The Albanian government is set to re-introduce a law that will allow citizens to declare up to €2 million in funds against a tax rate between 5-10% without needing to justify their sources.
Much criticised by the EU and International Monetary Fund, the so-called fiscal amnesty law applies to foreigners and Albanians who are fiscally resident in the country. The money, previously not declared or coming from tax evasion, corruption, or smuggling, can be essentially legalised through the payment of a tax, with no grounds for prosecution or other legal action.
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Notably, the bill excludes any politician, official, or former state official and those on their family certificates such as spouse, children, and parents. It does not apply to other family members such as a cousin, aunt or uncle, and parents-in-law.
The bill was first introduced over a year ago. Still, the government was forced to withdraw it following outrage that it was essentially state-backed money laundering, with the European Commission applying significant pressure.
The new draft of the law, however, does not contain any provisions to check whether the funds have come from tax evasion or more severe crimes such as drug cultivation or human trafficking. While the text states that subjects involved in organised crime and trafficking are prohibited from benefiting, there is no information on how this will work in practice.
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A full criminal amnesty will be given to the law’s beneficiaries regarding the specific assets covered. Prosecutors and law enforcement may not investigate the assets or use them as indications for other investigations.
“Beneficiary entities, to which the relevant certificate of completion of the voluntary declaration process has been issued, are exempted from criminal prosecution for criminal offences in the field of taxation and customs that are directly or indirectly related to the creation and disposal of declared property,” the law says.
Albanian law currently has penalties of three to ten years for VAT fraud and smuggling of excise goods, up to seven years. Still, under the law, criminals need only pay a minimum of 5% fee on the value and need not worry about legal action.
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According to the draft law, the fiscal amnesty implementation will be done in a non-transparent manner by a small working group of the tax administration headed by the Director-General.
“For the implementation of this law, a special structure is set up in the General Directorate of Taxes, called the Unit for Supervision of Voluntary Declaration of Assets (Unit), under the direct supervision of the Director-General of Taxation,” reads the draft law.
In Albania, citizens face up to 40% of their income, including Value Added Tax at the rate of 20% and health and social insurance at the rate of 25%.
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