Empirical Analysis of Vat Revenues on the Economic Growth of Albania

Objective: The presence of VAT revenues and its management to improve economic growth is crucial, very complex, and challenging. The aim is to see the influence of VAT revenue on economic growth, especially those that come from customs. Theoretical Framework: In this topic, the researchers are focused on the direct relationship between total VAT revenues and economic growth. According to the statistics of our economy, we choose to investigate the VAT revenues from customs looking to estimate their specific weight on the economic growth. Methods: In the econometric model, we introduce the VAT revenues from customs as the variable taken with precaution regarding value gain. Other variables based on the perspective of it, like CPI (inflation) and rate of exchange euro/all, are included in the model. Aggregate data presented by the official institutions are used to determine the influence of VAT on the economic growth measured by the GVA variable. This choice eliminates the duplication of the economic growth value by taxes and subsidies on products. Results and Discussion: The results underline the influence of VAT and CPI on economic growth (p< 0.05). Therefore, the reduction of the inflation rate and the application of an optimal rate of VAT regarding the parameters of the economic situation in the country remains an emergency in recent days.