Tirana Municipality grants construction permits worth 1.8 billion euros in 2024, collects record taxes

The addition of construction permits and the obligation for the infrastructure impact tax after references continue to provide record revenues from this tax to the Municipality of Tirana.

In total, for 2024, the infrastructure impact tax resulted in the collection of 14.3 billion lek or about 147 million euros in revenue, according to official sources from the Municipality. Compared to the initial plan of 6.3 billion lek, the collections have increased by 226%.

For Tirana, the infrastructure impact tax is at the level of 8% and is calculated per square meter on reference prices which, since July 2023 (implementation starts in August), increased from 5 to 76% for the 32 cadastral zones of Tirana.

The collection of 14.3 billion lek for this 8% tax means that the Municipality of Tirana has issued construction permits for a total value of 179 billion lek, or about 1.8 billion euros, a historical record.

Regarding the receipts from this tax, which are about 2 times higher than planned, the Municipality of Tirana expresses its opinion in the draft decision "On the approval of the consolidated report on the implementation of the budget of the Municipality of Tirana for the 12 months of 2024", sent for review and approval at the next meeting of the Municipal Council.

"The year 2024 is again a successful year for the collection of the infrastructure impact tax from new construction, reaching the highest value collected in years with an excess of 226%," the report states.

On average, for every 4 months of 2024, the Municipality of Tirana has collected around 49 million euros from the infrastructure impact tax from new construction.

The revenues from this tax are not only 2 times higher than planned, but also the highest ever achieved by the municipality of Tirana. The 2024 revenues also exceed the forecasts for 2025 and 2026, where the municipality expects to collect 6.5 billion lek in revenue each year.

Revenues from the infrastructure impact tax accounted for about 54% of total tax and non-tax revenues collected for 2024. Total tax and non-tax revenues collected for 2024 were 26.6 billion lek or 146% more than planned.

The increase in collections continues to be affected by the increase in infrastructure impact tax liabilities following the increase in reference prices from August 2023, as well as the increase in the area of ​​construction permits.

The infrastructure impact tax for new construction is applicable to all entities that request development permits and construction permits for residential, administrative, production, service, etc. facilities. The tax is paid by builders before the construction permit is issued.

In September 2024, the Builders' Association of Albania filed a lawsuit with the Constitutional Court for the partial annulment of the Council of Ministers' Decision that increased the reference prices for apartments, as it was disproportionate, violated economic freedom, the right to private property, and the principle of legal certainty.

From the conclusions presented to the Constitutional Court by representatives of the Builders' Association, they claimed that based on concrete analyses of approved construction permits, calculating the infrastructure impact tax with the new reference prices increases the fiscal burden on builders by 80%.

According to them, this will increase apartment prices by 200 to 300 euros per square meter.

After reviewing the lawsuit, the Constitutional Court rejected the Builders Association's request to annul the decision, deeming their claim unfounded.

In 2024, the area of ​​construction permits reached a record level of over 1.9 million square meters. This is the highest area ever granted for construction in the capital, at least since 2005, when INSTAT reports data for Tirana.

Compared to the previous year, the area allocated for construction in 2024 increased by about 36%, while it is also about 7% higher than in 2022, when the previous record was set at 1.8 million square meters./ Monitor