Fiscal Package 2020

29. December 2019

E-invoicing and tax filing

Albania Government passed a law that will implement a new online billing system to prevent businesses from circumventing tax payments and to boost revenue in the country.  The Albanian authorities hope to increase VAT revenues by 15% with this new e-invoice initiative. Recently, Italy stated that it had closed its VAT gap by over 10% with its new SdI e-invoice initiative this year.

Taxpayers registered as businesses will be required to submit B2B and B2C invoices in real-time from 1 September 2020. All invoices must be live reported to the tax authorities. All filings and supporting records must also be processed electronically.

Amendments on the Law “On income tax”

The main objective of the changes in this law is extending the base of income taxable in Albania and relieving the tax burden for certain categories and promoting production.

Corporate income tax

The CIT reduced rate of 5% will be applied for the automotive industry in an attempt to promote the automotive sector.

Loss carry forward

Taxpayers that have business project with investment more than or equal to 1 billion ALL in Investors will be allowed to carry losses forward for 5 years.

Expense deduction

Companies involved in exports can deduct up to 3% of their turnover for expenses related to marketing expenses for abroad trade fairs and exhibitions.

Companies with a profit up to 100 million ALL involved in sponsoring sport teams, member of sport federations can deduct for tax purpose up to three times the value sponsored.

Personal income tax changes

Exemption for pension income from EU countries for Albanian residents.

Exemption for transferring of real estate properties between family member limited to one event.

Individuals with a gross annual income more or equal to 2,000,000 ALL (16,424 EUR) are required to file. Exempt for these rule are the individuals employed in more than one employee that are required to file for a gross annual income starting at 0 ALL.

Amendments on the Law “On VAT”

As of 01.01.2020, for the supply of the electric vehicles VAT rate applied becomes 0%.

Tax incentive on revaluation of immovable property

All individuals who own immovable properties, as well as those who own immovable property in registration process shall be entitled to reevaluate their property at market value until September 30th, 2020. Besides the individuals, legal entities that own immovable properties will have the right to make a revaluation of the immovable property.

Revaluation by individuals

The tax that individuals will pay for registering this revaluation is 3% of the difference between the revalued amount as above and the value of property of the previously registered act or the previously revaluated value (for which tax has been paid earlier). The revalued amount will thus serve as a basis for calculating the realized gain in the case of a transfer of the ownership of the immovable property in the future, a gain that will be taxable at the moment of transfer with the effective rate (the existing rate in
force: 15%).

Revaluation by legal entities

Legal entities are entitled to reevaluate their immovable properties at market value through an expert act issued by a licensed independent expert. Legal entities will have to pay 5% of the difference between the revalued amount and the registered carrying amount of the immovable property. The difference between the revalued amount and the carrying amount shall not be depreciated for tax purposes.

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