Academic journal article European Journal of Sustainable Development

Real Estate Taxes in Albania

Academic journal article European Journal of Sustainable Development

Real Estate Taxes in Albania

Article excerpt

1. Introduction

The inventory and structure of real estates owned by Albanians during the last 20-25 last years has undergone great and essential changes. During the socialist period, most of the Albanians were poor and owned no financial assets. Afterwards, the housing market was privatized by 90%(OECD). The housing situation in Albania leftmuch to be desired with only 219 housings per 1000 people owned in the early 90-ies, while in 2007 reached 260 much less than other ex-communist countries in Bulgaria, this number is 491 (Aman). That is why the construction sector nowadays is one of the most important markets in the local and national economy, requiring for a continuous intervention of the state. For this reason, laws concerning real estates and construction sector, during the last 20 years, have been frequently modified. The construction companies generate an average circulation of over 1.5 billion Euros per year. However, part of the construction sector in Albania has developed in an informal way. Today, nearly 270.000 informal constructions can be counted as an investment of overall value 3 billion $.

This work intends to study and present a view of the development process and problems related to the construction sector legislation in Albania, by asking the following preliminary questions: How has the construction sector evolved in Albania? Which are the policies pursued in the construction sector? What problems is the application of the relevant legislation in the construction sector encountering?

2. The construction sector and its place in the Albanian economy

The construction sector is one of the most developed sectors during the transitional period of the Albanian economy as this sector provides the greatest part of the Gross Domestic Product (GDP) in Albania. The construction sector has been characterized by a fast growth. Since some years the annual growth of this sector has varied from 10 to 15%, listing this sector on the first place among other sectors of economy, which, on their part, have had a moderated growth. This growth would have been higher if this sector shouldn't have to face the obstacles created by either the central or the local government, such as fiscal costs and prices fixing, real estate transfer tax increase and construction permissions denial, which has caused a low use of the available capacities.

As shown in the figure 1, in 1991 this sector contributed only 2.5% to the country's GDP; in 2000 it contributed about 8%, while in 2008 this sector contributed 14.9% to the country's GDP. The GDP provided by the construction sector is more than twice higher than that provided by the industry and transport sectors, approaching the GDP provided by the agricultural sector. If we should add to these data the value of those economical contributions that represent citizens' independent investments (who construct or reconstruct their own houses) and the value of the intermediary services, the role and weight of the real estate sector in the Albanian economy would be greater. Since 2009, the construction sector has been involved from the crisis and contribution to GDP has declined to 11.9% in 2011.

The construction companies are organizations that carry out an important economical activity by circulating a volume of 1.5 billion Euro per year (or 190 billion Albanian Lek per year). 3292 companies (or 28% of all companies) operated in the construction sector in 2009, in 1995 in Albania 1457 construction company operating (Tsenkova). There are 53.000 employees (or 32.1% of all employees) working in the construction sector (INSTAT). The construction companies contribute billions of Albanian Lek to the annual state budget as taxes and duties. According to the statistic data, since 1994, time when private constructions started to develop in Albania, a 15.7 million M2 surface of houses and apartments of value 400 billion Albanian Lek has been constructed in Albania. In other words, in 15 years 150-200 thousand buildings have been constructed, increasing the national estates stock market by more than one third. …

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