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Constitutional judgment on amendments to Law no. 9632, dated 30.10.2006 “On local tax system”.

Constitutional judgment on amendments to Law no. 9632, dated 30.10.2006 “On local tax system”.

Constitutional judgment on amendments to Law no. 9632, dated 30.10.2006 “On local tax system”.

Rokaj & Partners, Advocates & Legal Consultants Law Firm has represented in front of the Constitutional Court the requesting subject, society “For the protection of Traders and Market” on their initiative to demand the proclamation as incompatible with the Constitution of the Republic of Albania Law no. 142/2015 “Amendments to Law no. 9362, dated 30.10.2006 “On local tax system” amended”.

The unconstitutionality of Law in front of Constitutional Court was presented by the Law Firm in two aspects and more concretely:

  • The first aspect concerns with the violation of the entry into force procedure of Law no.142/2015. In concrete, the procedure followed by the legislator is contrary to Articles 84, 117 and 155 of the Constitution. In Article 18 of the contested law it is predicted that: “This law is published in the Official Journal and enters into force on January the 1st 2016”. While Article 84, paragraph 3 of the Constitution provides that: “The law enters into force with the passage of not less than 15 days from its publication in the Official Journal”. Furthermore, the legislator, by defining as the date of entry into force of the Law the 1st of January 2016, has given retroactive effect to this law, what is contrary with Article 155 of the Constitution in which it is foreseen that laws which impose taxes, taxation and financial obligations cannot be given retroactive effect.
  • The second aspect unconstitutionality of the Law no. 142/2015 correlates with its material aspect, this because it is contrary to Articles 11, 17 and 41 of the Constitution and Article 1 of Protocol no. 1 of the ECHR. By analyzing the content of these articles, the Constitution recognizes freedom of activity as a fundamental right of every individual or entity, including business freedom, trade freedom, monetary freedom, fiscal freedom, property rights, investments freedom, financial freedom and labor freedom. Whereas, in this case, the increase of taxes level with Law no. 142/2015, without taking into consideration the macro-economic indicators of the country, it brings also the increase of shortage of taxpaying entities. In concrete, after an analysis of the macro indicators published by INSTAT and by analyzing economic growth indicators and unemployment indicators, it results that raising taxes in this case is disproportionate with all these indicators. As a chain process, the shortage increase effects from small business without V.A.T., to small business with V.A.T., to big business, to V.I.P. business and vice versa. Therefore, the increase of taxes level impact in only one of the above mentioned types of entities, has immediate and direct impact on all related and affiliated entities. In this way, referring to the above constitutional standards that compose the principle of proportionality, the analysis shows that the increase of local taxes is not only disproportionate but comes in full contradiction with the principle of solvency, which is expressed implicitly in Article 155 of the Constitution. This is because based on macro-economic principles and fiscal packages, the level of taxation should be adapted and aligned as much as the country’s development indicators. In conclusion, our stand is based on the fact that the law provisions under review fully violate the principle of proportionality provided in Article 17 of the Constitution, and do not constitute the right legal manner to achieve the desired goals, by being manifestly contrary to the features of an efficient and necessary instrument in fulfilling the public interest.

The Constitutional Court of the Republic of Albania, after reviewing and analyzing the raised claims by the requesting subject “For the protection of Traders and Market”, the defense and objections submitted by the interested parties the Assembly of the Republic of Albania and the Council of Ministers decided: “The partly admission of the request, abolishing only Article 18 of Law no. 142/2015 “Amendments to Law no. 9362, dated 30.10.2006 “On local tax system” amended”. The rejection of the request for Article 27 (amended by Article 14). The decline of the rest of the request.

The full decision of the Constitutional Court dated 01.11.2016 can be read on the official website address www.gjk.gov.al

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