The Albanian Tax Authorities have issued a critical call to taxpayers with turnovers up to 14 million ALL, urging them to update their economic codes of activity to ensure fair taxation. This move aligns with the introduction of progressive taxation, effective as of January 1st, with tax rates of 15% and 23% for self-employed individuals, private individuals, and traders in service professions.
Awareness and Compliance Measures
To enhance awareness and facilitate compliance, the Tax Administration has taken proactive steps. Personalized letters have been sent to each taxpayer, providing a comprehensive list of approved professional services based on government decisions. This effort aims to inform and guide taxpayers through the updated tax framework and ensure accurate alignment with their economic activities.
Updating Economic Codes
To facilitate economic code updates, taxpayers are strongly encouraged to personally verify their codes through the electronic account on E-filing. This verification should align with the list of professional services to ensure accurate taxation as professional services, as per the government’s decision. The correction of economic codes can be conveniently carried out online through services like “Application for Change of Individual” or “Application for Changes in Registration Data for Limited Liability Company Ltd.”
Changes in the List of Professions
The list of liberal professions has undergone updates, now encompassing a variety of activities such as IT services, accounting, legal services, education, medical professions, real estate, news agencies, employment agencies, sports, tourism operators, and more.
Impact on Income Tax Declaration
The Tax Administration underscores the importance of accurate data reflection in the Annual Income Tax Declaration or Simplified Income Tax Declaration for 2023. These declared details, including income, expenses, and taxable profit, will be subject to assessment by the Tax Administration for the calculation of preliminary profit tax during the financial year 2024.
Deductions for Liberal Professions
For liberal professions falling under the decision list “On Implementing Provisions of Law No. 29/2023 On Income Tax,” with an annual income up to 10 million ALL, undisclosed fixed deductible expenses in accounting are recognized at a rate of 30%. Alternatively, these expenses may be calculated based on respective documentation and invoices for each expense.
In conclusion, these measures collectively contribute to a more transparent and fair taxation system, emphasizing the importance of taxpayer cooperation in aligning with updated regulations for an effective and equitable tax environment.
Eurofast Albanian team stands ready to assist businesses in this process, ensuring a smooth transition and compliance with the evolving tax landscape. Do not hesitate to contact Eurofast office in Tirana at tirana@eurofast.eu
Ingrid Kodra
Global Mobility Consultant
Eurofast Tirana
tirana@eurofast.eu