Infrastructure tax for public constructions abolished/ 300 million lek less from municipalities, government guarantees compensation
The government has submitted to the Parliament a draft law that provides for amendments to the law "On the local tax system", with the main aim of exempting from the payment of the infrastructure impact tax public investments financed by the state budget and local self-government units. The exemption will apply to projects in education, health and social protection, areas that are considered priority for the social development of the country.
But referring to the report, currently the infrastructure impact tax ranges from 1 to 3% of the investment value for all municipalities, while in the Municipality of Tirana this tax reaches up to 4%. Its abolition for public investments aims to reduce project costs, speed up procedures and eliminate administrative delays, creating more favorable conditions for the implementation of works that are of particular importance to the community.
The legal amendments also provide for the clarification of the formula used to determine the selling price per square meter, which serves as the basis for calculating the tax. The draft law specifies that the price reference will be the decision of the Council of Ministers issued in implementation of the relevant articles of the current law, aiming to avoid different interpretations by municipalities and prevent unequal practices in the country.
The report states that the tax exemption is expected to reduce local government revenues by about 300 million lek per year. This financial effect, according to the government, will be fully offset by an increase in the unconditional transfer to local units starting in 2026.
The draft law was drafted by the Ministry of Finance and consulted with the Tax Council, which had no comments on the content. The draft consists of two articles and is expected to enter into force 15 days after publication in the Official Gazette, while its effects will start from January 1, 2026.
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