The American Chamber of Commerce in Albania (AmCham) expresses concern regarding the proposed changes in the 2027 Fiscal Package, which provide for a considerable increase in the tax burden on businesses and alter the conditions on which enterprises have built their operating, financing, and investment plans. And which would discourage foreign investors from considering Albania for future business. AmCham believes that any significant change in fiscal policy should be based on a comprehensive analysis of its economic and social impact, an assessment of the expected costs and benefits, and a genuine consultation process with the business community before final decisions are made.
Easing the cost of living and supporting citizens, particularly the households most exposed to rising prices, are important objectives. However, achieving them must go hand in hand with maintaining a healthy business climate, encouraging investment, and creating sustainable jobs. For this reason, AmCham opposes financing social measures by increasing the burden on businesses that duly report their economic activities and regularly meet their tax obligations, without first examining possible alternatives and the effects of such an intervention. Considering also the level of underutilization of budgeted expenditures and the surplus in public finances, any increase in the fiscal burden requires a clear justification of its necessity and of how the additional revenue will be used.
The proposed changes simultaneously affect several key elements of the tax system. The increase in the dividend tax from 8% to 15%, and in the standard VAT rate from 20% to 21%, alongside the increase of certain reduced VAT rates from 6% to 10% and changes to the personal income tax on employment, represent measures with a direct impact on economic activity. These measures may reduce the funds available for reinvestment, lower returns on capital, and affect businesses’ operating costs, employment, and expansion plans. Net impact on GDP and thus gross tax receipts may well be lower than predicted if a new policy hinders evolution of the businesses.
Meanwhile Albania operates in a regional environment where outside investors compare fiscal conditions and the predictability of the business environment across countries. Increased tax rates will further diminish our competitive position. A decrease in FDI (Foreign Direct Investment) will shrink the potential size of the economy and thus produce negative ongoing fiscal consequences. Given the risk of such changes weakening Albania’s competitiveness as an investment destination relative to other countries in the region, we would expect a significantly deeper fiscal assessment to support these dramatic changes.
Another concern relates to the impact of the proposed changes on consumer prices. While the introduction of a reduced 6% VAT rate for a category of basic food products aims to ease the cost of living, raising the standard rate from 20% to 21% and certain reduced rates from 6% to 10% may lead to higher prices for a wide range of goods and services. To the extent that these increases are passed on to consumers, additional household expenses may diminish or partially offset the expected benefits of the VAT reduction on basic food products. Moreover, a reduction in the VAT rate does not in itself guarantee that the benefit will be fully reflected in final prices. For this reason, AmCham calls for an analysis of the net impact of the changes on consumer prices, purchasing power, and household budgets, as well as clarification of the monitoring mechanisms that will assess whether the intended social objectives are actually achieved.
AmCham further believes that financing social policies and increasing budget revenues should rely, first and foremost, on broadening the taxpayer base, reducing informality, and improving the efficiency of tax administration, before increases in tax rates are considered. Increasing the burden on businesses that declare and regularly meet their obligations, without first tapping the potential for formalizing the economy, risks placing a further burden on compliant enterprises and deepening competitive distortions. For AmCham, broadening the tax base, applying the law equally, and effectively combating informality represent a more sustainable approach to increasing public revenue, financing social needs, and preserving the competitiveness of the economy.
Our concerns are further compounded by the manner and timing of the introduction of these proposals. Changes with such a broad impact, which are expected to take effect from January 1, 2027, leave businesses a limited period to analyze the consequences and adapt. For enterprises with long-term investments, existing contracts, and financial commitments, these changes affect decisions made on the basis of a given fiscal framework. This is particularly important for American companies and international investors, for whom fiscal stability and predictability are essential factors in assessing a market. Sudden changes, without a clear timeline and reasonable transitional periods, may undermine the confidence of current and potential investors.
In this context, the proposed legislative amendments should be subject to deep fiscal studies and modelling which are transparently communicated, and then followed by real, effective, and inclusive public consultation process. Rather than being treated as a mere procedural formality. Proposals with a direct impact on business activity should undergo a thorough review, in which the arguments and recommendations of the business community are analyzed and taken into account before adoption. Such a process is essential to improving the quality of fiscal policy and avoiding unintended consequences for the economy.
Furthermore, the consistency of the proposed changes with the objectives and direction set out in the Medium-Term Revenue Strategy, developed in cooperation with international partners, including the IMF and the EU, needs to be clarified. Any departure from the measures or timelines envisaged in this framework should be accompanied by a clear economic and fiscal rationale, ensuring the coherence and predictability of tax policy.
Under these circumstances, the American Chamber of Commerce calls on the Government to reconsider the proposed increases in the tax burden, publish the economic and social impact assessments, and evaluate, as a priority alternative, broadening the tax base, reducing informality, and improving public revenue administration before adopting measures that raise tax rates. AmCham also calls for an open and meaningful consultation process and for reasonable transition periods before any changes of this magnitude are considered, much less implemented.
AmCham remains ready to contribute its expertise and concrete recommendations toward a fair, sustainable, and competitive fiscal system that encourages investment, supports formalization, and creates the conditions for sustainable and inclusive economic growth.