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Constitutional Review of Tax Law

Published: 04 January 2017

I.    Albanian Point of view on reviewing tax law.

II.    The case of constitutional review of the Law “On local tax system”.

III.    The Constitutional Court decision.


While the general principles on the fundamental human rights and freedoms are predicted in the second part of the Albanian Constitution, their limitation may be established only by laws for a public interest or for the protection of the rights of others.

The Albanian Constitution demands that this limitation shall be in proportion with the situation that has dictated it, it may not infringe the essence of the rights and freedoms and in no case it may exceed the limitations provided for in the European Convention on Human Rights.

To be mentioned that the Albanian Constitutional Court decides, among other, on the compatibility of the law with the Constitution and the compatibility of normative acts of the central and local organs with the Constitution.

Under these lights, a tax law may be reviewed for violation of the Constitution for being contrary to the principle of proportionality whenever the object of the legislator is not duly important to justify the limitations of rights, or the foreseen measures are arbitral and not justified, or when the harsh measures exceed what are the necessary requirements for a successful result of the law.

Nevertheless, without any doubt, a tax law must respect the general provision for the approval of laws and their enforcement.

As per what concerns the judicial proceeding, according to the Article 134 of the Constitution of Albania, the Constitutional Court is put into motion without any restriction only on the request of the President of the Republic, the Prime Minister, not less than one-fifth of the deputies, or the Chairman of High State Control.

At the same time, Article 134 combined with Article 145 of the Albanian Constitution enclose the conditions for every court to suspend their proceedings and send the issue to the Constitutional Court whenever a law comes into conflict with the Constitution.

The other subjects provided in Article 134 of the Albanian Constitution may make a request only for issues related to their interests, a limit applicable to the People’s Advocate, organs of the local government, organs of religious communities, political parties and other organizations, and individuals.

Before considering the request of constitutional review of a tax law by a civil organization, the Constitutional Court must verify the locus standi of the subject. In order to be recognized as an entity holding interests interfered by the tax law, the organization shall prove that the purpose of the organization is related to the rights infringed by the new dispositions, to a concrete or potential damage directly caused by the new law.

The case analyzed below is an example of the exercise of this constitutional right by a civil organization which purpose is the protection of the traders’ interests from the market competition, for the successful realization of their business plan, developing the knowledge and use of techniques to prevent market abuse and insolvency. The organization aims to influence the organs of state to defend the legal interests of Albanian or foreign traders.


On November 2016, The Albanian Constitutional Court took in consideration the initiative of a civil organization for the protection of traders and based on their demand examined the proclamation as incompatible with the Constitution of the Republic of Albania of Law no. 142/2015 “Amendments to Law no. 9362, dated 30.10.2006 “On local tax system” amended”.

The unconstitutionality of Law in front of Constitutional Court was presented in two aspects and more concretely:

The first aspect concerned with the violation of the entry into force procedure of Law no.142/2015, dated 17.12.2015, published in the Official Gazette on 22.01.2016. In concrete, the procedure followed by the legislator was contrary to Articles 84, 117 and 155 of the Albanian Constitution.

In Article 18 of the contested law it was predicted that: “This law is published in the Official Gazette and enters into force on January the 1st 2016”. While Article 84, paragraph 3 of the Constitution provides that: “3.The law enters into force with the passage of not less than 15 days from its publication in the Official Gazette”.

Furthermore, the legislator, by defining as the date of entry into force of the Law the 1st of January 2016, had given retroactive effect to this law, what was contrary with Article 155 of the Constitution wherein it is foreseen that laws which impose fees, taxes and other financial obligations, national and local, as well as the method of their collection, may not be given retroactive effect.

The second aspect of unconstitutionality of the Law no. 142/2015 correlated with its material aspect, because it was contrary to Articles 11, 17 and 41 of the Albanian Constitution and Article 1 of Protocol no. 1 of the European Convention on Human Rights.

By analyzing the content of these articles, the Albanian Constitution recognizes freedom of trade as a fundamental right of every individual or entity, including business freedom, trade freedom, monetary freedom, fiscal freedom, property rights, investments freedom, financial freedom and labor freedom.

Whereas, in this case, the increase of taxes level with Law no. 142/2015, without taking into consideration the macro-economic indicators of the country, would bring also the increase of shortage of taxpaying entities.

In concrete, after an analysis of the macro indicators published by the National Institute of Statistics and by analyzing economic growth indicators and unemployment indicators, it resulted that raising taxes in this case was disproportionate with all these indicators. As a chain process, the shortage increase effects from small business without V.A.T. to small business with V.A.T., to big business, to V.I.P. business and vice versa.

Therefore, the increase of taxes level impact in only one of the above mentioned types of entities, has immediate and direct impact on all related and affiliated entities. In this way, referring to the above constitutional standards that compose the principle of proportionality, the analysis showed that the increase of local taxes was not only disproportionate but came in full contradiction with the principle of solvency, which is expressed implicitly in Article 155 of the Albanian Constitution, because based on macro-economic principles and fiscal packages, the level of taxation should have been adapted and aligned as much as the country’s development indicators.

In conclusion, the initiators’ stand was based on the fact that the law provisions under review fully violated the principle of proportionality provided in Article 17 of the Albanian Constitution, and did not constitute the right legal manner to achieve the desired goals, by being manifestly contrary to the features of an efficient and necessary instrument in fulfilling the public interest.


The Constitutional Court of the Republic of Albania, after reviewing and analyzing the raised claims by the requesting subject, the defense and objections submitted by the interested parties the Assembly of the Republic of Albania and the Council of Ministers decided:

1. The partly admission of the request, abolishing only Article 18 of Law no. 142/2015 “Amendments to Law no. 9362, dated 30.10.2006 “On local tax system” amended”.

2. The rejection of the request for Article 27 (amended by Article 14).

3. The decline of the rest of the request.

Once more, the constitutional judges confirmed the aspect of non-retroactivity of tax legislation in view of the general principle of legal certainty. The legislator should respect the principle of legal certainty as it infringes the taxpayers’ expectations raised by the existing legislation.

The full decision of the Albanian Constitutional Court dated 01.11.2016 can be read on the official website address

Boiken Bendo
Bendo Law, Advocates & Legal Consultants
Practice Area:
Phone Number:
+355 695544846
Boiken is the founding partner of Bendo Law, Advocates & Legal Consultants. He also holds the position of Arbitrator at Albanian Commercial Mediation and Arbitration Centre and Lecturer of Civil Procedure Law at the University of Tirana. Over the years, he has developed specific expertise in Litigation and Arbitration, Corporate and Commercial Law, Tax Law, Real Estate, Mergers and Acquisitions, Employment Law and Intellectual Property Rights. He is fluent in English, while his mother tongue is Albanian.

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