Overview of 2021 Albanian Tax Legislation Revamp

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Recently, the Albanian government has published certain changes to the tax legislation which are effective as of January 1st 2021, affecting a wide range of taxes.

Increase of the VAT threshold

According to Decision no.576 dated July 22th, 2020, published in the Official Gazette no.139 of 2020, starting from January 2021, the VAT registration turnover threshold is increased to 10 million ALL (about 81,000 EUR) for all business categories. All businesses with an annual turnover not exceeding the 5 million ALL will be considered to be outside the VAT regime. Businesses with a turnover between 5 and 10 million ALL may choose to be subject to VAT on a voluntary basis.

The previous VAT threshold was 2 million ALL (about 16,000 EUR). Freelancers subject to VAT are subject to the same threshold (10 mil ALL) as of 2021.

CIT rate amendments

Law no.107/2020 published in the Official Gazette no.154 of 2020 also amended the profit tax for small business with turnover not exceeding 14 Million ALL (about 113,000 EUR).

As of January 2021, small business (per the above definition) are not liable to pay any profit tax. The amendment has changed the rates as follows:

• 0% – applicable to businesses with turnover up to 14 million ALL
• 15% – applicable to business with turnover exceeding 14 million ALL

This incentive has mostly been introduced as a way to support small businesses both during the difficult period and after it.

Minimum salary increase

According to the Albanian Council of Ministers’ decision taken on 16th Dec, 2020, the minimum salary has increased from 260,00 ALL (211 EUR) to 30,000 ALL (243 EUR).

The 15% increase of the minimum salary is expected to be in line with the increase of the maximum salary ceiling on which contributions are payable. The current maximum salary in Albania is 114,670 ALL (930 EUR). The exact amount of the amended maximum salary will be published January 2021.

As the amendments are varied and affect almost all companies active in Albania, we advise Albanian entities to carefully review the changes and seek professional advice.

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31/12/2020