Albania to raise corporate tax to 15 pct as it battles rising debt

Mon Dec 16, 2013 2:40pm EST
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* Albania could announce IMF loan deal as soon as Tues

* 2014 budget sees deficit at 6.6 pct, growth at 2.1 pct

* Budget to start paying 350 mln dollars in arrears to business

By Benet Koleka

TIRANA, Dec 16 (Reuters) - Albania announced on Monday that it would raise taxes from January, scrapping a flat 10 percent corporate and income tax rate, and plans to end tax exemptions for foreign oil workers, as its new government wrestles rising debt.

Prime Minister Edi Rama said last week that the Balkan country needs a new loan arrangement with the International Monetary Fund as his three-month-old government tries to contain a hole in its finances.

IMF officials are now in Albania wrapping up a fortnight of talks and a government official said a deal on a loan of probably around US$400 million could be announced as soon as Tuesday. Albania was last under an IMF programme in 2009.

Living up to its election promise to tax more heavily those who earned more, the government unveiled plans to raise profit tax for bigger businesses to 15 percent from 10 percent and cut taxes for small businesses.

Finance Minister Shkelqim Cani, outlining the new measures in a draft of the 2014 budget, said the government also plans to introduce two rates of personal income tax of 13 and 23 percent, and would end tax exemptions for foreign personnel at oil and gas companies on VAT, excise and personal income tax.   Continued...