Prime Minister Edi Rama’s remarks at meeting with General Taxation Directorate officials:

First of all, unfortunately, the political situation and the constant calls against the state, the general anti-state movement over the past few months that preceded the June 30 local polls, the anarchic outcries and the unjustifiable actions primarily against the State Police, but also against the state institutions in general have definitely had a negative impact on the public, as well as on the public administration. An increase in the informality level was one of the consequences of this negative impact.

Time is now high for tax administration’s immediate frontal reaction, either individually or collectively by every tax administration official and employee, to address this phenomenon by adopting a zero tolerance policy.

Issuing the tax receipts at the moment is at its lowest rate, even lower than it was prior to the launch of a tough but indispensable fight against the informal economy and tax evasion in the country. This is the tax administration’s direct responsibility it should systematically and intolerantly address, just like it is a direct responsibility of the tax administration not to restore the heinous conduct and practice of the past.

On the other hand, the informality rate has again significantly affected the labour market too. We have decreased the unemployment rate to 12.1 percent, its lowest rate in more than two decades, while a daunting increase in the informal labour has been recorded again. This should also be an essential part of the daily concern and actions by the tax administration in close collaboration with the State Labour Inspectorate. Again, I reiterate, they should build a well-structured action, but away from demonstrating any aggressive and arbitrariness actions hurting business.

One of the most important accomplishments of this ruling majority has been the release of many people from slavery work in informal economy. Such an achievement cannot be undone, on the contrary, it needs to be reconfirmed and consolidated.

Today, these two institutions, the Tax Administration and the Labour Inspectorate, operate under one umbrella and should work as an integrated system. It is deplorable that a growing number of inspections are reported year by year while the effectiveness of these increased inspections is declining. No targeted actions are carried out and inspections that consume excessive energy, affect the image of the state and unjustly worry entrepreneurship are conducted. And certainly this is all reflected in a narrower space for public investment and the violation of the social packages that have been approved and budgeted.

It is intolerable that lack of efficiency from these two structures affects investments and social policies.

The Ministry of Finance and Economy has set performance indicators that are not applied to every employee and to every detailed inspection.

Meanwhile, I would like to strongly emphasize today what many of you might have repeatedly heard from the Minister of Finance and the Deputy Prime Minister. Whoever fails to meet the performance indicators will no longer be part of this administration, neither the Tax administration, nor the State Labour Inspectorate.

Can one of you here tell me, is it acceptable that more than 15,000 cash registers report, or transmit no data from some 112 000 active businesses operating today? They are a number one risk factor.

Who is going to be held responsible for this?

Is there anyone being held responsible for this?

Who covers the territory of these red alarm points?

How comes that a new day, a new week and month come and these red alarm points remain red?

Why no fines are imposed on the cash register companies? The law stipulates it clear.

A system largely seen operational has been set up in the Tax Administration together with the International Monetary Fund (IMF), which the Fund itself has been hailing as a model to be used in other countries to modernize interaction with taxpayers too, with risk modules that would make up the basis for analyses and targets of the tax inspections and direct visits to the businesses in an intelligent activity. There is only one reason behind the insufficient results: disorganization and anarchy within the administration, where the past phenomena with individual or group activities involved in corruption practices.

We are currently working on fiscalization project, or fiscal law designed to avoid retailer fraud, which will soon undergo a public consultation process on the electronic receipt to transparently detect any transactions by transitioning to a digital model, with every receipt being practically monitored in real time, putting an end to the era of end statements, but also to the receipts issued among the businesses themselves. The system will even monitor the bills payment via banks, in order to prevent any fraud bills.

However, whole this system does not rule out the human factor, it doesn’t rule out the organization, coordination and daily actions factor.

Tell me, how comes that fuel, tobacco and excise goods in general, including alcoholic beverages, but also the construction industry that have the highest impact on the budget revenues, are not addressed by this administrative system in a coordinated manner, let alone tourism, which is at its peak!

