Social and health insurance contributions
Reference salaries for Social and Health Insurance Contributions
The Decision of Council of Ministers (DCM) No. 37, dated 21 January 2016, entering into force starting from 29 January 2016, determines the reference salaries on which social and health insurance contributions will be calculated for self-employed persons performing economic activities.
It takes into consideration the type of profession, the status of the licensed professionals, the area where the economic activity is performed, the number of employees working with self-employed persons, as well as the working experience on the profession.
For instance: self-employed professionals whose address of activity is out of jurisdiction of the municipality (e.g. village etc.) benefits a 20% decrease on the minimum reference salary.
Previously the minimum salary on which social insurance contributions were calculated was the minimum salary for contribution purposes (i.e. 22,000 ALL). While for health contributions the minimum salary was twice (i.e. 44,000 ALL)
Self-employed pensioner carrying out their own professional activity, are not liable to pay social and health insurance contributions.
[Source: Law No. 143/2015 dated 17 December 2015, published
in the official gazette No. 244, dated 11 January 2016.
Law No. 144/2015 dated 17 December 2015, published in the
official gazette No. 244, dated 11 January 2016.
Law No. 144/2015 dated 17 December 2015, published in the
official gazette No. 244, dated 11 January 2016
DCM No. 37, dated 21 January 2016, published in the official gazette No. 9, dated 29 January 2016]
Tax on insurance premiums
Tax on insurance premiums, except for insurance premiums on life products, travel health insurance and the green card police, will be 10% of the premium value. Previously it was 3% of the premium value.
Tax on luxury cars
Luxury vehicles will be subject to two new taxes:
- Annual tax of ALL 21,000 and;
- Initial registration tax of ALL 70,000.
A 4+1 capacity vehicle is considered a luxury vehicle, if one of the below criteria is met:
- a cylinder of 3,000 m3 or more; or
- a price of ALL 7 million or more
[Source: Law No. 141/2015 dated 17 December 2015, published in the official gazette No. 252, dated 22 January 2016]
Simplified profit tax on small business
- Taxpayers with annual turnover not more than ALL 5 million are exempt from the simplified profit tax on small business.
- Taxpayers whose annual turnover falls between ALL 5-8 million, will pay simplified profit tax rate will be 5% of the taxable profit.
Previously, taxpayers with annual turnover from ALL 0-2 million had to pay ALL 25,000 per year and those between ALL 2-8 million had to pay 7,5% on net profit (not less than ALL 25,000 per year).
Hotel accommodation tax
The hotel accommodation tax will now be calculated based on the number of nights of accommodation depending on the hotel location and conditions. Annex 8 of the law No. 142/2015 dated 17 December 2015 "Amendments on local taxes in the Republic of Albania" provides the new rates of hotel accommodation taxes.
Previously it was 5% of the accommodation price per room/night per accommodation night.
Tax on impact on infrastructure of new constructions
- Tax rate on impact on infrastructure for constructions of residential buildings or service facilities by construction companies, which are not designated for tourism, industry or public use, is between 4 to 8% of the sales price per m2.
- Tax on impact on infrastructure for buildings which are on legalization process is 05% of the investment value.
- Tax on impact on infrastructure for public projects (national roads, ports, airports, tunnels, energy projects etc.) is 0.1% of the investment value, but not less than the cost of rehabilitation of damaged infrastructure in case this cost is not included into the preventives of investment.
[Source: Law No. 142/2015 dated 17 December 2015, published in the official gazette No. 252, dated 22 January 2016]
The main amendments of Law No. 9920, dated 19 May 2008 "On Tax Procedures" which are in force starting from 12 November 2015, as well as amendments to Instruction No. 24, dated 2 September 2008 "On tax procedures" which are in force starting from 1 December 2015, are as follows:
When performing the tax risk analysis the tax administration will take into account the fact if the taxpayers' financial statements and tax declarations are certified as "compliant with the tax legislation" by certified auditing companies. The certified declarations will serve as a "low risk" component in the taxpayer's risk analysis for tax audit purposes.
In case tax authorities conclude that the financial statements and tax declarations are not in compliance with tax legislation, then taxpayer will be liable to the full amount of tax liabilities as well as related penalties and interests, while the certifying audit company will be subject to a penalty amounting equally to such tax liabilities.
Instruction No. 31, dated 27.11.2015, entering into force on 1 December 2015 provides further information on the procedures and criteria of certified audit companies eligible to provide such tax certifications.
Certified auditing companies meeting the following criteria will be selected and entitled to perform the tax certification:
- Statutory auditing companies being enrolled into the Public Registry of Certified Chartered Accounting (IEKA),
- Having at least 10 years of working experience on auditing, accounting and tax advisory, and
- Having at least 1 statutory auditor in the role of engagement partner with a working experience of more than 5 years.
The tax certification is not mandatory, it is optional. The certified tax declarations will be subject to tax audits from the tax administration based on the regular tax audit procedures.
Late payment of CIT instalments
Prepayment of corporate income tax or simplified profit tax on small businesses will be subject to penalties of 15% in case of failure to perform their payments within the respective deadlines.
Taxpayers conducting activity in addresses non-declared to National Registration Center will be subject to a penalty of ALL 500,000.
Unregistered employees and incorrect declaration of employee's real salary
As of 12 November 2015, taxpayers that will be found by the tax verification that:
- Do not declare the newly hired employees at least 1 calendar day before they join, and
- Do not declare the full real remuneration of employees
will be subject to a penalty of ALL 500,000 for the first instance detected, and subject to criminal offence in case of repetition of the same type of non-compliance.
