The Albanian Tourism Association (ATA) opposes the Government’s draft decision to raise the Value Added Tax (VAT) on accommodation services from 6% to 10%, warning that this measure could damage the competitiveness of Albania’s tourism sector in the region. According to the association, the proposal was drafted without prior consultation with sector representatives and without a full analysis of its economic impact. ATA argues that the tax increase comes at a time when tourism businesses are facing difficulties linked to the fall of the euro, rising wages and higher raw material costs. Another concern raised relates to informality in the accommodation market. Referring to the Tourism Strategy 2026-2030, ATA states that 78% of accommodation capacity consists of short-term rental apartments, which, according to the association, operate mainly informally, while 22% are represented by hotels.
Full statement
The Albanian Tourism Association ATA expresses its deep concern regarding the Government’s Draft Decision to raise VAT on accommodation services from 6% to 10%. This draft decision, undertaken without any prior consultation with stakeholders and without a proper impact analysis, constitutes a direct blow to the sustainability and competitiveness of Albanian tourism in the region. This measure comes at a critical moment, when formal businesses in the sector are facing severe survival challenges caused by:
– The drastic 40% fall of the euro, which has severely damaged revenues from foreign tourists;
– The doubling of wages in the sector to retain the workforce;
– The rise in raw material prices as a result of global crises.
The expectations and historic growth of Albanian tourism, where the number of visitors rose from 6 million to 12.6 million, raising the sector’s contribution to 1/4 of GDP and 44% of exports, has been precisely the product of the reduced 6% VAT rate.
It must be recalled that the application of the 6% VAT was not a gift, but the result of a long advocacy process by our Association, which convinced the IMF and the Albanian Government. The Prime Minister himself engaged a group of experts from Harvard University, who, in cooperation with the Albanian Tourism Association, drafted a report on revitalising the sector, in which the main recommended measure was the reduction of VAT, according to the successful model of the European Council (Directive 2006/112/EC). Today, Europe holds 52% of world tourism with only 6.8% of the globe’s surface area, thanks precisely to these incentive-based fiscal policies.
The solution is not taxing the formal business, but formalising the market. Instead of penalising enterprises that pay their taxes regularly, the government’s attention should be directed towards informality. According to the Tourism Strategy 2026–2030 itself, today 78% of accommodation capacity in Albania consists of short-term rental apartments that operate mainly informally, while only 22% are hotels.
Albania has only 1% of hotels rated 4–5 stars, while regional countries such as Montenegro and Croatia have 7% to 10%. Official INSTAT statistics show that with 12.4 million tourists, only 10 million overnight stays are reported. By comparison, Montenegro, with 2.7 million tourists, reports 15.6 million overnight stays, while Croatia records 110 million overnight stays with 21 million tourists. These figures clearly show that the solution for increasing budget revenues is not raising taxes on honest entrepreneurs, but formalising the uncontrolled market.
Appeal to the Albanian Government
The Albanian Tourism Association formally appeals to the Albanian Government:
1. To suspend the Draft Decision on raising VAT on accommodation.
2. To begin without delay an inclusive consultation process with stakeholders and sector representatives.
3. To concentrate all capacities on the fight against informality in order to create a market with fair competition.
Raising this tax will cause us to lose the regional market and damage with our own hands the main engine of the Albanian economy. Albanian Tourism Association.