Zero profit tax on small businesses with annual turnover of up to 14 million lek, zero VAT on businesses with turnover of 10 million lek

Communication of Prime Minister Edi Rama on draft legislation designed to support small business:  


Hello everyone!

Today we are holding this communication that will then take place systematically with the reporters to directly inform the public and further answer, starting next time, the questions from journalists and the public through online platforms on the performance of the economy, the measures to support the economy, the facts and real figures of the economy.

We will focus on the small business today, about which we have launched and passed a very aggressive support measure that has been passed with the support of the parliamentary majority. A measure that is unique in our region and coincides with our pledge to provide strong support for anyone who generates employment for themselves and their families, as well as for others and becomes part of the small business community.

Pursuant to a decision of the Assembly of Albania, since July, small businesses with an annual turnover of up to 14 million lek will no longer pay profit tax. Zero!

In the meantime, small businesses with an annual turnover of up to 10 million lek will be also exempted from having to pay VAT. Zero!

Albania’s small business with annual turnover of 10 million lek is the only community in the region to be excluded from the value added tax. So, small businesses with annual turnover of 10 million lek will not pay VAT and those with annual turnover of 14 million lek will not pay profit tax.

It is important to look back for a moment and recall that just seven years ago, in 2013, the small business community paid a 10% flat profit tax and a total of 60,000 taxpayers were running small business activities with an annual turnover of 8 million lek. Not only these businesses paid a 10% income tax, but they also paid another 10% profit tax to the local government. Double taxation, as we branded it back then, which was gradually undone once we took office to this moment, which is historic for the small business community. This moment, which is extremely encouraging for all of those engaged in small business activities, or are seeking to create jobs for themselves, their families and other people, will pay zero VAT rate for an annual turnover of 10 million lek and zero profit tax for annual turnover of 14 million lek.

A significant figure is that the state budget has collected around 19 billion lek in profit taxes during the period between 2006 and 2013, whereas small business has paid only 5.3 billion lek in taxes since 2014.

This is a fact. These are figures and this is a clear picture to understand the big difference between this government not as a majority and administration that supports the rich only, but as a majority and administration that, first and foremost, strongly supports small business.

As of today, a total of 93 743 businesses or around 77% of the total number of businesses that pay zero profit tax. Around 14% of other businesses pay just a 5% profit tax rate.

Both these categories, with the law having been passed by parliament, will no longer pay profit tax.

In 2012, we found 450,000 employees were registered in the state’s payrolls. While the number of registered employees at the end of 2019 was 698.000 up by 55%.

With the COVID-19 pandemic, small business could have dealt a devastating blow. But today we can confidently highlight some fact and figures and underline that we have left nobody alone, not a single employee in small businesses, a total of 43.265 businesses, which we supported with an assistance measure of 7 billion lek. Plus, the one-off sum of 40,000 leke paid to 172 263 other workers.

For more details, I will give the floor to the Finance Minister and the Reconstruction Minister, whose work is closely related due to the need to simultaneously address the growth and recovery problems while we are seeking to take further steps. However, I would like to highlight one indicator.

These are businesses in the Republic of Albania and here is 9% of those who are richer, out of 1005 businesses. These today pay a 15% tax rate.

Seven years ago they used to pay only 10%. So, unlike what the propaganda claims, we have imposed higher taxes on those who earn more.

Meanwhile, around 14% of the taxpayers will now pay zero taxes from a previous 5% rate they used to pay until lately, down from a flat 10% rate they used to pay under the previous government.

In the meantime, 77% of the businesses will pay zero profit tax and VAT.

This is the true picture of Albania doing business today and the government’s relation with this Albania that does business today.

The Finance Minister will certainly provide further details and the Reconstruction Minister will elaborate on some other indicators and data for which we bear full responsibility and would have wished to see others opposing them by providing facts and figures should our figures are questioned, but these are the official statistics and data of the Republic of Albania today.

This is the first day of an intense communication we will hold with journalists to confront with our truths and figures after a hard work, day and night, in our endeavour to take Albania to a whole new level, a much higher and safer level than the insecurity and very low level for everyone just seven years ago.

To conclude, I will also highlight another data on small business and we have taken into consideration the small business with an annual turnover of under 8 million lek, while this concept will change after the passage of the law in July and we now have small businesses with annual turnover up to 100 million lek that pays no VAT and small businesses with annual turnover of up to 140 million lek that will not have to pay profit tax.

This is the performance of the small business.

[shows data on the chart] This shows the month of April, when business registered a drastic decrease, this is June, whereas the July and August indicators are much more encouraging.

This is the average number of businesses that register in the Republic of Albania [data chart], where all businesses are being closed, according to those who pretend to have landed from the Moon. An average of 14,121 businesses were registered each year during the period between 2009 and 2013.

An average of 20,785 businesses are registered each year from 2014 to 2019. In 2020 we are still waiting to get the final figure. So, a 47% increase in registration.

These are facts and figures on official registers. They are related to contributions, taxes, social and health insurance contributions. These are not parliamentary figures, but I am talking about the idle discussions.

There is another worth highlighting figure. In addition to the war salary and the one-off sum of 40,000 leke payment, the removal of simplified profit tax instalments and the postponement of profit tax instalments has an estimated effect of 19.1 billion lek or $190 million that has been left to business, companies and all of those who were not left alone to cope with the difficulties caused by COVID and the total lockdown. This is a fact. It is an amount of $ 190million that did not end up in the state coffers.

In the meantime, it doesn’t turn out that the mass Reconstruction Programme is suffering any setbacks. It doesn’t turn out that we are experiencing any setbacks in supporting and caring about every sector and the people in every sector.

We will talk about other facts and figures next week and we will take stock of every program pledges and confront them with facts and figures and not perceptions that are created and made up through daily repetition of defamations, allegations, lies and fabrications or by looking at the Albanian reality not from the site of work, where ordinary people of this country work, produce and generate hobs for others, earn income, produce and export, but from the ground of idle talks.