The Flat Tax Spreads to Albania
June 6, 2007
By Alvin Rabushka
On May 30, 2007, Albania’s parliament approved a 10% flat tax on personal and corporate income. Based on its success throughout Central and Eastern Europe, Prime Minister Sali Berisher has been a strong supporter of the flat tax. The government hopes to implement the 10% flat tax on personal income by July 1, 2007. It replaces the previous system of five rates, 5% on monthly income between 14,000-40,000 leks ($1=91.62 ALL), 10% between 40,000-90,000 leks, 15% between 90,000-200,000 leks, 25% between 200,000-500,000 leks, and 30% over 500,000 leks. Dividends received by individuals remain taxed at 10%. The 10% tax also replaces the small business tax rate of up to 30% that applies to individuals.
The 10% corporate income tax replaces the current 20% rate on profits.
The Albanian government stated that its enactment of a 10% flat tax was intended to create a friendlier investment climate, make the economy more competitive, attract foreign direct investment, encourage the legalization of the shadow economy, and simplify tax collection.
June 6, 2007
By Alvin Rabushka
On May 30, 2007, Albania’s parliament approved a 10% flat tax on personal and corporate income. Based on its success throughout Central and Eastern Europe, Prime Minister Sali Berisher has been a strong supporter of the flat tax. The government hopes to implement the 10% flat tax on personal income by July 1, 2007. It replaces the previous system of five rates, 5% on monthly income between 14,000-40,000 leks ($1=91.62 ALL), 10% between 40,000-90,000 leks, 15% between 90,000-200,000 leks, 25% between 200,000-500,000 leks, and 30% over 500,000 leks. Dividends received by individuals remain taxed at 10%. The 10% tax also replaces the small business tax rate of up to 30% that applies to individuals.
The 10% corporate income tax replaces the current 20% rate on profits.
The Albanian government stated that its enactment of a 10% flat tax was intended to create a friendlier investment climate, make the economy more competitive, attract foreign direct investment, encourage the legalization of the shadow economy, and simplify tax collection.
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