The “Albanian Commercial Union” express to the Prime Minister Mr. Edi Rama, the Ministry of Finance and the Ministry of Economy concerns and suggestions regarding the Law 99/2015 “On some amendments to the Law on Tax Procedures in the Republic of Albania”.
We hereby share some problems that produce concerns among large and serious companies, which employ a large number of employees, are important contributors on paying taxes and base their business activities on honest work and in compliance with rules.
Our concerns relate mainly to the provisions of Law 99/2015 on some amendments to the Law on Tax Procedure, especially regarding the level of administrative and criminal penalties, the lack of precise criteria for determining violations and identifying and penalizing the responsible persons that have committed such violations.
Our general observations and recommendations regarding these provisions are as follows:
- Penalties should be scaled, depending on the violation, responsibility, taxpayer’s history in meeting tax obligations, the size and the real opportunities and wealth of the taxpayer. Thus, to respect the principle of proportionality, connecting the penalty amount to the level of the infringement, damage caused, etc. The Code of Administrative Procedure, Article 11 (principle of equality and proportionality), paragraph 2, stipulates:”2. Actions of public administration … should in any case respect the principle of proportionality and not affect the essence of freedoms and rights. This means that public administration actions shall be such that the scope will be realized with less repressive measures, without compromising their effectiveness.”
- Should be defined criteria that separates cases of intentional evasion of taxpayer from unintentional errors and employees mistakes. In large and regular companies businesses, although employees are instructed and trained by the company for the working processes, in order that the laws and regulations are implemented, it may happen that the worker incorrectly (due to careless) or intentionally (aiming misappropriation) does not issue the fiscal receipt (coupon) or the fiscal invoice. These cases where the taxpayer (the company) is not aware of any of the violations made by the employees, should not be considered tax evasion for the company and penalized as such, but can be adjusted by taking appropriate action against employees who committed the violation, paying the appropriate taxes due to the state, including penalties and interest for the late payment of tax.
- For cases that are criminal charge should have clear criteria for the determination of the violations, the responsible person, as well as for the value of the damage caused to the state budget.
Here below are presented more specifically those provisions of the Law on Tax Procedures that need to be clarified via an Instruction of the Ministry of Finance or amended by llaw:
- Article 121 Goods unaccompanied with tax documents. Under this provision, the taxpayer who storage, use or transports goods unaccompanied with tax documents, is punished by confiscation of the entire quantity of goods being held in storage, used or transported without tax documents. For taxpayers that are in wholesale, in addition to the confiscation of goods, it is made a reevaluation of income for a period of 6 months and a fine of ALL 10 million applies. Obviously, are given three and very high punishments for the same violation and further for repeated violations, criminal charges are filed against the taxpayer.
The Instruction of the Ministry of Finance should clearly define criteria by separating the following cases:
- Differences in the inventory resulting from errors made because of careless. In a lot of large companies, warehouses which has thousands of items, in supermarkets or hypermarkets, employees’ careless or intentional errors made for misappropriation purposes, or steals committed by the costumers etc., can create inventory difference. In such cases should be given clear criteria in the MF Instructions, and should be permitted compensations or differences, for example up to 10% of the value of the inventory, of course without prejudice to the tax obligations, but eliminating penalties and fines.
- Goods without any documentation, thus produced and supplied in contraband. In such cases should be applied the corresponding punitive measures according the responsibility and the damage caused.
The same rules should also apply to customs, distinguishing differences and discrepancies due to errors from the contraband cases.
- Article 122 “Administrative violations in the use of fiscal device…” Penalties for non-issuance of tax receipt (coupon) has increased to 500.000 ALL for each case (besides of tax obligation and a fine as 100% of the obligation). Thus are applied to very high penalties for the same violation. For repeated violations, criminal charges are filed against the taxpayer. In retail networks, supermarkets, hypermarkets or distributors, can occur in some cases that the employees, deliberately or accidentally, do not issue the tax receipt. Since the terms are not defined, the penalty will applies to the taxpayer even for intentional or unintentional errors performed by employees, while the responsibility is not of the company/taxpayer. We are of the opinion that clearer criteria should be set for determining violations, preserving the principle of proportionality and considering criminal charges when it is proved that there is a deliberate concealment of tax liabilities or contraband goods (without documentation) over a certain value.
- Article 124 “Violations in issuing tax invoices, tax receipts and documenting of transactions”. Paragraph 2 of this article provides the penalties in case the tax invoice is not issued by the taxpayer whom sells goods as wholesale. The penalty includes: (a) a fine equal to the 100% of the value the obligation undeclared or unpaid as a result of not issuing the invoice, except taxes and interests (b) reevaluation of incomes for a period of 6 months, and (c) a fixed penalty of ALL 10 million. Obviously, are given three and very high punishments for the same violation and it is not provided any protection to the taxpayer when the not-issuance of the tax document is connected to reasons that do not depend to the taxpayer. In the case of large distributors, warehouse receipts for supplies to other businesses are issued by agents of the seller. There are distributors that have dozens or hundreds of selling agents that issue thousands of tax receipts per day. Can happen for various reasons like negligence, misappropriation, etc., that the selling agent to not issue for the respective goods the sales invoice or tax receipt in the event that money are collected in cash. The taxpayer in this case will not only suffer from the theft made by the employee, but must also withstand the above penalties, and my even face criminal charges. If such a violation occurs should be applied only payment of taxes, interest and fines as well as 100% of the obligation, but should not be applied the other two penalties: the reevaluation of incomes for 6 months and the fixed fine of ALL10 million.
We consulted with fiscal domestic and foreign experts these problems and concluded that, compared with other countries in the region and beyond, the penalties provided for in Law 99/2015 are much more severe in Albania, and moreover there are uncertainties in the determination of violations. We ascertained from the global experience that fines are generally associated with unpaid liability (damage caused), while fixed penalties are escalation. In most cases, criminal charge applies only for serious intentional violations, and consequences of fiscal considerable damage.
ACU expresses its readiness to cooperate with the Ministry of Finance and the General Directory of Taxation to improve these provisions.
Believing that our comments and suggestions will be taken into consideration
Board of Directors
“Albanian Commercial Union” Association