Understanding fiscal evasion
Understanding fiscal evasion the definition of tax evasion is given in two senses:
According to the science of finance, the meaning of the term tax evasion is related to all those actions that aim to reduce or eliminate the financial contribution to the state coffers by citizens or entities, violating specific fiscal provisions and norms.
Fiscal evasion is the non-payment of tax liabilities arising from the law.
While the meaning of fiscal evasion in legal terms referring to the Criminal Code is defined as follows: Concealment or avoidance of payment of tax liabilities, through non-submission of documents or non-declaration of necessary data, according to applicable law, submission of forged documents, or false statements or information, for material gain, for oneself or others, through the incorrect calculation of the amount of tax, tax, or contribution, constitutes a criminal offense and is punishable by a fine or imprisonment of up to three years.
When this offense is committed with the purpose of concealing or evading the payment of a tax liability worth more than five million ALL, it is punishable by imprisonment of two to five years. When this offense is committed with the purpose of concealing or evading the payment of a tax liability worth more than eight million ALL, it is punishable by imprisonment of four to eight years.
Fiscal evasion is possible through several actions performed in different situations
~ in performing sales or service operations without issuing the regular invoice for the activity performed against the citizen/consumer (so-called “black” sales);
~ drafting false income declarations resulting in faulty or incorrect fiscal representation that results in the missing payment of real liabilities;
. performing an economic activity outside any rules
~ secret agreements with the client or employee to reduce or altogether avoid the submission of invoices ~ non-payment of taxes or obligations for the benefit of services or non-fulfillment of mandatory requirements, for example, non-payment of TV tax, local service taxes, keep two books for recording their business transactions (two balance sheets). He records the real dealings and, in the other, the inaccurate transactions, enough to be presented to the tax authorities.
The negative phenomenon of Fiscal Evasion is a severe obstacle to the economic and sustainable development of the country and the lack of attraction for strategic investments in energy, infrastructure, education, health, burdening the cost of living of citizens. This creates an unfavorable climate for sustainable economic development and the rule of law. On the other hand, it creates a favorable environment for financial crime, illegal trafficking, dirty money circulation, and their investment and cleaning. Promotes the informality of the economy, which is a haven for crime and is slowly becoming a serious obstacle to further developments, threatening the public and civic order.
Fiscal evasion is the result of businesses doing unregistered activities, using fictitious invoices, violating the general principles of the document because sales are not made with invoices, but through pocket-to-pocket transactions, an area where tax authorities cannot influence, thus avoiding VAT liabilities, excise tax, profit tax, personal income tax, small business tax and finally questioning the reimbursement of VAT.
The process of transition that Albania is going through, which has been going on for years, is influencing and continues to highlight many problems, one of which is the quality and effectiveness of the fiscal policy. In my opinion, the level of poverty in our country is increasing, and many individuals are trying to find “solutions” with tax evasion. The dysfunction of the state administration and the right institutions is also affecting the state’s finances. People think that the money that should be declared and go to the state coffers is not being used well for the existence and development of the economy, but that they are going into the pockets of those in power or are using it in illegal activities which they do not use. Serve anyone.
The path chosen by many small businesses or individuals is not legal, but at least they are using the money for their families. Every company that generates financial income must register with the state tax authorities and implement any law procedure.
Although there are penalties and coercive measures in the law, it is noticed that many violations are present where the leading cases are:
1. No registration
2. Unregistered registration
3. Failure to issue an invoice (NIPT)
4. Issuance of invoice with incorrect information
5. Failure to comply with the declaration within the specified date
6. Do not mark the relevant selling price
7. Making a false or misleading statement
9. Concealment of tax evasion by state structures
The impact of this phenomenon on the Albanian economy
All of these causes come as a result of the misuse of fiscal policies. I think the fight against tax evasion as one of the tax administration’s primary tasks should be seen as linked to possible corruption within the administration, as an offer made by dishonest taxpayers who try to create the distorted idea of the figure of the taxpayer and the administration he represents. Precisely the presence of this phenomenon and the extent of its spread, of course, lead to a reduction in tax revenues.
In Albania, it has been stated that the most significant reason remains the salary of tax inspectors. If we look at the wages of a tax employee, it is 200-250 euros, compared to the average salary of a tax employee in countries with a developed tax system it is four times higher. For these salary levels, they can create spaces in inspectors’ districts without moral and professional integrity, accepting bribes by taxpayers, making it possible not to come to the tax administration large amounts of income.
Another reason for the emergence of corruption in recruiting individuals who also have shortcomings in basic knowledge of taxes and accounting.
This category, which takes the controller’s name, focuses on the inspection it carries out in unprofessional debates about pencil sharpeners, etc. Rather than examining and deconstructing everything in economic activities in Albanian multinational companies. The control strategy needs to do the possible calculation of the inspectors’ corruption to avoid as much as possible the phenomenon. Insufficient economic and legal instruments influence the mismanagement of the situation, which is degrading year after year and has the most significant impact on our country’s economy.
How businesses are handled and the concessions made to those who are most “powerful” in the market is another tax evasion factor. Large companies are supposed to pay more taxes because their income is relatively higher than anyone else operating in our country. But in our country, the opposite current is applied and followed. The strongest declares less income and contributes less to the state coffers, leaving all the burden on those who barely close the month.
Fiscal evasion spread even more for reasons such as:
-The transition period from the centralized economy to the market economy
– Insufficient economic and legal instruments
-Marketing of goods on the black market
These factors do not allow Albania’s economy to improve, and the policies pursued to avoid tax evasion to succeed.