Influencing factors of VAT income in Albania

AuthorEnver Sele - Ilirjana Gjergji
PositionTax administration of Kosovo
Pages159-165
159
Vol. 4 No.2
September 2018
Balkan Journal of Interdisciplinary Research
IIPCCL Publishing, Graz-Austria
ISSN 2410-759X
Acces online at www.iipccl.org
In uencing factors of VAT income in Albania
PhD (C.) Enver Sele
Tax administration of Kosovo
MSc. Ilirjana Gjergji
Abstract
Taxation system has a crucial role in the economy of a country.One of the indirect tax types
for more than sixty years is Value Added Tax. In this paper will be analysed the in uence
that real GDP, in ation and government expenditures have on VAT incomes in Albania.
For the period under study 2005-2017, was proved the hypothesis that real GDP does not
a ect VAT revenue. While for the other two variables in ation and government expenditures
was con rmed the hypothesis that they have an impact on VAT revenues and are statistically
signi cant at the levels of importance, 5% and 1% respectively. Since real GDP variable needs
to be removed from the model, we developed an improved model with the previous data and
it turns out that about 97.44% of the dependent variable variation is explained by the variation
of independent variables, while the rest remains unexplainable. The importance of this paper
lies in re ecting the impact of the above variables on the Albanian economy and the possibility
of comparing the e ect of these variables with other countries.
Preface
The importance of value added tax as a source of government revenue is a challenge
that has been overwhelmingly discussed in recent decades. Value added should be
understood as a “value” that a manufacturer (whether a manufacturer, distributor)
adds to his rst materials or purchases before selling the product, new service or
improved service to the user (Tripathi, Sinha & Agáral, 2011:32). Since VAT has
the largest share of state budget revenues, this is one reason why tax collection
e ectiveness is the main task of any government (Hajdúchová, Sedliačiková & Viszlai,
2015:680).
The importance of the value added tax has been ascertained by many authors. (Bikas
& Andruskaite, 2013:41) argue that in the case of cyclical uctuations in the economy,
it is the value added tax system that is mainly used to stabilize state revenues and
ensure the performance of public functions.
(Bikas & Andruskaite, 2013: 48) also argue that according to the VAT structure, value
added is created at each stage of the production process, so each stage generates
revenue in the government budget. Given this mechanism it is important to stimulate
the increase of VAT revenues. In addition, it is important to study the VAT revenue
determinants in di erent economies to study the e ects.
This paper will study the relation through VAT revenues, as a dependant variable
and real GDP, in ation and government spending as independent variables, driven
by the revision of world literature.

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