Albanian Business Community Unites Against Tax Barriers

A representative of the Albanian Association of Meat Processors, Alban Zusi, speaks about tax challenges at the Consultative Forum on June 29, 2012, in Tirana. (Photo: Carmen Stanila/CIPE)

Engaging the business community in an open debate not only contributes to better economic policy, but also creates space for the private sector to participate in democracy. Public-private dialogue is an excellent tool for the private sector to discuss the challenges they face in a transparent manner and debate possible solutions from the business point of view, as well as highlighting issues the government may have overlooked.

To be successful, representatives of the private sector need to unite around common priorities and agree on the solutions for reform. Consultations with as many businesses and entrepreneurs as possible are therefore critical to maintaining a “reality check” on the process and achieving credibility with government officials.

On June 29, representatives of the Albanian business community met at a Consultative Forum in Tirana to discuss the current tax barriers they face and propose solutions that would improve the overall business climate in the country. About 30 representatives from various business associations discussed the proposals that emerged from a series of focus groups with businesspeople around the country. In the months leading up to the event, CIPE partner the Albanian Center for Economic Research (ACER) conducted the consultations in the towns of Shkodra, Korca, Vlora and Saranda.

In order to communicate effectively with government officials, CIPE and ACER worked with about 20 business associations and chambers of commerce to establish a Business Advocacy Working Group composed of six organizations. The role of the Working Group is to speak with one voice on behalf of its constituents and to engage actively in promoting private sector interests in the policy reform process. To help the members of the Working Group realize the benefits of working together for a common purpose, ACER also translated into Albanian and distributed to all participants at the consultative forum last week CIPE’s Reform Toolkit “Making the Most of Public-Private Dialogue: An Advocacy Approach.”

ACER discussed and validated the results of the four focus groups with the members of the Working Group and together formulated a set of proposals to tackle the most common tax problems. Among the key problems identified were contradictory and overlapping tax regulations, limited information available to business regarding new tax provisions, and frequent and ad-hoc tax inspections.

Members of the Working Group debated with the participants in the consultative forum and came to consensus on the following proposals, among others:

  • the tax administration needs to institute regular communication with the business associations in regards to clarifying and simplifying the tax regulations,
  • tax offices need to develop informational materials about changes to tax rules, and ,
  • tax inspections need to be planned and the businesses being inspected should be notified at least 24 hours in advance.

ACER has prepared a policy paper that summarizes the results of these consultations and, together with the members of the Working Group, will present the proposals for tax reform at forthcoming advocacy events. The advocacy efforts will target the Ministry of Economy, Trade, and Energy (METE), the Ministry of Finance, the General Directorate of Taxation, and the Parliamentary Commission on Economic Issues. In particular, the Working Group members plan to present their proposals at the Business Advisory Council (BAC) hosted by METE, which is an official platform for public policy discussions on economic and business issues.

To date, the BAC has shown little effectiveness, mostly due to the lack of preparation on the part of the private sector to engage in a productive dialogue. CIPE has helped ACER and the Working Group devise and follow the preparation process. This distinguishes their efforts from previous attempts at influencing policy, where the private sector came together in an ad-hoc way following the priorities of international donors, rather than focusing on issues brought up by Albanian businesses themselves.

The Business Advocacy Working Group is the first such attempt by the private sector in Albania to better organize itself and speak with one voice on specific issues. Grounding its recommendations in a rigorous grassroots consultation process, with the added analytical support of a think tank such as ACER, will give the Working Group more credibility and legitimacy in the eyes of the BAC and other public officials in the months to come.

Published Date: July 10, 2012