Taxes in Albania, Taxation in Albania, Tax system in Albania
Tax and tariff regime in the Republic of Albania consists in a package of laws, directives, regulations, tax agreements with other countries which display a complete review of all kinds, levels, calculations, procedures, as well as the methods and forms of tax control for taxes included in the Albanian tax system.
Tax legislation is subject to continuous amendments and changes, due to the rapid developments of the economy. For more details see the website www.tatime.gov.al
The Legal and physic persons in the Republic of Albania are subject to the following taxes:
Type of Tax Tax Rate
Profit Tax 10%
Personal Income Tax Progressive taxation with tax rates from 1% to 20%
Source Tax 10%
Value Added Tax 20%
All companies (foreign or not) which are registered in the trade register and pay VAT are subject to the profit tax.
The Resident taxpayers are subject to taxation only for incomes generated (produced) in the territory of the Republic of Albania.
A legal person is considered resident in Albania if:
a)he has a permanent residence (central offices) in the Republic of Albania
b) he has an efficient center of business management in the Republic of Albania
The tax rate for profit tax is 10%.
The taxable profit for the tax period is defined based on the balance-sheet and its annexes which should be in conformity with the law no.7661, date 19.01.1993 “On accounting”, with the provisions of this law, as well as with the sub-legal acts issued by the Ministry of Finance to that end.
In order to settle the taxable profit in the Republic of Albania, the expenses carried out to profit-seeking, profit-security and profit-keeping, in case when these expenses are certified and documented by the taxpayer, as well as when they are subject to restrictions specified by this law are considered as expenses.
The basic document used to justify the expenses for tax effect is: VAT tax invoice, the simple tax invoice and any other document compiled and issued in conformity with the instructions of the Minister of Finance, in application of the tax legislation.
Value Added Tax
The Value Added Tax is payable:
a. for all taxable supplies of goods and services realized against the payment by a taxable person, as part of his economic activity in the territory of the Republic of Albania.
b. for all imports of goods in the territory of the Republic of Albania
The minimum limit of registration is 8 million leks (per calendar year) or any other amount defined by the Council of Ministers based on the item 5 of this article.
All legal and physical persons involved in export or import activities are constrained to register in order to pay the VAT.
Any other entity such as individuals, central and local government, social, politic and international organizations, diplomatic missions, etc, which carry out import-export activities, regardless of the turnover are also constrained to register. For any entity which carries out import-export activity, the customs operations will proceed after he submits the original or the notarized copy of the Certificate of the Identification Number for the Taxable Person (NIPT).
The total turnover is calculated based on the total price paid by the buyer, inclusive also the tax and condemnation fees (fines).
The VAT declaration and payment form is filled in two copies and the taxable person submits it to the respective bank with which the GDT has an agreement regarding the admission of VAT payments, within 14 days after the expiration of the tax period.
VAT is applied at 20% , unless otherwise settled by law. The following operations are excluded from payment of VAT:
• financial services supply
• gold, bank-notes or currencies supplies to the Bank of Albania
• Postage-stamp supply used for mail service or similar stamps
• Supply provided by a non-profit organization against a reduced payment is considered an excluded supply under the conditions laid down by the article 24 etc.
The taxable value of supply is the total amount paid to that supply, unless otherwise settled by law no.7928, date 24.04.1995.
All the residents in the Republic of Albania, central and local government, non-profit organizations and any other entity, recognized by the legislation into force, are constrained to withhold the tax at source at 10% from the gross amount of the following payments, generated by a source in the Republic of Albania:
Share of profit 10%
Fee for technical, management and financial services, etc. 10%
Fee for Rent 10%
Payment for author’s and intellectual property right 10%
The taxable revenues are fixed based on the balance-sheet and its annexes which should be in accordance with the law no. 7661, date 19.01.1993 “On accounting”, with the provisions of this law, as well as with sub-legal acts issued by the Ministry of Finance to this end. Gains or other net revenues are the difference between the revenues and deductible expenses. The tax year corresponds to calendar year and it commences since January 1st and terminates on December 31st.
As in other countries of the region, the expenses deducted from taxes are those which produce incomes, which ensure and maintain taxable incomes. The expenses are deductible if:
• They result from economic activities which produce revenues or if they are related to the usual management of the taxpayer’ business activity.
• They provide sufficient documents which confirm the destination of these expenses.
• They are reflected into the book accounts by reducing the net assets
Personal Income Tax
All individuals, residents in Albania are subject to taxes for all incomes produced wherever in the world, while the non-residents are subject to taxes only for incomes produced within the border of the Albanian territory.