We have drastically cut the Value Added Tax to a six percent rate only, in a bid to lure entrepreneurship, as well as to formalize the market. The entrepreneurship has been eased, yet the market has not been formalized. Risk analysis is missing again.

The model is clear. The risk module identifies 6100 high-risk businesses, 270 of which are subject to excise tax, 453 are construction firms, while the main focus is missing.

Then, when this question should be strongly raised and when an answer is going to be provided to this question? Why?

Only 1574 subjects have been registered with Booking.com.

Do they declare their turnover to the tax administration?

What does it mean that their turnover is revealed by booking.com, but the tax administration has no idea about their turnover?

This is because of disorganization and anarchy.

There are penthouse apartments in Saranda, advertising 550 euro-prices per night and they turn out to be fully booked online, which is indeed a fantastic development for tourism, as it shows a positive growth of tourism industry and its revenue.

How comes that such apartments pay no tax contributions?

We have repeatedly stated that tobacco and fuel need an integrated cooperation between the Tax Administration and the Customs Administration, data sharing and exchange, monitoring of each link of an entire chain from arrival to the end user and consumer. Tax on such goods account for around 40% of the Customs revenue and any failure to collect such revenue have a direct negative impact. The fraud VAT schemes in the construction industry have been discovered and destroyed, but they have not been totally eliminated.

We will soon finalize the employment project for some 200, who will involve in communication with the business to assist you during inspections on the ground. Starting today, the Employment Service will announce the vacancies and the recruitment procedures and the General Taxation Directorate will coordinate this whole team, yet it is the tax officials and employees the ones who ultimately have to share the burden of this task.

We have decided to replace the General Director and Mrs. Ibrahimi, who has been chairing the National Institute of Statistics (INSTAT) will now serve as the head of the Tax Administration, but this is just the beginning of a process of performance-based changes to the entire hierarchy.

Performance has been the key evaluation criteria for the previous head of Tax Administration.

The same goes for the new Director General of the Tax Administration.

Performance results will be the key evaluation criteria for every tax administration official at any level.

It is time to give a clear message not only through words but also in concrete actions that informality will no longer be tolerated!

Of course, as I stated at the start of this address, the political situation over the first six months of the year has totally disfavoured the state’s overall performance and certainly, in this regard, there is room for understanding with businesses, citizens, and consumers, yet there is no room for understanding with the public administration.

No understanding will be shown on any tax administration official who fails to achieve the monthly result and performance targets.

No understanding will be offered to any tax administration employee and inspector who fail to meet the monthly performance targets.

To conclude, I would add something about the Tax Investigation Directorate. A year ago, the Tax Investigation was identified as a weak problematic link with the business, the consumer and the state itself.

The Tax Investigation cannot act as paramilitary inspection troops.

The Tax Investigation should act as the intelligent service of the tax administration.

It should act as the eye that can see where others can’t, the ear to listen where the others can’t and initiate assaults based on intelligent findings, and not act as a paramilitary force raiding enterprises and business premises, because as such it causes a lot of harm.

I am confident that the newly-appointed head of the Tax General Directorate, together with the Ministry’s team and tax administration, under the systematic oversight of the Deputy Prime Minister, have every opportunity to succeed, but success in this area and at this moment requires sacrifices, not in terms of any heroism, but in terms of commitment of any individual or relevant structure working to achieve performance targets.

Wishing every success to the new head of the tax administration and every other official and employee in the tax administration, I would like to conclude by extending an appeal to all businesses:

For more than six months, we have opted for a more advising, informing and educating approach, instead of taking the final step before taking some initial steps. This period is now over and I believe that the existing legislation makes it clear and it stipulates that any business failing to regularly operate by issuing the due receipts, then they face penalties, including the closure of the business activity. But it would incur serious damages and losses to any business operators. Therefore, I beg everyone, don’t challenge the tax administration, don’t challenge the state, because nobody would be tolerated!

Thank you very much!