bus203 notes part 9

8/13/2019 Bus203 Notes Part 9

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NOTES PART 9

TAXATION

LEGAL FRAMEWORK

Since 1995, following the process of opening and liberalization of the market, theAlbanian Government, supported by the !", #uropean $nion, the %reasury &epartment$nited States of America and other organizations, has adopted a series of ta' laws(

)urrently, the legal framework regulating the ta' system in Albania is based on*+aw o( 99-5, dated ./(0-(.00/ On the national taxes , and subse uent amendments2+aw o( 934., dated 40(10(.003 On the local taxation system and subse uentamendments2+aw o( / 4/, dated ./(1.(199/ On the income tax in the Republic of Albania and itssubse uent amendments2+aw o( -9./, dated .-(0 (1995 On the value added and subse uent amendments2+aw o( /9-3, dated 1.(1.(.00. On the excise duty and subse uent amendments2+aw o( 99.0, dated 19(05(.00/ On the tax procedures in the Republic of Albania (

&ecision of the )ouncil of !inisters o( 55, dated 04(0.(.010 67n obligatory electronicdeclarations of the ta' documents and other documents related to ta'es8, as per its name,states on the obligation of ta' electronic declaration(

1. INCOME TAX

%he +aw o( / 4/, dated ./(1.(199/ On the income tax in the Republic of Albania6+aw / 4/8: and subse uent amendments, which came into force on the .1(01(1999, has

substantially changed the ta' system( +aw / 4/ governs direct ta'es on natural and legal persons(

;+iable to the income ta' are* companies, corporate groups, consortiums and institutions2Albanians and foreigners who conduct a business in Albania < all those that are sub=ect tovalue added ta' payment 6legal persons8:(;+aw o( / 4/ establishes a criteria of territoriality* all sources of income are ta'able,even if perceived abroad(;Sub=ect to income ta' are legal persons having their head uarters residence: in Albania,as well as legal persons not resident in Albania but still having sources of income

produced in Albania( A legal person is considered as resident in the case it has aregistered office or place in Albania where it has the effective management of its affairs(

From 1 January 200 !"# !a$ ra!# on %n&om# %' 10( ( %he ta' base is determined bythe annual e'ercise balance and accounting records < in accordance with accounting rules

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in force( %he fiscal year of reference starts on the 1st of >anuary and ends on the 41st of&ecember of each year(

+aw / 4/ introduced an analytical list of non deductible e'penses( )an not be deducted anuary .003, small entrepreneurs natural persons or legal entities: which have agross annual turnover up to A++ 5(000(000 appro'imately euro 43,000: are sub=ect tolocal ta' on small businesses, regulated by +aw o( 934., dated 40(10(.003 6+ocal ta'essystem8, as amended 6+aw 934.8:( %hese ta'es are collected by the %a'es and &uties!unicipality 7ffices and flow into the municipal budget(

According to the +aw 934., every ta'payer shall register with the register of local ta'es before starting their business( %he amount of local ta' on small business is determined by

the turnover during the fiscal year and also varies by the type of activity(&espite the declaration by the ta'payer, the ta' office has the right to conduct inspectionsand remove the company from the register of ta'payers, giving notice to the )entral"iscal Authority( %he local ta' must be paid in four rates*

1: "irst rate < the time of registration or renewal of certificate of registration, withinApril .0,

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.: Second rate < within >uly .0,4: %hird rate < within 7ctober .0,

: "ourth rate ? within .0 >anuary of the following year(

III. IN+I,I+)ALS- TAXATION%he new rules dictated by +aw / 4/ substantially modified the regime applicable to personal income( Ee uired to pay ta' on all their incomes are* residents, people as thelatter treated and non


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%he CA% rate is .0 ( %he ta'able amount is the value of provided goods and servicese'cluding CA%( %he ta'able amount of imported goods includes transportation costs andinsurance, import costs, ta'es, duties or tariffs(

+aw o( -9./ states that CA% is e ual to 0 in some cases, including*

i: e'ports of goods outside Albanian territory2ii: services performed outside the Eepublic of Albania by a person whose place of business or place of residence if individual: is located in Albania2

iii: provision of goods or services relating to international carriage of persons or property2

iv: provision of goods or provision of services relating to commercial or industrialshipping(

,. EXCISE TAX+egislation on e'cise duties was also entirely repealed and replaced by a new regulatory

measure* +aw o( /9-3, dated 1.(1.(199/ On excise duty , as supplemented by +aw o( 90 1, dated .-(4(.004 and, more recently, as amended by +aw o( 9143, dated.-(1.(.0042 +aw o( 94./ dated 03(1.(.00 2 +aw 959/, dated .-(0-(.0032 +aw o(9-1 , 9-35, 9/5 of .00-2 +aw o( 995 , dated .3(03(.00/2 +aw o( 1003-, dated0.(0.(.009 and +aw o( 101 - dated ./(09(.009(

#'cise duties apply to a limited number of products for mass consumption, in particular,tobacco and its derivatives, petroleum, alcoholic beverages, soft drinks and coffee, aswell as perfumes and deodorants(

"or tobacco and tobacco products, the applicable rate goes from 0 to .500 A++Bkg2 for

alcoholic beverages and li ueurs applies an e'cise duty which goes from .0 A++Bliter to00 A++Bliter2 while for non


