Changes to the Small Enterprises Tax Law in Albania

Albania/February 2014

At the end of 2013, the Parliament of Albania has approved several laws, which initiate the implementation of the tax reforms declared by the new government after winning the elections. Among other things, one of the major changes was the reform of the small enterprises taxes. The new simplified tax on profits, replaced the two previous taxes paid by the small enterprises: the local tax on small enterprises and the tax on profits.

According to the recent changes the small enterprises whose annual turnover is less than ALL 2.000.000, will pay as simplified tax on profits a fixed amount of ALL 25.000, which is paid only in an annual installment. All those businesses that have an annual turnover between ALL 2.000.000 and ALL 8.000.000 will pay 7.5% of the profit. The payment of the tax shall be carried out, in four periodical installments. The payment of the tax is based on the self declaration statement that all the small enterprises will deposit to the Tax Authorities in accordance with the Guidance that the Ministry of Finance issues.

All taxpayers, with annual turnover from 2 to 8 million, are obliged to submit an annual tax statement prior to the 10th of February of the following financial year period. This tax statement should contain details regarding income, total input costs, taxable profit, tax payable, and any other details required by the Minister of Finance in the Guidance that is issued for completing and submitting the annual tax declaration. This Statement should be submitted to any of the banks with which the tax administration has signed the relevant agreements for accepting the declarations and payments. In case the tax paid during the previous financial year is greater than the obligation due to be paid according to the declaration, the taxpayer will deposit a request for reimbursement. On the other hand if the amount paid is less than the actual obligation, the taxpayer will have to make a request for paying the tax difference.

Another change made by the new law, is that contrary to previous financial years the small enterprises tax will be administered from now on by the Central Tax Administration and not by the local one.

The new changes to the law on personal income and on the local taxes are essentially a reduction of the taxes of small businesses but they also constitute an overall simplification of the tax payment procedure.

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