From the Perspectives of Macroeconomic Factors: The Past and Future of Problematic Loans in Albania

There are a lot of risks that influence the ongoing performance in banking system and especially commercial banks, but, the credit risk is one of the highest one. The most important factor that indicates this performance is the level of nonperforming loans. It highly affects the bank stability each year. So, for this reason it is very important to manage them in the most effective way possible. For being able to manage these loans we must understand and know what are the main factors that indicate them are. There are different factors, such as macroeconomic and banking factors. The purpose of this paper is to analyze these factors in order to maintain the bank stability in the right way. This analyze is done for the Albanian banking system during the years 2000-2012. Factors included are the GDP rate, Real Interest Rate, Inflation Rate, Money Supply Growth Rate, and Unemployment Rate. The relation between these factors and NPLs show us the ongoing growth of the NPLs and how are affected. DOI: 10.5901/mjss.2015.v4n1p3

FROM THE PERSPECTIVE OF ACCOUNTING THEORY: BANKS’ LOAN LOSS PROVISIONS AND TAX LEGISLATION IN ALBANIA

Tax authorities often are doubtful on the regulation of accounting and they fear to accept the tax treatment of bank loan losses which it reduces income taxes paid by banks. The banks and bank regulators generally want the tax rules for recognizing loan losses to conform closely to regulatory accounting in order to encourage banks not to under-provision for loan losses and to ensure a current tax benefit from loss provisions. In recent years, a sharp increase in the level of Non Performing Loans (NPL) in the banking system triggered mainly by the effects of the economic crisis but also emphasized by other internal and external factors. Other problems are present in the environment such as: lack of reliable financial information, clients’ poor business planning and execution, inefficient collateral collection processes etc. (Deloitte-Albania, 2013) In this paper, accounting theory will help us to understand and evaluate better the actual practice of loan loss provisions and their tax treatment in Albania. Also it will show us the way how to address for the actual debate between the banks and tax authority regarding the fiscal treatment of loan loss provisions. This paper aims to explain, when and how loan losses provisions should be recognized as a deductible expense for tax purposes by using the accounting theory. To address these issues financial accounting, according to International Financial Reporting Standards (IFRS) and regulatory accounting, according to central bank in Albania, Bank of Albania (BoA) of loan losses provisions must be considered

Forced Tax Collection: Bank Accounts` Blockage and Its Impact on Taxpayers` Fiscal Behaviour in Albania

One of the big reforms in Albania regarding Tax issues was the abrogation of Law no. 8560, of 22 December 22, 1999 “For Tax Procedure in the Republic of Albania'' and the approval of new Law no. 9920, of May 19, 2008 with the same name and the Instruction no.24, date 02.09.2008 on “Tax Procedure in the Republic of Albania'' which both have the purpose to reduce informal economy and to improve the business climate in the country. By way of providing details on some issues, we will focus on the part of how this law determines the procedure of constringent precautions for a forced tax collection and mainly that of taxpayers` bank accounts blockage. The paper aims to shed light on if this procedure of constringent precautions help the purpose of this Law to reduce informal economy and to improve the business climate in the country or not. As a methodology we are going to give the evaluation of Albanian application of the above mentioned Law and Instruction, being in incompliance with other parts of regulations and blocking orders themselves. DOI: 10.5901/ajis.2014.v3n3p31