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3,600 freelancers closed their businesses in 4 months after the tax was introduced

2024-05-20 17:20:13Biznes SHKRUAR NGA REDAKSIA VOX

3,600 freelancers closed their businesses in 4 months after the tax was

After the government decided to tax freelancers up to 23%, thousands of individuals affected by this regime have requested closure of the activity near the National Business Center. In the first four months of the year, KKB received 3,620 requests for business closure. Experts predict an increase in the number if the Constitutional Court decides against freelancers.

Esmeralda Topi

The entry into force of the progressive taxation of freelancers has forced thousands of them to close the activity.

According to the new income tax law, the income tax rate for small businesses with a turnover of up to 14 million ALL per year is 15 percent. Meanwhile, the tax for businesses with an annual turnover over ALL 14 million amounts to 23 percent. 

This taxation regime has pushed 3620 individuals to seek closure of business near the National Business Center. According to the KKB, 35% of them have been officially closed, while the rest are still in the process.

"The application for closure has a deadline of verification by the tax and municipal bodies of 30 working days, therefore the applications received in the month of April receive a response from our institution in the following month," explains KKB.

Hopes for the Constitutional Court

The new income law that affects all self-employed, natural persons and self-employed service traders has been appealed four times to the Constitutional Court.

The parliamentary group of the Democratic Party

Accountants and auditors (IKM and IEAKA)

400 different professionals

Association of Driving Schools

The court has set the date of June 18 for holding the first session where the first three lawsuits will be examined.

"We have no doubt that we have hope because we have [the complaint] based on the law. It depends on how they will judge the Constitutional Court. I hope...", says accountant Sotiraq Dhamo.

According to him, the revision of the installments or the change of the tax rate by the Constitutional Court are the only hope for all those affected by the new progressive taxation regime. In case the Court comes out with a negative decision, Dhamo predicts that the number of closed businesses will increase further.

"Even more will be closed in case the Constitutional Court has a negative decision. A part is still waiting for its decision," argued Professor Dhamo.

The decision of the Constitutional Court will be decisive for the fate of thousands of professionals who exercise their activity in Albania.

"In the end, the ones who will pay are the citizens, as the prices will increase. The self-employed will pass on the increased costs to the products or services they offer", argues the expert on fiscal issues, Eduard Gjokutaj.

In addition to increasing prices, taxing freelancers, according to Gjokutaj, creates a path for informality and encourages professionals to leave.

"When you haven't closed the escape routes, you will force these free professionals to go informal, or on the other hand, you will encourage them to leave for neighboring countries," he emphasizes.

cONcluSiON

Progressive taxation of freelancers would take effect in 2023. But faced with strong opposition from thousands of freelancers in an election year, the majority took a step back. Socialists postponed for this year the taxation of lawyers, notaries, accountants, auditors and all other free professions. 

The Ministry of Finance says that the new tax regime includes up to 29,000 self-employed businesses. In the financial accounts, about 90% of the total affected businesses (divided according to 3 categories, such as: self-employed, natural persons and traders) are in the range of annual income up to 14 million ALL per year, which means that will pay a 15% tax rate. 

The government expects to collect 3 billion more in budget revenue from this tax. / Faktoje.al


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