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Fuels constitute the most important products subject to excise tax in Albania and are therefore a very important source of fiscal revenue for the government. However, due to the specifics of fuels, fiscal control is more difficult to exercise by the relevant state bodies. Unlike many other excise products, fuels cannot be certified by means of special fiscal stamps certifying the payment of excise and other taxes, which are controllable at any time by tax/customs inspectors.

Albania is a country with a complex fuel industry. On the one hand, Albania has the largest continental oil-bearing field in Europe. On the other hand, in terms of refined fuels for consumption, domestic refineries operate in the market as well as entities that import fuels for the local market as well as for re-export, mainly to Kosovo. Consequently, Albania remains a vulnerable country in terms of the risks of mixing, fuel smuggling, poor quality, etc. These problems cause colossal fiscal losses to the government every year.

Smuggling
Smuggling is one of the most widespread methods for fiscal evasion of hydrocarbons. In many countries around the world, national tax collection authorities fail to collect it and consumers bear the burden by paying more tax out of their own pockets to compensate for the loss in tax collection. Smuggling is widespread in countries where:

  • A large amount of fuel passes through, mainly destined for export;
  • There is a large disparity in fuel prices with neighboring countries;
  • There are different subsidies or taxes for the same products;
  • There is a vulnerable control in the distribution chain.

Blending
Blending is a practice where lower priced products are mixed with more expensive fuels. Mixed products have numerous negative impacts on vehicles, the environment, public health and fuel distribution vehicles. Blending is common in countries where there is crude oil and its by-products, paraffin or jet fuel which are often mixed with diesel and sold at a higher price. This happens in areas where the prices of such products differ from each other and where there are differences between taxes and subsidies for fuel and solvent products. Albania is a country where the problems caused by the mixtures are visible, reducing budget revenues and causing a lot of damage to consumers and the environment.