Respectable,

To the end of precisely informing the public, we hereby point out that no increase of VAT and PIT rates is planned.

In fact, under the statement by Minister of Finance, Fatmir Besimi in the “Economic Magazine” TV Show, the mentioned increase pertains to the share transferred to municipalities, on the basis of collected VAT and PIT revenues, as Central Budget transfers, rather than the VAT and PIT rates.

Minister of Finance was a guest in the “Economic Magazine” TV Show covering the topic “Fiscal Decentralization”, wherein he presented the fiscal decentralization reform.

Even the creator of the “Economic Magazine” TV Show himself, Goran Temenugov, stated, via the social networks, the following: “Minor inaccuracy published on Alsat website, where it was stated that VAT and PIT rates would be increased, left the public perplexed. This information pertains to the participation of municipalities in the collected VAT and PIT revenues, rather than the increase of the respective tax rates. This means that the percentage of collected VAT and PIT revenues distributed to the municipalities, will be increased, rather than the tax rates themselves. I would like to use this opportunity to apologize, and I will do my best to ensure that such mistakes do not occur in future…“

As regards the fiscal decentralization reform being previously announced by the Minister of Finance and the Ministry of Finance to the public, three pillars have been proposed – strengthening the fiscal capacity of the municipalities, cost-effective and accountable operations and increased transparency.

First pillar envisages increase in the share transferred to the municipalities on the basis of collected PIT revenues, as well as gradual increase of the amount of VAT grants according to the municipalities’ performance. In fact, two Funds are planned to be established: Performance Fund for the municipalities showing positive results and higher own revenue collection and Equalization Fund for the municipalities with lower revenues, but also showing fiscal effort and good results in collecting their own revenues.

These proposals will be put up for public discussion with the Association of Local Government Units and all stakeholders in order for this reform to be implemented through a transparent and inclusive process.

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