Albania: Albanian Government Proposes New Amendments to the Income Tax Law

Last Updated: 11 October 2010
Article by Genc Boga

The Council of Ministers has recently approved a draft law introducing some amendments to provisions of the law no. 8438, dated 28.12.1998 "On Income Tax" (the "Draft Law"). The Draft Law shall be submitted to the Albanian Parliament for approval.

Below is a brief summary on the most important amendments:

Income Deriving from Gambling and Inheritance shall become Taxable

Among the categories of taxable income, are also introduced those deriving from gambling and inheritance. An Instruction of the Minister of Finance will clarify the procedure about payment of tax, especially in case of inheritance.

Annual Tax Return

Subject to existing provisions of the Income Tax Law, any individual realizing Albanian sourced income, which has not been subject to withholding tax, shall declare such income within 30 January of the following year.

According to the Draft Law, all taxable individuals (whether self-employed or not), being resident in Albania, as well as non-resident individuals that realize Albanian sourced income, shall submit to the tax authorities the annual income tax declaration (Annual Tax Return), not later than 30 April of the following year.

These categories of taxpayers are not required to file the Annual Tax Return:

  • self-employed individuals that realize an annual turnover up to Leke 2,000,000 (approximately EUR 14,800);
  • individual taxpayers that realize an annual income up to Leke 200,000 (approximately EUR 1,480).

However, the Annual Tax Return may be voluntarily filed by the above indicated persons, as well as by other taxpayers who do not have the obligation to file it. The persons that undertake to file the Annual Tax Return will benefit from the deductible expenses scheme provided by the Draft Law.

According to the deductible expenses scheme established by the Draft Law, certain expenses are considered as tax deductible for purposes of calculating the taxable income. Persons realizing an annual income less than Leke 800,000 (approximately EUR 6,000) are entitled to benefit from such scheme.

The difference between the amount of gross income and deductible expenses shall compose the taxpayer's taxable income subject to tax at 10% rate. The tax amount shall be paid within 30 days from submission of the Annual Tax Return. In case of a credit amount, the tax authorities shall reimburse to the taxpayer the amount of tax paid in excess or, upon the taxpayer's consent, use it for payment of income tax in the following years.

The Minister of Finance shall issue a specific instruction to introduce specific rules for implementation of the above said provisions.

The Draft Law shall enter into force on 1 January 2011. Therefore, the first annual tax return (which will cover income generated during year 2011) shall be filed on or before 30 April 2012.

New Minimum Monthly Salary

The Council of Ministers has approved a new decision "On Determination of the Minimum Salary on Country Level", which abrogates the existing decision no. 522, dated 13.05.2009 (the "New Decision").

As per the New Decision, the minimum monthly salary payable in Albania is Leke 19,000 (previously Leke 18,000), to be granted for 174 working hours performed during the normal working hours. Based on the new monthly salary amount, the minimum hourly salary becomes Leke 109.

The New Decision shall apply starting from 1 July 2010.

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.

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