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%he recent +aw o( 99-5, dated ./(0-(.00/ On national taxes determines the ta'esapplicable at national level and regulates their collection(

ational ta'es are*i: port ta'es2ii: the annual fee movement of vehicles2

iii: the environmental ta', which consists of*a: import duty vehicles used2b: carbon ta' gasoline, benzene and diesel2c: rates of plastic bags for li uids produced locally or imported2iv: ta'es and mining royalties2v: ta' on the transactions and stamp duty2vi: fees for registration of gambling, national lotteries, sports betting, casino and

e uestrian events2vii: All ta'es on fishing(

2. LOCAL TAXES AN+ FEES+aw o( 934., On the local tax system , as recently amended by +aw o( 10 1 3 of ./September .009, regulates the ta' payable to the local ta' authorities(

According to this law, are considered as local ta'es* ta' on small businesses, ta' on real property buildings and agricultural land:, hotels ta' 5 on the price paid by thecustomer overnight:, ta' on infrastructure for new constructions 1 to of theinvestment:, ta' on transfer of ownership, registration fees for vehicles, fee for publicspaces use monthly fee calculated on the basis of area occupied:, the charge ofadvertising and sanitation, temporary ta'es(

#'* %a' on buildings* is calculated based on the surface of buildings and is annual( tvaries depending on the district where the building is situated( "or e'ample, for thedistricts of %irana and &urres apply the following ta'es* i: buildings for commercial use.00 A++ B m, ii: housing 15 to 40 A++Bm. and iii: other 50 A++Bm.(

%he ta' on agricultural land* is calculated based on the land held by the owner, is annualand varies depending on the category of land and location of the land itself( "or thedistricts of %irana and &urres applies a fee which goes from 1,/00 A++ B etc( to 5,300A++ B etc(

"or the ta' on transfers of real property* the ta' levied is payable by the seller of the

property and is a necessary condition for proceeding with the registration of the propertywith Eeal #state Eegistration 7ffice( %ransfer of real estate property ta' is generallye ual to . < calculated on the selling price(

,II. SOCIAL SEC)RIT CONTRI )TIONSAccording to +aw o( --04, dated 11(05(1994 On social security of the Republic of

Albania and +aw o( -/-0, dated 14(11(199 On the health insurance in the Republicof Albania , as amended, as well as their respective amendments, employers and

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employees are re uired to pay mandatory contributions to social security and health care(!andatory contributions cover the following risks andBor the following situations wherethe employee may be* temporary inability to work due to illness, maternity leave, old age,accidents at work and occupational diseases, unemployment(

%he basis of the contribution is constituted by the minimum and ma'imum monthlysalary established by decision of the )ouncil of !inisters(

"or the purposes of calculating social security contributions, the minimum monthly wageis set at 13,110 A++ appro'imately #uro 11-: and the ma'imum monthly salary is set at/0,300 A++ appro'imately #uro 5//:(

$nder the legislation in force, the employer must pay each month for each employeee'cept for small firms which pay every trimester: at the nstitute of Social Security, a

total contribution e ual to 4.(9 of the salary income received by the employee(

%he overall rate of contribution* .1(- is borne by the employer and 11(. is borne bythe employee( %he amount of contributions for which employee is ta'ed are deductedfrom his salary and paid by the employer(

,III. ACCO)NTING )+GET AN+ A)+IT CONTROL+aw o( 9../, dated . (0 (.00 On the accounting and budget , as amended 3La4922 5 :, by repealing +aw o( -331, dated 19(01(1994, is currently the legislativeframework on the matter( According to +aw 9../ all economic and non economicentities e'( G7: established in Albania, ,including institutions of creditBfinance and

subsidiaries, regardless of their legal form, are re uired to keep accounts in accordancewith the principles and methods set by the Accounting ational )ouncil( !icroenterprises are e'plicitly e'cluded(

Accounting records are written in Albanian and the applicable currency is A++ < in paperor electronic < and must be =ustified by supporting documentation, which will be

preserved along with the a&&oun!%n6 r#&or7' 8or !"# n#$! 10 y#ar' after the closure ofthe financial year(+aw 9../ also provides the obligation to conduct an inventory of assets, liabilities andown capital, a! #a'! on a y#ar.%he business year lasts 1. months, starting from >anuary 1st and ending in &ecember

41st of each year(According to +aw o( 9901, dated 1 (0 (.00/ On entrepreneurs and commercialcompanies , it is solely the burden of companies to submit their accounting records andrelated documentation to audit(

PRO+)CT LIA ILIT

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Froduct liability in Albania is mostly regulated by the Albanian )ivil )ode 6A))8:(

Ar!%& # :2 o8 !"# ACC ;ro


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a: the producer has not supplied the product2 b: the faultBdefect was not present at the time when the product has been supplied2c: the product has not been manufactured for sale or any other form of distribution, withthe intent of generating profits for the manufacturer, nor has it been manufactured orsupplied in the framework of company or professional activity2

d: the defect is a result of compliance with regulations imposed by public authorities2e: the defect was not discoverable given the state of scientific and technical knowledge atthe time of supply2f: it concerns raw materials or components of another product and the defect manifestsduring the formation of that product, or as a result of the incorrect instructions from themanufacturer of that product(

$nder the Albanian legislation the in=ured party can recover monetary damagesconstituted by the damage suffered and profit lost(%he damage suffered can be represented by the damages to the product itself, damage tohealth or damage to property Article 3 0 and following of the A)):(

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bus203 notes part 9

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