This year brings again several tax changes in Albania: What investors and entrepreneurs should know about recent taxation in Albania.
1. Amendments on the Law “On VAT”
As of 01.01.2019, the reduced VAT rate of 6 % will be applied to the supply of accommodation and restaurant services provided within accommodation facilities that are certified as “agro tourism entities”. The supply of beverages from these structures will continue to be subject to a standard VAT rate of 20 %.
- The reduced VAT rate of 6 % will be applied to the supply of advertising services by any audiovisual media.
- The reduced VAT rate of 6 % will be applied to the supply of public passenger transport vehicles of ten or more seats that only use an electric motor until the 31 December 2021. From 1, January 2022 the rate becomes 10 %.
- The reduced VAT rate of 6 % will be applied to the supply of books of any kind.
All supplies of in-work processing services destined to be re-exported by authorized taxable persons and their subcontractors for operations under the active processing procedure will be treated as ‘Exports’ and the VAT rate applied becomes 0 %.
2. Amendments on the Law “On Local Taxes”
The amendment of the Law “On local taxes system” provides the exemption from the tax of impact on infrastructure of investments of entities that conduct hosting activities, certified as “agro tourism”.
3. Income Tax in Albania
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.
Tax on dividends and profit shares
The rate of tax on dividends distributed to shareholders and profits shared to owners shall be reduced from 15 % to 8 %. For dividends/profits distributed by companies resident in Albania, this reduced rate shall be applicable to retained earnings of the year 2018 and previous years, including reserves and capitalized profits, provided that tax on dividends deriving from:
- retained earnings of 2017 and previous years is paid no later than September 30th 2019, whereas
- the profit of 2018 is paid no later than August 20th 2019.
Personal income tax on employment income
The upper limit of employment income taxable at 13 % shall increase from 130,000 ALL/month to 150,000 ALL/month.
The new scheme of personal income tax on employment income is as in the following table:
|Taxable employment income
|Personal income tax
on employment income
|0 – 30,000||0 %|
|30,001 – 150,000||+13 % of the amount over ALL 30,000|
|150,001 – more||ALL 15,600 + 23 % of the amount over ALL 150,000|
4. Declaration and payment of profit tax by non-resident persons
Non-resident persons that earn income sourced in Albania i.e. income taxable in Albania, which are not subject to income tax otherwise in Albania, shall be subject to profit tax in Albania in relation to such income. They shall have the obligation to submit a special declaration of taxable income by 31st March of the following year and pay the amount of tax declared therein.
The provisions of profit tax prepayment instalments and of the credit of foreign tax shall not be applicable in this case. An instruction of the Minister of Finance is expected to further clarify which non-residents are subject to this obligation and to determine the form of this declaration, the method of calculation and payment of tax.