Abstract
The inspired for the treatment of this topic is the debate regarding the effect of the two tax systems, flat and the proportional one that has been adopted in our country last two years. The impact of taxes is not only important in the economic side but they have their influence and in social side. The major competition between the countries and the compaction to attract foreign direct investments is the tax system itself with major economic and competition among countries to attract foreign direct investment is itself the country's tax system. The most important factors affecting the state budget income, are income tax and personal income tax business. The goal this study is to analyze the effects that the change on the tax system has had on the impact on the income tax rates in Albania. For this reason will be analyzed the effects of income tax on inflows of foreign direct investment, creating a clearer idea of how these two models are been adapted into a taxation economic situation in Albania during their application. Studying and deal with the experience of both, tax systems will be understood the importance of change that has a country's tax system on foreign direct investment. The research question raised in this study is: how and if the changes in the tax system, has impacted foreign direct investment? Methodology: Literature review of the tax systems, analysis of the factors influencing the tax income and a linear singular regression through the empirical measurement DOI: 10.5901/ajis.2016.v5n3p79
Highlights
The basics of proportional taxing were first proposed by two American proffesors Robert Hall and Albin Rabuschka in 1981
The purpose of progressive taxing is to tax more but at the same time to offer more public services and guarantees, education, health services, infrastructure, entertainment etc,.The supporters of flat taxing say that this taxing system triggers the economical growth in the country, because it demotivates the tax evasion since individuals and businesses will have less opportunity to evade the tax payment
Taxing on incomes in Albania is regulated with the law nr.8438 on 28.12.1998 “Income taxes”changed with the Directive of the Ministry of Finances nr. 5 on 30.01.2006 “Income taxes”.In Albania between years 2008 and 2013 has been used the flat taxing and in 2014 until now is used the progressive taxing
Summary
The basics of proportional taxing were first proposed by two American proffesors Robert Hall and Albin Rabuschka in 1981. Progressive taxing according to Adam Smith is related to the ability of the individual to pay more when he earns more This type of taxing is applied in higher rates in higher revenues compared to the lower ones. The main weight of PIT values structure is revenue by wage taxing, which makes up an average of 60% of PIT according to studied years. Reducing in number of taxpaying entities with 6.6% compared to 2013 or 1,803 unit; Decreasing in wages declaration (following the abilition at the end of 2012 of refereal wages); Increasing in threshold of exclusion from PIT for wages, from 10 000 to 30 000 Leke PIT from interests of deposits and investments in bonds is increased from 2009-2013, because of bank deposits interests which make up 98.5% of budget
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