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Albania: New Tax Impact

Excise Duty is the fourth most important tax in Albania’s state budget, after VAT, profit tax and social security contributions. The Albanian customs administration, which has been managing this tax for years, has performed well, exceeding targets.

Statistics show that revenue from excise duty has been increasing year on year. From €448 million collected in 2019, that total had risen to €580 million in 2023, with the government planning to collect 10% more during this year. As a percentage of total budget revenue, excise duty accounts for approximately 10%.

Albania’s excise law underwent significant amendments in 2014. At that time, a schedule was set to increase this tax almost annually. Later, in 2016, the government once again intervened in excise policy, but only on fuels, reducing the excise duty on liquefied gas for vehicles from 13 to 8 ALL per litre. Meanwhile, excise duty on gas used by households to heat and cook was set to zero. The last significant change in excise duty occurred in 2021, when the government approved a formula whereby excise would be indexed every two years in line with the average inflation rate. It also unified the excise on gas without differentiating between households and vehicle users. The government additionally claims that a new schedule was set to increase the excise tariff on cigarettes from 2022 to 2026, until it reached the European Union level.

Albania unified excise duties for domestic and imported beer in 2022, thus increasing the tax burden on domestic producers and raising beer prices by 20-25%

Excise duty changes reflect immediately in the final prices of products for retail consumers. In 2014, with the first significant change, cigarettes and tobacco products were the hardest hit. After setting the tax at 20 ALL per pack, the final price increased by 50 ALL, as reflected by retailers. Maximum cigarette prices are reported annually to the Tax Directorate. Thus, in 2014, company Philip Morris, the largest trader, sold Marlboro Gold for 270 ALL per pack, while by 2023 the price had reached 380 ALL, marking an increase of 30% over nine years.

Petrol and Diesel have seven taxes imposed on their retail price in Albania, with excise duty being the highest among them. It reached a 2023 average of 37 ALL per litre, the highest price in the region, but also making Albania the most expensive country in Europe for diesel, impacting all businesses directly. Together with the inflation crisis, fuels is the category that has experienced the sharpest price hikes.

Meanwhile, in the case of alcohol, beer is Albania’s top import product and main source of revenue from excise duty. In 2022, in another legal amendment, the government decided to unify the excise duty for domestic and imported beer. This increased the tax burden on domestic producers, causing beer prices, but also those of other alcoholic beverages, to rise by 20-25%, according to major producers.

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