5. How to reduce the informality of e – commerce?

The fight against informality is an important precondition for a country that aims to increase
the efficiency and competitiveness of its economy, improve the investment climate, ensure
the implementation of balanced tax policies, ensure sustainable economic growth and in the
long run, fulfill the obligations arising from the framework of the agreements with the EU.
The bad news of the development of e commerce is related to the increase of informality in
this sector, the specificity of which creates the possibility that anyone can sell from home,
without registering with the BCC and without offering any kind of guarantee for the products
sold. This is also favored by some distribution companies, which operate in cash and not
through banks. As a result, businesses that are formal and taxpayers are put in difficulty,
slowing down economic growth as a whole.
Although the online market has grown, this growth is not well organized. This confuses both
the client and the service providers, because every day new non-serious pages are opened and
closed. These new businesses claim to gain quickly while operating this way. But once they
see the difficulties, they start doing bad service to increase short-term profit.
In an effort to increase economic sustainability, to develop this market in the right way and to
create consumer value, this market must be regulated according to specific laws and the
public must be made aware of the consequences of an unregulated market.
The objective of our study is to identify ways that lead to the informality reduction of
businesses that operate online. There are several ways to achieve this. In the continuation of
the paper we have tried to express the information absorbed from the literature review and
from our study.

5.1. The control of traders and distributors by tax authorities

The tax administration needs to find ways to reduce the informality of businesses operating
online and implement these ways. These ways can be related to the control of businesses and
the control of distributors.
More specific laws or guidelines should be drafted for businesses operating online as well as
information on laws, sanctions and penalties. Thus, the rules of action in this field of business
and the consequences that come from their violation must be clearly defined. There needs to
be more effective control over businesses and distributors. To achieve this, the staff of the tax
administration that will have the responsibility to control this segment, to be competent.
All entrepreneurs should also be informed about the consequences of informality in the
economy.
The emergence of online platforms requires the need to develop a legal infrastructure
dedicated to clarifying the rights and responsibilities faced by these new types of businesses.
As the market grows, the major risks associated with online markets will occur, but they also
need to be managed. Government agencies, such as the tax and customs administrations, will
need to update procedures to effectively manage e-businesses, combat informality in online
markets, and ensure that international e-commerce operators pay their share of taxes in
Albania. Albania's competitive framework will need to find practical solutions to protect
customers from e-commerce giants that could dominate markets and restrict competition.
Regarding the control of distributors to reach the sellers operating online, at the end of 2021
an action was taken to stop the distributors by asking them for the tax documentation that
should accompany the sale and transport of a product. From this step taken by the tax
administration, many illegal actions were detected by traders and the responsible persons
were detained. As communicated by the administration, this control will continue and is
expected to reduce the informality of these businesses.
In our opinion this is a good start in controlling online trading businesses. If this action is not
stopped and continues to be carried out with full responsibility by the relevant authorities,
there will be many improvements in this aspect of the economy.

5.2. The impact of the clients and competitors

Since the informality of one business directly affects the performance of a competitor in the
same field, there must be a high interest of businesses to limit this. Unfair competition affects
the low level of activity of others. Informality begins with the non-registration of online sales
operators, non-maintenance of documentation, starting from the purchase documents, sales
invoices, coupons, payments only in cash and leaving no trace, non-registration of
employees. So in some ways tax evasion is present. A business that performs these tasks is
clearly at a competitive disadvantage and is more likely to fail in market penetration.
Although the chances of becoming part of the online sales market are high, as entry barriers
may be considered low, current operators estimate the chances of new competitors surviving
in the low market. But often businesses do not claim their rights over the unfair competition
that other businesses make for the reason that they themselves may be in violation of the law
in one way or another.

Customers should also be aware of the negative aspects of buying from an unregistered
business, or from a registered business that does not issue the relevant tax documentation. It
is necessary for buyers to put pressure on online sellers to obtain a tax coupon. Many people
who have an account on social networks endlessly see ads of various products and if you
order them online, it will enable the immediate delivery of the product to the respective
address. It is proven that when ordering different products from different businesses, to see if
they comply with one of the legal obligations such as providing the customer with a tax
coupon at the time the goods purchased online are delivered, almost all businesses that
operate online do not put together with the product the tax coupon, which shows that this
business has not performed a financial transaction. In other cases they send an irregular
document, and not a legal one, making it look like a tax invoice, but in reality that document
is not valid. They can also send along with the order, copies of tax coupons issued on an
earlier date, with the same value as the current order. For this reason, customers who may be
aware of the provision of a tax document, should be informed about the conditions of validity
of an invoice or tax coupon.

5.3. The impact of fiscalization

The main purpose of applying fiscalization is to apply a system for monitoring the turnover
of the economy. Following the example of many countries in the region, Europe and the
world, Albania has recently been able to apply the fiscalization process. This process consists
of an online platform where business invoices are posted in real time and the tax
administration, sellers and buyers have access to them. Fiscalization is a set of measures used
to reduce tax evasion in transactions with and without cash. In the fiscalization process, all
transactions are reported in real time to the tax administration. For the purpose of identifying
and tracking each transaction, each invoice is given a unique invoice identification number.
Each invoice has a special QR code, with the scan of which all the data related to the invoice
are displayed. Through this process, the inflows and outflows of inventory in a certain
business can be easily distinguished. The comparison of purchases and sales determines the
accounting inventory, which according to the rules must reconcile with the physical
inventory. A problem here is with businesses that provide services, the tracing of whose
activity is more difficult, but still fiscalization facilitates this process. Fiscalization also aims
to implement the tracking of cash flow movements in a business. Fiscalized programs have
the obligation to request the status of the cash register at each start of the working day. In this
way the transfer of funds can be traced.
The problem lies in the fact that fiscalization has no impact on unregistered businesses.
Although registered businesses have an obligation to be taxed, unregistered businesses
continue to operate in violation of the law and without concern. This deepens the gap
between registered and unregistered businesses.

5.4. Beyond the fear, what might push businesses to llegally register?

Unregistered businesses generally say that if they registered they would not be able to afford
the costs and would fail very soon after registration. Some of them claim to make a very
minimalist profit and do not have to register. In our opinion, initially in Albania there is a
lack of culture of paying taxes. Citizens who do not directly see the benefits of paying taxes,
use any means to avoid them, even though these evasions constitute tax evasion in this case,
and not evasions within the limits of legality. Some businesses want to avoid paying for fiscal
programs and equipments, as well as their annual coalition.

Also, the culture of paying social security and health insurance contributions is not strong in
our country. People refuse to think about backup plans for their future and focus only on the
present. They focus only on achieving short-term profit and do not make long-term plans.

By not registering now, in the future they will be considered as new businesses, with low
credibility and medium to high risk. If they want to receive financing from financial
institutions, the conditions they require for the provision of financing include data on the
performance of the activity, the time they have operated in the market, the correctness in the
payment of tax obligations and other requirements related to registered businesses.

Also by not registering, they may lose the opportunity to win tenders on certain activities,
which can be an opportunity that comes very rarely. They may also miss opportunities to
collaborate with international businesses.

If more careful legislation were drafted, which would provide some facilities for these types
of businesses, they could also push them to register according to the rules. Taxation segments
can be offered in such a way as to stimulate the growth of these businesses that have potential
for the future. Incentive schemes can also be provided for new youth initiatives to open and
develop their independent activities.