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Research Evidence Lowers Taxes in Albania

CONTEXT

In November 2015, the Government of Albania passed the Law on Amendments to the Law on Tax Procedures in the Republic of Albania, introducing a series of amendments that directly impacted taxpayers, especially small and medium business owners, which are the backbone of Albania’s economy (companies from 1 to 4 employees constitute 89% of all registered entities). The new amendment increased the penalties for the breach of tax legislation more than 10 times, causing some of the small businesses to close down.

 
 

Nisma Thurje, a local grassroots organisation focusing on advocacy and increased citizens’ participation in decision-making, constituted a strong civil voice against these amendments, conducting numerous public analyses on the economic and social effects of these amendments and organising many public protests. Joining them in the discussions was the Association of Small Traders (a local union), as the official representative of the affected parties, namely small and medium traders operating in Albania. 
 
Regardless of these efforts, the Government passed the law and the Association of Traders, assisted by Nisma Thurje, decided to take the law to the Constitutional Court of Albania arguing the disproportionality between the breach of the law and the penalties imposed. During the proceedings it became apparent that no research evidence had been used to support the provisions of the law. After reviewing the case, in March 2016 the Court ruled in favour of small businesses, ordering amendments to a series of articles of the Law on Tax Procedures. 
 
PERFORM supported Nisma Thurje in collecting scientific evidence that would reinforce their proposals for the new amendments to the Law on Tax Procedures. It also served as a pilot for building a case of using scientific evidence and evidence-based argumentation on other similar issues in Albania.
 

Intervention Logic +
Nisma Thurje, under the facilitation of PERFORM, set up a core working group composed of representatives of the scientific community, tax and legal experts, representatives of the Association of Small Traders, and the media. The working group developed a methodology for the study, collected historical legal and tax-related data and information on Albania, the Balkans, and European best practices. The core working group conducted a series of focus groups with small and medium businesses in five main cities around the country (Tirana, Shkodra, Korca, Fier and Vlora) and a series of interviews with representatives of the Ministry of Finance, Members of Parliament specialised in tax issues, representatives of chambers of commerce and businesses associations. 
 
At the same time, the Union of Chambers of Commerce of Albania was developing a set of opinions, in the form of official demands to the Government regarding the Law on Tax Procedure. Nisma Thurje was invited to join the initiative and the set of recommendations they provided was the only one based on research evidence, while other contributions were centred around concerns and demands of business owners. These recommendations were further articulated and included in the general recommendations presented to representatives of the Ministry of Finance and Members of Parliament. 
 
Monitor Magazine, the largest Albanian portal and magazine on economic issues, was the media partner for the intervention, ensuring extended media coverage and emphasising that the recommendations and findings were based on evidence. Monitor served as a connector with other media outlets, increasing the overall outreach. 
 
Results +
This intervention enabled evidence based recommendations to be reflected in the new amendments to the Law on Tax Procedures. These recommendations mainly addressed the lowering of penalties and fines for small businesses, and ensuring that fines and penalties are proportional to the degree of the violation.
 
The intervention successfully piloted the collaboration model between grassroots organisations and social science researchers and showcased the importance of grounding policies in concrete research evidence. 
 

Next steps to expand systemic change

The model of cooperation introduced by this intervention was implemented for the first time in the landscape of grassroots organisations. Nisma Thurje’s collaboration with the Union of Chambers of Commerce is a first step in fostering collaboration among grassroots organisations, research community and business entities. 
 
The intervention will also contribute to the further rooting of the idea among Albanian decision makers and institutions that good quality policies require scientific evidence.
 



*Photo by Nisma Thurje

Mandated By

implemented by



contact information

Serbia
HELVETAS Swiss Intercooperation SRB
Njegoševa 5/II
11000 Belgrade, Serbia
Tel. +381 11 3640 044, +381 11 3640 045
PERFORM-Serbia@helvetas.org

Albania
HELVETAS Swiss Intercooperation
Rruga "Donika Kastrioti" 14, Ap. 15/6L
1000 Tirana, Albania
Tel: +355 4 453 5050
PERFORM-Albania@helvetas.org