
The government plans to reduce VAT on 54 food basket products by 14% from January 1, 2027. In other words, the Value Added Tax that will be applied to these products will not be 20%, but 6%.
The reduction in VAT on food products, foreseen in the 2027 fiscal package, aims to ease the financial burden on consumers, at a time when the prices of basic products continue to be one of the main concerns for Albanian families and constitute the highest share of their budget expenses.
But does this automatically mean price reductions for these products?
The real effect of this fiscal intervention on final prices remains to be seen. The tax reduction does not automatically guarantee a corresponding reduction in prices, as its reflection also depends on the behavior of economic operators along the supply and trading chain.
Sources from the Ministry of Finance indicate that to guarantee that the benefit from the VAT reduction goes to the consumer, market monitoring mechanisms are being envisaged. In cases where businesses do not reflect the tax reduction in product prices, measures may be taken by the responsible institutions, through the control structures of the General Directorate of Taxes.
Meanwhile, the concrete way in which these control mechanisms will function remains under discussion, but one of them is through verification of the profit margins that companies currently have.
However, a clear mechanism is expected to be determined on how prices will be monitored before and after the fiscal change comes into effect, as well as what instruments will be used to identify cases where the VAT reduction is not passed on to the consumer.
One of the main challenges will be precisely ensuring transparency in the market and avoiding situations where the benefit from the tax reduction is absorbed by trading margins, without bringing a significant change to the consumer bill.
In parallel with the reduction in VAT on food, at the beginning of next year, the general VAT increase to 21% will be applied, which is expected to bring an increase in the cost of products and services. /scan tv