The amount exceeded the planned target by 15.4%, driven by growth in formal employment and higher wage reporting, particularly in private sector companies encouraged by enhanced tax controls and digital reporting systems.

The Tax Administration reported 10,523 new employees in the first six months compared to 2024. Wage increases in the public sector and key industries such as technology, construction and finance also expanded the taxable base.

Additional revenue growth came from taxes on rents, dividends, self-employment income and capital gains, supported by rising real estate market activity and investment interest.

Improved tax administration through e-filing and real-time fiscalization further boosted collection efficiency and transparency.

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According to the latest fiscal indicators report, the revenue collections from the personal income tax rose 28% year-on-year, with the tax administration collecting an additional amount of 1.6 billion lek compared to the same period of the previous year.

The increase in the state budget collections from the personal income tax was mainly driven by the wage increase reform launched by the Albanian government, as well as by the obligation of the over employed workers to fill in the individual annual income statement that should be completed within the first 4 months of the year.

Tax administration plans to collect a total of 70.7 billion lek in revenue from the personal income tax, up by 8.7% or 5.6 billion lek more than in 2024.

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According to the next year’s state budget bill, currently undergoing reading debates at the parliamentary committees, the state budget revenue collections are projected to grow by 5.4% or 2.5 billion lek more than in 2022.

According to the Ministry of Finance and Economy, the personal income tax projections take into considerations the country’s economic recovery, its impact on the average salary, increased employment in the private sector, as well as the employment growth incentives.

The Ministry of Finance and Economy has proposed a series of changes to the budget law as part of the 2023 Fiscal Package.

The Ministry of Finance has proposed to increase the salary tax limit from 40,000 to 50,000 lek, a move that would reduce the state budget revenue by around 1 to 1.2 billion lek per year, but it will increase the income of employees with salaries up to 50,000 lek, which would translate into more money for Albanian households and increased consumption.

More than 70,000 workers will benefit from this measure.

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The government of Albania increased the monthly non-taxable income threshold to 40,000 lek from 30,000 lek starting April 1 as part of its social resistance package to offset the rising prices due to the impact of the Russian aggression on Ukraine.

For salaries up to ALL 40,000 (approx. EUR 320), the entire amount shall be tax exempt.

Under the law on personal income tax, the tax rate on monthly income between 40,000 leks and 50,000 leks is cut by 50 percent to 6.5% from a previous 13% rate.

The 23% tax rate will be applied on monthly salaries up to 200,000 lek from 150,000 lek previously.

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According to the Ministry of Finance and Economy, the annual personal income declaration from the individuals earning more than 2 million lek a year had an important impact on growth in personal income tax collections during the eight-month period of this year.

“The declaration on the annual personal income led to a 100% increase in personal income tax collections compared to the same period of the previous year, whereas dividend tax revenues and shares surged 53% compared to the same period of 2020,” the Ministry of Finance and Economy said.

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