‘This is the budget more or less, and something else, no taxes will be increased. No taxes!, stated Prime Minister Edi Rama at the end of this year, while introducing the 2024 budget at the Expanded Assembly of the Socialist Party in Fier.
Esmeralda Topi
Yet, the facts speak tell a different story.
‘The law ‘On income tax,’ approved in the first quarter of 2023, has provided for the inclusion in the taxation scheme from January 1, 2024, of entities providing professional services’, is anticipated in this year’s budget.
Contrary to what the Prime Minister propagates, the truth is that 2024 has started with a new taxation regime for 29 thousand small businesses operating in the service sector.
Starting from January 1, the new income tax law affecting all self-employed individuals, natural persons, and traders in the service professions came into force.
‘Of course, it’s a new tax. Previously exempt from taxes, most professions will now be subject to up to 23%’ argues Professor Sotiraq Dhamo.
According to the new income tax law, the income tax rate for small businesses with an annual turnover of up to 14 Million ALL is 15 percent. Meanwhile, the tax for businesses with annual turnover exceeding 14 Million ALL reaches 23 percent.
In the end, it will be the citizens who pay, as prices are expected to rise. The increased costs will be transferred by the self-employed to the products or services they provide’, warns the fiscal expert Eduard Gjokutaj.
The same assessment is shared by the accountant Sotiraq Dhamo.
All freelance professionals have maintained these prices because they have been tax-free for at least the last four years. And now, prices will inevitably rise.’ he states for Faktoje.
In addition to price increases, taxing freelance professionals, according to Gjokutaj, paves the way for informality and motivates professionals to consider leaving.
‘When you haven’t closed evasion ways, you’ll force these freelance professionals to move into informality, or on the other hand, you’ll encourage them to leave for neighboring countries.’ he emphasizes.
Ministry of Finance states that the new tax regime includes up to 29 thousand businesses in freelance professions. In financial calculations, around 90% of the total affected businesses (categorized as self-employed, natural persons, and traders) fall within the bracket of annual income up to 14 Million Lekë, implying they will pay a tax rate of 15%.
On December 22, 2023, the detailed list of services of freelance professions subject to the new taxation was published in the Official Journal. It includes a list of 26 types of activities divided into 180 professions.
The government foresees collecting an additional 3 Billion ALL in revenue for the budget from this tax.
Conclusion
The progressive taxation of freelance professionals was supposed to come into effect a year ago. But in January 2023, the government took a step back. Faced with strong resistance from about 17 thousand professionals, in the election year like 2023, the majority extended discussions on the new income tax law, postponing the taxation of lawyers, notaries, accountants, auditors, and all other freelance professions to January 2024. Based on the conducted verification and the gathered information, we categorize Prime Minister Edi Rama’s statement that no taxes will be increased in 2024 as False.
