“The Law on Income Tax is a fundamental law, and a new improved law will provide a more solid framework for the business environment”.
FIAA: Mrs. Paparisto, in addition of representing FIAA to the National Tax Committee in the Ministry of Finance, you have been recently elected also the Chairwoman of the FIAA Tax & Financial Committee. Can you tell us what motivated you to further contribute to FIAA and how do you plan your engagement in this journey?
Mrs. Paparisto: KPMG Albania is a long-time member of FIAA and has contributed to increase the awareness of the public authorities on the tax issues faced by taxpayers in Albania. The experience gained through the years working for KPMG Albania and management of different complex engagements, strongly motivates me to lead the Tax & Financial Committee of FIAA in the future. My aim here is to contribute in the technical discussions and legislative proposals of the Committee in order to help improving the tax/customs climate and their compliance in Albania. I believe that our efforts as a Committee to contribute through the experience and expertise we possess, is very crucial to increase the awareness of the policy makers for the improvement of the regulatory and compliance procedures.
I am eager to transmit the technical and practical issues of other members of FIAA to the Authorities and altogether try to find out acceptable solutions. In addition, I look forward to organize networking activities, aimed at establishing and maintaining a dialogue with stakeholders on issues which are critical to the business climate in the country, which is one of the goals of the working Committees established in FIAA.
During the last months, you and the other colleagues from the Financial Consulting Firms in FIAA, have been intensively and proactively working with the Ministry of Finances for the consultation of the Draft Law on “Income Tax” currently under the care of the Parliamentary Commission for Economy and Finances. How have you found this draft law? Does the business expect fundamental changes and novelties? Is it going to improve the doing business environment?
Well, for me the preparation and drafting of a very important law such as the one on “Income Tax”, it is a great effort and commitment from the Ministry of Finance and Economy. I must admit that it is not an easy process. Taking into consideration the climate of approximation of laws with the EU legislation, and also trying to capture the gaps that the current law on income tax provides, are not easy tasks.
I consider though, a positive fact to have a new law on income tax, as the current law is to a certain degree outdated. The Draft Law is quite extensive and covers a wide range of definitions, new concepts, and certain changes in taxation of individuals income and business income (comprising here, but not limited to business income that non-resident entities incur in Albania). The Draft Law provides more novelties rather than fundamental changes when it comes to business transactions and income. Of course, certain concepts, definitions and articles of this draft law could have been considered more thoroughly and be written in a more clear and explicit way in order to mitigate the risk that business have faced in the past decades, which is that of misinterpretation of legal provisions.
However, there is still work to be done once the draft law is approved. The preparation of the Instruction of the Law, hopefully will bring more clarifications and provide clear guidance further for the taxpayers.
The Law on “Income Tax” is a fundamental law, and as such, a new improved law provides a more solid framework for the business environment. This shall not automatically improve the business environment, as I believe what is another important step after approval of the draft law, is the education that the authorities should undertake with the taxpayers, but also for the tax administration itself for the provisions and implementation of the new law. If all the steps are taken properly, then business shall see improvement in the business environment.
Finally, let’s talk a bit about KPMG and its experience in Albania! More than 20 years in the local market, in this perspective how do you find the market? Can you share with us some challenges you are facing?
In the past two decades the market has changed considerably, and especially in the last 3 years, we learned the importance of being flexible and taking immediate actions to unexpected changes in the way of doing business. The Albanian market is a small one, and being part of a bigger organization or network, which encompasses multi jurisdictions, for sure brings more stability to your own business and provides more opportunities for further business growth. Having said that, we see that Albania is moving forward and developing fast towards the digitalization era and also in trying to harmonize legal framework with the EU legislation. However, one of the main challenges we face is still at the phase of implementation. It’s not enough to make theoretical changes. We still face difficulties, problems, challenges which are time consuming for the business, when we come at the point of implementation (i.e. of a certain legal framework, a new electronic procedure, or when we simply need input from public administration).
In the nowadays doing business, having talented people onboard, fast reaction, high flexibility, and adapting quickly to frequent changes in the global or local market, are the key elements for the business ‘success.
Also, not to forget about the journey of KPMG with FIAA for almost 22 years Membership. How would you describe this long journey of KPMG in FIAA?
KPMG Albania is very pleased for being a member of FIAA in the past 22 years. Throughout all these years, we have been part of this important business network and we have been working together in different business initiatives and considerable round tables between business and government. Continuously, there have been taken actions and often there have been given solutions, so, we feel that our voice has been heard. And for this, I would like to thank FIAA for the work and commitment in supporting business in all these years.
How attractive do you find Albania as an investment destination?
Throughout my work as a Consultant for different investors in Albania and potential ones, I may say and confirm the high interest of the latter to invest in Albania. Though Albania is a small market, its geographic position and potential of natural resources have put the country in the target of foreign investors. There is still work to be done in making our country even more attractive and this is an ongoing process which, does not have a starting or an ending point. When taking initiatives which, may affect legal framework, tax system or other investment incentives, one important point to consider, is to follow good examples in the other neighboring countries in order to be aligned or potentially bring our country to a better position in the Balkan. As a tax expert, I would take as an example here the tax system, and I may say that the Albanian tax system can be considered the least attractive in the region. However, considering other advantages that Albania may offer, there is still potential to improve further the position of the country in the eyes of a foreign investor.Read More