The Informal Economy and Tax Evasion are Obstructive Factors in Sustainable Development and Albania's Integration Into the EU

Abstract

Albania has gone through a long period of changes that have been crucial for its integration into the European Union. The process of aligning with EU laws and regulations has been a major challenge for our country, as it requires deep changes in various sectors of society and the economy. One of the major challenges Albania continues to face is the informal economy and tax evasion. These phenomena directly affect the country’s economic development, creating not only economic barriers but also social and political ones..  Citizens become part of these practices due to immediate gains, without considering the long-term consequences they may have on the pension scheme, job security, and the country’s economy. This study, based on the descriptive model, aims to analyze these phenomena in Albania and understand whether citizens have become part of the informal economy, as well as whether they would be willing to do so in the future. The instrument used to answer the research question is a questionnaire addressed to citizens. Money laundering and corruption are harmful phenomena that have negatively affected the image of our country and have led to a lack of trust in our institutions among citizens. Since these phenomena are difficult to identify, more tools and mechanisms are needed to investigate and resolve them. Businesses need to understand that informality and tax evasion cannot be competitive phenomena, and furthermore, the legal costs associated with them damage the image and harm them financially. Integration into the European Union requires a country with a low level of the informal economy and citizens who cooperate with government institutions to prevent and report this phenomenon. Albanians need to understand that the cost of the informal economy is higher than the benefits.

Received: 20 April 2025 / Accepted: 12 June 2025 / Published: 25 June 2025