The Total value of the Payroll Tax and comparisons Public vs. Private Sector in Employment 2015-2022

Open Data Albania is examining the statistics regarding Personal Income Tax, focusing on the Payroll tax. The data are sourced from the General Directorate of Taxes (DPT), and are divided into tax revenues for salaries of employees part of the State Administration and employees in the Private Sector.

In 2022, an amount of ALL 28.3 billion were collected from the payroll tax, or 11.6% more than in 2021. With the exception of 2020, (due to the Covid-19 situation, that brought a lower number of contributors and fiscal relief for businesses for retained workers), which resulted in a decrease in the tax revenues from the previous year, in all other years there has been an increase.

Source: DPT
Comments and Analyses: Open Data Albania

More than a third of the state revenue from the payroll tax, throughout all the years under review, came from public sector employees. Accordingly, in 2022, about 35.6% of the income tax on the payroll came from contributors employed in the state sector, while the remaining was covered by the private sector (64.4%). In terms of value, an amount of ALL 10.1 billion in taxes were collected from he payroll of public administration, whereas ALL 18.2 billion were collected in the private sector for the year 2022.

Wages in the private sector have increased their tax contribution by 17.4% in 2022, compared to only 2.4% increase in the public sector.

Taxes collected from the payrolls of employees in the state sector have increased every year, even in 2020.

Source: DPT
Comments and Analyses: Open Data Albania

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Source: DPT
Comments and Analyses: Open Data Albania

The number of people employed in the state accounts for more than a quarter of the total employees registered by the Tax authorities in 2022, namely 25.7%. The latter would stand for 184,114 employees in the state institutions, compared to 533,013 in the private sector for 2022. Although the number of administration employees has continued to increase year after year, the share of contribution to the overall PIT revenues has decreased from 31.3% for a lower number of employees in 2015, to 25.7% in 2022.

Only, there is a number of 20,094 additional employees in the Administration in 2022, compared to 2015.

Source: DPT
Comments and Analyses: Open Data Albania

Source: DPT
Comments and Analyses: Open Data Albania

Open Data Albania has carried out a comparison of the Public and Private Emplyment Sector ratios in the number of employees and the ratio of taxes on the salary paid, based on the declaration of the employers for the employed individuals.

Employees in the state sector accounted for 25.7% of the total number of employees in 2022 and the taxes paid for their salaries (tax on the payroll) comprise 35.6% of the total taxes paid for all employees in the country.

In 2015, employees in the public sector accounted for 31.3% of the total job positions, while taxes from their salary comprised 35.3% of the total. So a difference of 4.1 percentage points. The gap has deepened further in 2020 and 2021. In 2021, public employees accounted for 26.1% of total employees, and tax contributions were paid at a level of 38.7%. Hence, there is 12.7 percentage points difference in the contributions paid compared to the total number  of employees in the sector. In 2022, the difference was 9.9 percentage points.

Source: DPT
Comments and Analyses: Open Data Albania

More specifically, an employee in the public sector paid an annual average of ALL 54,611 in taxes on the payroll in 2022, while an employee in the private sector paid only ALL 34,188 in taxes on salary. So, it turns out that on average, an employee in the public sector paid 20,423 ALL more in payroll taxes than an employee in the private sector for 2022.

The biggest disparity between the amount of payroll taxes paid by employees in both sectors is in 2021, namely a difference of ALL 23,721; whereas, the narrowest gap between the two was recorded in 2015, which is the first year under examination, in which the difference was ALL 5,802.

Source: DPT
Comments and Analyses: Open Data Albania

The great dissimilarities in the level of the payroll tax that is collected from salaries in the public and private sectors respectively, can potentially uncover an element of informality in the economy and more precisely, the lack of proper declaration of the salary for employees working in the private sector.

Download excel: The Total value of the Payroll Tax and comparisons Public vs. Private Sector in Employment 2015-2022
Comments and Analyses: Open Data Albania
Contributed by: Ilir Brasha
Translated by: Rezarta Cushaj