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The tax burden of a freelancer in Albania is higher compared to Kosovo and the countries of the region, such as: North Macedonia and Montenegro.
In Albania, businesses with an annual income of up to 140,000 euros are taxed at 15%. Bandage businesses with an annual turnover of over 140,000 euros are taxed at 23%.
In Montenegro, taxation is zero for self-employed businesses with income up to 8,400 euros per year. For bandage businesses with a turnover of 8,401 to 12,000, taxation is 9%. For businesses with an annual turnover over 12,000 euros, the tax is 15%.
In Kosovo, for businesses and the self-employed with an annual income of up to 960 euros, taxation is zero. For the second band of businesses, which belong to the annual turnover category of 961 euros to 3,000 euros per year, the tax is 4%.
For businesses with turnover from 3,001 to 5,400 euros per year, taxation is 8%. As for businesses with turnover over 5400 euros, the tax is 10%.
In North Macedonia, businesses with an annual turnover of up to 17,080 euros, the tax is 10%. Above 17,080 euros annual turnover, the tax is 18%.
For many of the businesses in the IT sector, setting higher tax rates than Kosovo or other countries far from the Balkan region, such as Estonia and Georgia, Albania loses its competitiveness and strategic position in the Balkans to provide innovative services for Europe and the American market with free cost.
Consequently, after the 15% taxation, there are many people who have a passion for engineering, as self-employed, who are already looking towards Kosovo or further afield for opening a business, due to more favorable fiscal policies.
The survey showed that 23% of the respondents were thinking of closing the activity, where 17.5% of them said they would close or suspend the activity, while another 5.4% said that in addition to closing the business they would leave the country . Kosovo, Estonia, Georgia were the most considered choices for business transfer.
Lawyer Sajmir Laçej says that out of 29,000 self-employed professionals, only 169 have an income of over 140,000 euros per year, which is claimed to pay 23%. According to him, if it is not reflected to review the legal provisions for freelancers, it will have a number of negative effects.
"Many natural persons will be converted into LLC with 15% tax profit. Foreign professionals will leave Albania to neighboring countries that have a more favorable tax system.
While lawyers, notaries and accountants will raise prices by transferring costs to those who serve them with 0% taxes until 2029. Some will be employed by companies".
How can it be reflected? It recommends that first, a specific manual for the deductible expenses of independent professionals by fields should be adopted.
Secondly, to determine the threshold with 0% taxation, for net income up to 12,000 euros per year.
Third, to revise the tax level according to categories with a progressive taxation level: 10% taxation for income from 12,001 to 100,000 euros per year; 15% tax for income over 100,001 euros.
"This would be a positive and long-term reflection to be applied to other businesses that have 0% tax, until 2029, preparing them so that it does not happen as with freelancers"./Monitor
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