BUILDING PROPERTY TAX /FISCAL CADASTRE SYSTEM IN ALBANIA

The intervention will strengthen financially all the municipalities of Albania, which are still highly dependent on the central government funding and with little or under-utilized local resources. While the Territorial and Administrative Reform carried out a few years ago and supported financially by Sweden granted municipalities more functions, the funding from central government has not been following the same pattern.One of the main own financial sources fully decided by the municipalities, is the property tax. The proposed intervention will support the Ministry of Finance and Economy of Albania (MFE) to set up a property tax system, that is based on real market value of the properties and achieves an increased collection in each municipality. The intervention is expected to reach a collection that is 0.5 % to 0.8 % of GDP (from 0.32 currently), or in terms of absolute budget figures, adding more than € 50 million into the budget of the 61 municipalities of the country.The current system is based on very broad cadastral zones which are assigned reference fee levels that don't take into account the real market value of each individual building, causing the system to be perceived as unfair. The collection efforts are poor, resulting in overall low level of collection throughout the country, with mainly the capital being the main payer of this tax. Thus, the current system fails to deliver fairness and equality in payment of property taxes. The Swedish contribution will help Albania establish a modern property tax system, based on the real market values of the properties, which will be applying advanced ICT solutions, hosted and maintained by the Central Government, but used by the municipalities on daily basis. The revenues generated from the property tax collection will be available to the municipalities to improve the range and quality of services provided to their citizens, while becoming less depended from central government funding. The project will be carried out as cooperation between the Ministry of Finance and Economy (MFE)as the direct beneficiary, , other central agencies in Albania and all 61 municipalities, the Swedish Tax Agency (STA), as the main implementing partner Lantmäteriet contributing to the field evaluation methodology, and the Kosovo Tax Administration, through its ICT experts, familiar with a similar property tax system built in Kosovo under the Swedish model. The intervention will cost a total of 36 281 000 SEK over a three years period, ending in 2020.