Goods un-accompanied by proper tax documents
The wholesaler maintaining, utilizing, or transporting goods not accompanied by proper tax documents will be subject to:
- A penalty amounting to ALL 10,000,000;
- Seizure of the goods, and
- Re-assessment of revenues for the last 6-months period.
Any repeated case will be considered as a tax evasion. In that case, the tax administration will have the right to charge the taxpayer with criminal offence.
Restriction to wholesalers
The wholesalers selling their products to the end-costumers (i.e. individuals) are liable to sell goods with fiscal coupons until 31 March 2016. However, such sales must not exceed 10% of the taxable amount (without VAT) of goods sold during the same month of the previous year.
In case the wholesalers excess the 10% limitation stated above, then they will be subject to a VAT reassessment, as well as a penalty of 100% of the VAT amount.
While, starting from 1 April 2016 onward, wholesalers will be allowed to sell only to businesses (i.e. retail trader), not to individuals.
Database of IMEI numbers of mobile phones
Starting from 12 November 2015 the General Tax Directory set up a database for the IMEI's numbers of mobile phones. Importers and sellers of mobile phones should declare and upload the IMEI numbers of all the mobile phones they have in stock 1 month after entry into force of such expected Decision and all the mobile phones subsequently imported/bought and released for sale.
Failure to upload or an incorrect upload of IMEI numbers will be subject to a penalty of 30,000 ALL for each case
Amnesty for tax liabilities/penalties imposed by new IT tax system
Several tax liabilities/penalties/interests were charged to certain taxpayers due to the implementation of the new IT tax system. All additional tax liabilities/penalties and interests generated up to 31 August 2015 will be cancelled from the tax system.
Failure to use "proper" fiscal documentation and devices
- Failure to issue a fiscal invoice or a fiscal coupon will be subject to a penalty of 100% of the unpaid tax liabilities, in addition to the tax liabilities and related interests.
- For the wholesalers, in addition to the penalty stated above, a penalty of ALL 10,000,000, as well as the re-assessment of revenues for the last 6 months will be applied.
- While, for other companies (except the wholesalers) in addition to the penalty stated above, a penalty of ALL 500,000 as well as the re-assessment of revenues for the last 6 months will be applied.
- Any repeated case will be considered as a tax evasion. In that case, the tax administration will have the right to charge the taxpayer with criminal offence.
- Failure to post in a visible place the list of prices of goods and services will be subject to a penalty of ALL 500,000.
- Failure to post in a visible place the "notification" informing the buyers for their right to refuse the payment if they do not receive a fiscal invoice or coupon for the goods or services they buy, will be subject to a penalty of ALL 500,000.
- Failure to use or maintain "proper" fiscal devices which are not the same with those specified in the tax legislation, will be subject to penalty to seizure of the goods in stock. In addition, the tax administration will have the right to charge the taxpayer with criminal offence.
Forced debt collection
In the light of collecting the unpaid tax liabilities tax authorities will now be allowed to monitor the activity of taxpayers at their premises and seize 50% of the turnover realized during the day, but however without exceeding unpaid tax liabilities.
Also, the tax authorities will be entitled to request payments from third parties owing money to the taxpayer.
The taxpayers will not be able to transfer money from their accounts, neither transfer their assets nor their capital, unless such payments are made only for the purposes of paying 100% the unpaid tax liabilities.
Correction of tax declarations purposely filed erroneously
For all taxpayers which self-declare and correct a tax return, that they purposely have filed erroneously, and pay the related liabilities and interest within 31 December 2015 will not be charged with criminal offence by the tax administration.
Note: Law no. 99/2015 "On some amendments in the Law no. 9920, dated 19.05.2008 "On Tax Procedures in the Republic of Albania" has been suspended by a decision (not a final one) of the Constitutional Court of the Republic of Albania.
The main amendments stated on that law remain suspended until a final verdict of the Constitutional Court.
[Source: Law No. 99/2015 dated 23 September 2015, published
in the official gazette No. 187, dated.
Instruction No. 26 dated 16 December 2014, published in the
official gazette No. 193, dated 22 December 2014.
Instruction No. 14/1 dated 4 September 2015, published in the official gazette No. 156 dated 7 September 2015.]
Value Added Tax
VAT on import of machineries and equipment directly linked to investments
More details on the procedure of obtaining the exemption from the VAT on import of machineries and equipment, applicable only to certain categories of importers, directly linked to investments are provided by the Decision of the Council of Ministers (DCM) No. 841, dated 14.10.2015.
[Source: Decision of the Council of Ministers No. 841, dated 14 October 2015, published in the Official Gazette No. 183, dated 21 October 2015]
Accounting and Financial Reporting Standards
New National Accounting Standard on Non-for-Profit Organizations
Starting from 1 January 2016 a new National Accounting Standard will be applied to non-for-profit organizations.
For more details visit the website of National Accounting Council (www.kkk.gov.al).
[Source: The Order of Minister of Finance No. 62, dated 17 September 2015, published in the Official Gazette no. 171, dated 1 October 2015].
International Accounting Standards and Financial Reports
Starting from 1 January 2016 several amendments of the International Accounting Standards and International Financial Reporting Standards will enter into force. More precisely, amendments to:
- IFRS's 10, 11, 12, 14; and
- IAS 1, 16, 27, 28, 38 and 41
will be effective from 1 January 2016;
- IFRS 15 will be effective from 1 January 2017;
- IFRS 9 will be effective from 1 January 2018.
[Source: The Order of Minister of Finance No. 81, dated 1 December 2015, published in the Official Gazette no. 214, dated 14 December 2015].
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.