Corporate Income Taxation
- No change on the copotate income tax rate of 15%.
- As from 1 January 2015, if the net book value of a fixed asset, at the beginning of a year, is lower than 3% of the historic cost (for assets depreciated at 5% on net book value) or 10% of the historic cost (for assets depreciated at 20% or 25% of the net book value), the net book value will be entirely expensed in that year as deductible expense for Corporate Income Tax purposes.
- Voluntary contributions to pension funds made by the employer in favor of his employees will be considered as deductible expenses for purposes of Corporate Income Tax up to the limits set forth by Law no. 10197 On Voluntary Pension Funds, dated 10.12.2009.
- Voluntary pension funds, administered by a company licensed for that purpose by the Financial Supervisory Authority, will be exempt from Corporate Income Tax.
- The withholding tax for payments to non-resident persons and not-registered individuals has increased from 10% to 15% of the gross payments.
Personal Income Taxation
- Personal Income Tax on all types of income has increased from 10% to 15% (excluding Personal Income Tax on Employment Income, subject to theexisting progressive rate);
- Personal Income Tax on capital gains from transfer of ownership of immovable properties has increased from 10% to 15%;
- Voluntary contributions by a member of a pension fund (including the contributions made by the employer on his favor) up to the limits set forth by the Law no. 10197 On Voluntary Pension Funds, dated 10.12.2009, will be considered as a nontaxable revenue for purposes of Personal Income Tax. In this respect, returns from investment on a pension fund’s assets (including capital gains) will be considered as non-taxable as well.
- The following expenses are no longer considered as deductible for purposes of Personal Income Tax: real Estate tax; expenses for voluntary contribution to a pension fund; voluntary health and life insurance expenses.
- As of 1 January 2015, a new tax on premiums will be introduced, amounting to 3% of the premium, collectable by insurance companies licensed by the Financial Supervisory Authority. It is not applied on premiums for life insurance, health insurance on travel and international vehicle insurance.
- The circulation tax on petrol and diesel, imported or domestically produced, has increased from 17 ALL/liter to 27 ALL/liter.
- Royalty tax for the metallic content of the mineral byproducts will be equal to 2/3 of the rates in force.
- Fishing vessels will be exempt from circulation tax and carbon tax.
- There has been introduced a new definition of the energy drinks and the excise tax on them is set at 30 ALL/liter;
- The amendment includes an Annex with updated excise tax rates for all products subject to it.
- The level of customs duties for certain items, particularly for certain types of livestock, has been reduced to 0%.
- The period of time for the Tax Appeal Directorate to issue a decision in response to a tax appeal is reduced from 90 days to 60 days.
- Taxpayers willing to appeal a notice of assessment by using a bank guarantee for the amount of tax liabilities and interest, should provide a guarantee with a validity period of a minimum of 6 months and in any case not shorter than the period until the decision has become final/enforceable.
- The General Tax Directorate should publish in its official website the final decisions of the Administrative Court of Appeal, Supreme Court and the Constitutional Court on tax matters.
- The right of the taxpayers to request the refund of a tax credit balance is limited to within 5 years after the respective tax return has been filed.
- If a taxpayer with VAT credit balance (and meeting the conditions for refund) requests to the Regional Tax Directorate the VAT refund, the latter is obliged to verify the tax situation and approve the amount of refund within 30 days for exporters and 60 days for all other taxpayers. When necessary, the Regional Tax Directorate may conduct a tax audit at the taxpayer’s premises. Once the amount of refund is approved, the state budget should disburse in cash the approved balance to the taxpayer within 5 days. Otherwise, the taxpayer has the right to not pay other tax liabilities up to the amount pending for refund.
- The Tax Administration is expected to publish and keep updated in its official website the list of taxpayers transferred into the Tax Passive Registry.
- Transactions entered into by taxpayers included in the Tax Passive Registry will be subject to administrative penalties.
- The Tax Administration has the right to file at the Administrative Court a claim for bankruptcy for taxpayers included in the Tax Passive Registry for more than 3 consecutive years.
Alternative assessment methods
In addition to the methods provided under article 72 / Law No. 9920 as basis for alternative assessment methods by tax authorities, the following sources will be also utilized:
- Indirect data on market prices of similar goods and services and reference rent prices determined by decision of the Council of Ministers.
- Information on import prices at the disposal of the General Customs Directorate and on retail prices available to the General Tax Directorate.
- Taxpayers not registered for VAT and CIT will be subject to a penalty of ALL 50,000 for the nondeclaration of employees.
- Failure to pay on time the correct amount of the tax liability or contribution will be subject of a penalty equal to 0.06% of the unpaid amount per each day of delay, up to a maximum of 365 days (equal to 21.9% of the unpaid liability). Before the amendment, this penalty amounted to 5% of the unpaid liability for each month or part of month in delay, up to a maximum of 25%. The same penalties i.e. 0.06% per each day of delay, up to a maximum of 365 days, applies also to incorrect filings resulting in unpaid or over-credited amounts of taxes and contributions.
Incorrect application of the reverse-charge mechanism by the Albanian beneficiary or nonapplication of the reverse-charge mechanism by the Albanian beneficiary, liable to pay VAT on services from non-residents (based on the rules of the new VAT Law), will be subject to the following penalties:
- A penalty of ALL 50,000 when the taxpayer has failed to issue a reverse-charge invoice as required by the new Law On VAT, but such failure has not affected the VAT liability;
- A penalty amounting to 100% of the VAT liability when the taxpayer has failed to issue a reverse-charge invoice as required by the new Law On VAT, and such failure has affected the VAT liability;
- A penalty amounting to 50% of the unpaid amount or incorrectly claimed tax when the reverse-charge invoice is not issued in line with the requirements of the new Law On VAT;
- A penalty equal to 0.06% per day of the unpaid amount of VAT for a period up to 365 calendar days when the taxpayer has issued the reverse-charge invoice but has failed to declare it by affecting the VAT liability.
The definition of ‘fiscal evasion’ has been extended to include also the concealment or avoidance of tax liabilities by not submitting tax declarations or not declaring the necessary information. The following infringements have been designated as consisting in fiscal evasion (and being therefore subject to penalties of 100% of the tax liabilities implied, in addition to other administrative penalties):
- The recurrent non-declaration of the employees at least one day before the start of employment;
- Maintenance, utilization and transportation of goods by non-registered persons;
- Non-installation of the electronic cash register or non-issuance of fiscal coupons.
In these cases, the Tax Administration preserves the right to charge the taxpayer with criminal offence.