SEEU Review vol. 6 Nr. 2 (pdf) - South East European University

Haderi S., Prof. Dr.; Kola T., Prof. Asocc. Dr.; Liko E., Dr.Social contribution has an important role in total budget revenue inAlbania. The current law for social contribution is implemented in year 1993with two amendments of year 1995 and 2007. The amount that the insuredperson should pay has changed from 9.5% in year 1993 to 8% in year 1995,the minimum earning for contribution purposes were 11,800 lek andmaximum equals to five time the minimum monthly wage. The rate of 8%remained unchanged with the amendment of the year 2007 but there hasbeen an increase in minimum monthly wage 13,140 lek and the maximumfive times the minimum wage of about 65,700 lek. The amount paid byemployer is also decreased from 29.9% in year 1993 to 21.7% of monthlypayroll in year 2007. The payment made by self employed personimplemented in year 1995 has also been subject of changes in year 2007.From 39.2% of the minimum monthly wage of about 11,800 lek in year1995, self employed pay 33.2% of the minimum monthly wage which has aslide increase in about 13,140 lek. From the date reported in above tablesocial insurance contributions have had a considerable decrease afterchanges in the law in 2007 relative to the previous period.The total tax revenue in Albania has had a considerable increase in time,during the year 2008, the government was able to collect about lek214,577million relative to lek184,029 million in the previous year.FDI and Corporate TaxationA present statutory corporate tax rate of 10% applied in Albania is in thesame line with statutory rate applied in some region countries such as Serbia,Macedonia and Bulgaria, and substantially low relative to other countries. Inthis respect could be said that this tax is used by respective government intransition economies as a significant incentive (see Šimovic 2009). This rateis significant low relative to average statutory corporate tax rate applied inEU-15 at about 27.15% for the same year. From international perspective,are expected low statutory CIT rates in small countries relative to bigcounties, and interdependence in the rates they impose (see Randelph 2005).(Pisari 2008) supports the interdependence in tax decision in developingcountries with the argument that this countries are not strong enough todecide their own rules. (Dharmapala and Hines 2006), have found thepositive impact of decreasing statutory corporate tax rate in the volume andlocation of FDI. Increased economic integration between countries has madetax incentive a decision factor with growing importance related to FDIlocation.140