Project: “Implementing Market Value Based Property Tax in Albania version 0.93, February 20, 2018, financed by SIDA (Swedish International Development Agency) in the amount of 36 281 000 SEK.

The Albanian Government has decided to modernize and strengthen the Albanian Property Tax System. The reform started as a part of a broader fiscal adjustment and structural reform program initiated as part of a three year (2014-2016) IMF program, and was considered one of the main areas of performance improvement. It included the implementation of a modern market value based immovable property tax system.

A key objective of the reform was to raise the present, very low, yield of property tax. Another key element is the medium term structural reform process that has fundamentally transformed the system of inter-governmental finance, by consolidating local governments into larger and financially viable units with the property tax potentially emerging as a stronger source of local finance.

In the beginning of 2017 the Albanian Ministry of Finance asked Sida to review the possibilities of assisting in the reformation of the property tax system. The purpose of the this Sida financed project is to contribute to strengthened municipalities in Albania by substantially increase their own source revenues by implementing market value based immovable property tax on buildings, i.e. object units.

The project has three main development goals that are to be achieved in long term, after project close-out. Parts of them will, however, be realized already during the project period:

  • Raised property tax revenues
  • Market value based property tax system
  • A better functioning economy

The project will deliver five main project results:

  • Enhanced Property Tax Regulations
  • Well Prepared Taxpayers
  • Comprehensive Property Tax Registers
  • Centralized IT System Deployed
  • Business Processes Implemented

The Project has two stages of implementation:

Stage I embraces the first two phases of the project, Inception and Specification. As planned, it is started in March 2018

Focus during this stage is to create and consolidate a property tax register based on the OSHEE register including survey data, implement a centralized property tax IT system and start taxation of buildings (object units).

During this stage, also, a long term solution for a market value based property taxation is specified, i.e. new legislative framework drafted and new business processes and methods designed.

Priority is quality and completeness of registers rather than increased property tax revenues.

Stage II embraces the last two phases of the project, Implementation and Transition. It is planned to end by December 2021

Focus during this stage is to implement a market value based property taxation of buildings (object units) in all municipalities in Albania.

During this stage, also, a proposal for and preparation of taxation of land (parcels) will be done.

Priority is sustainability and gradually also increasing property tax revenues.

Beneficiaries

  • Taxpayers
  • Ministry of Finance & Economy (MFE)
  • Municipal Tax Offices
  • ASIG
  • Property Market Actors
  • Credit Market Actors