businesses and constitutes about 31% of the total small business total.
Even after the reduction of the threshold from 5 to 2 million ALL, again 56% of businesses continue to operate outside the VAT scheme. Within the VAT scheme are only 44% of entities that conduct economic activities.
The level of VAT collection and the impact of small business
Total VAT revenues if we compare 2019 with 2009 it can be concluded that they have increased by 20%. This increase in VAT if compared only to the increase in gross domestic product in the last 10 years, which has increased by at least 30.3% clearly shows how much VAT has flowed from politics and administration not harmonized with each other, as in terms of tax exemptions, but also from the impact of evasion. Small businesses with VAT collect nearly 1.1 billion ALL in VAT.
This amount represents 2.8% of the total VAT, or that part of VAT collected by the tax administration. In total, this VAT accounts for 0.01% of the total VAT collected from taxes and customs in 2019.
VAT in the Balkans and tax rates along with the taxable threshold
In a comparative look at VAT rates (standard and reduced) in 2020, as well as the taxable threshold for the Balkans, it can be seen that:
| BALKANS | VAT | THRESHOLD (Euro) |
| NORTH MACEDONIA | 5; 18 | 32,555 |
| KOSOVO | 8; 18 | 30,000 |
| MONTENEGRO | 7; 21 | 18,000 |
| ALBANIA* | 6; 20 | 16,000 |
| BOSNIA-HERZEGOVINA | 17 | 25,600 |
| SERBIA | 10; 20 | 60,000 |
| BULGARIA | 9; 20 | 10,200 |
| GREECE | 6; 13; 24 | 10,000 |
| CROATIA | 5; 13; 25 | 10,400 |
| ROMANIA | 5; 9; 19 | 7,290 |
| * the threshold will increase to 80.000 Euros | ||
We see that:
- the lowest standard rate in Bosnia and Herzegovina;
- the highest standard rate in Greece and Croatia
- the threshold of the highest VAT taxable turnover is in Serbia
- the threshold of the lowest VAT taxable turnover is in Romania.
Meanwhile, in Albania, compared to the surrounding neighbors, there is a taxable threshold that is the lowest.
With the media coming out in June 2020 of the Minister of Finance, it is expected that this taxable threshold will reach 80 thousand Euros, becoming the highest threshold in the entire Balkans and compared to neighboring countries.
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