The Albanian government is about to reintroduce a law that will allow citizens to declare up to 2 million euros in funds against a tax rate of between 5 and 10% without having to justify their sources.
Highly criticized by the EU and the International Monetary Fund, the so-called tax amnesty law applies to foreigners and Albanians who are tax resident in the country. Money, previously undeclared or derived from tax evasion, corruption or smuggling, can essentially be legalized by paying a tax, without cause of prosecution or other legal action.
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Notably, the bill excludes any politician, civil servant or former state official and those listed 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 in-laws.
The bill was first introduced over a year ago. Yet the government was forced to withdraw it following outrage that it was essentially state-sponsored money laundering, with the European Commission exerting significant pressure.
The new bill, however, contains no provision to check whether the funds come from tax evasion or more serious offenses such as drug cultivation or human trafficking. While the text states that subjects involved in organized crime and trafficking are prohibited from benefiting, there is no information on how this will work in practice.
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Full criminal amnesty will be granted to beneficiaries of the law regarding the specific property covered. Prosecutors and law enforcement cannot investigate the assets or use them as clues for further investigations.
“The beneficiary entities, to which the certificate of completion of the corresponding voluntary declaration process has been issued, are exempt from criminal prosecution for criminal offenses in the tax and customs field relating directly or indirectly to the creation and sale of declared property,” says the law.
Albanian legislation currently provides for penalties ranging from three to ten years for VAT fraud and smuggling of excise goods, up to seven years. Yet under the law, criminals only have to pay a minimum 5% fee on value and need not worry about legal action.
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According to the draft law, the implementation of the tax amnesty will be carried out in a non-transparent manner by a small tax administration working group headed by the director general.
“For the application of this law, a special structure is set up within the General Directorate of Taxes, called the Control Unit for the Voluntary Declaration of Assets (Cell), under the direct supervision of the Director General of Taxes”, we read in the press release. law Project.
In Albania, citizens have to pay 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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