According to a regional news report, another nation has joined the flat tax club, meaning that as of July 1 there will be 18 countries with income tax systems that treat taxpayers equally. With a low rate of 10 percent, Albania will have – at least temporarily – the world’s lowest flat tax rate. The corporate rate also will drop to 10 percent, and other tax rates have also been reduced:
In a move aimed at creating a friendlier investment climate and making the economy more competitive, the Albanian government approved a fiscal package last week that includes implementing a 10% flat tax – the lowest level in Southeast Europe. Corporate taxes will also be slashed to 10%. …Advocates of the move say it will bring many benefits. In addition to attracting Foreign Direct Investment, they say, it will encourage the legalisation of the shadow economy and simplify tax collection. Economic activity increases, and so does honest reporting of income, while tax evasion drops. …The government hopes to implement the legislation by July 1st, with the exception of the corporate tax reduction, which will be implemented January 1st, 2008. The Democratic Party-led government has already instituted various tax reductions during the past two years. The most important of these was the reduction of social security contributions from businesses, from 29% to 20%, and a lowering of taxes on small businesses.