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Scope of application
Liable to Profit Tax are:
Attention: Every person, despite the status or legal form of registration or recognition, in cases where is or becomes liable to profit tax, has the right, at any time, to request his deregistration, but cannot be liable to simplify income tax for the small business.
The liability to pay the profit tax
The resident taxpayers are liable to the profit tax on incomes provided from all sources established:
The Non-resident taxpayers are liable to the profit tax on incomes provided:
Exemption from the profit tax:
Are excluded from the profit tax:
- The central and local governmental organs, the Bank of Albania, humanitarian associations, international organizations, if provided for in special agreements, enterprises, provided for in international agreements and ratified from the Assembly of the Republic of Albania, foundations or non – banking financial institutions formed or transferred upon the decision of the Council of Ministers, film production companies subsidized by the National Film Center, administrated voluntary pension fund.
Attention: All the above-cited subjects have the obligation to submit to tax organs their tax declarations and the annual report, respecting the same deadlines as subjects liable to the profit tax.
The taxable profits result from the deduction of the total revenues gained during the taxation period (calendar year) with the recognizable expenses.
The taxable profits of the taxation period are determined according to the annual report and its annexes that should be composed in compliance with the law “On Accounting and financial statements”
The total incomes imply every type of income generated during the taxation period and include, not only, but also the incomes generated from the supply of services and goods, interest incomes, incomes from use of movable and immovable property.
The recognized expenses (deductible)
To be considered as recognizable (deductible) the expenses must be:
The unrecognizable expenses (deductible)
For purposes of defining the taxable profit, the expenses that are clearly provided in the exhaustively list of the law on taxation, will not be recognized. For further information, please refer to the Law no. 8438 on “Income Tax”, article 21, included in the following.
The Tax rate applicable on The Profit Tax is of 15%
The down payment of the profit tax
Instalments may be paid on a monthly basis, in amounts as follows:
The profit tax is paid every quarter or in advance every month during the year, in the form of monthly down payments.
The instalments may be paid on a monthly basis, in the following amounts:
The general case
In cases when the taxpayer begins his activity during the preceding second year of the taxable period, the down payments are calculated as follows:
If the taxpayer begins his activity during the preceding taxable period, the down payments are:
If the taxpayer begins his activity during the successive taxable period, the down payments are:
Correction of prepayments installments
In the case when the taxpayer, at any time during the taxable period, attests, before the tax authorities that the profit tax for this taxable period will be, significantly, lower than the income tax in the previous period or the previous second period, then the tax authorities accept the reduction of the down payment installments.
If the subject has reduced the down payment installments, determined from the tax organ and the annual tax liability for the profit tax, resulting from the balance sheet, exceeds the down payment by more than 10%, the subject has to pay default interest on the difference between the actual annual liability and the prepaid amount during the year.
If tax authorities estimate that the profit tax for the following tax period will exceed by more than 10 per cent the profit tax of the previous tax period, they can fix this by increasing the down payment installment, in accordance with the estimation of the profit tax made by them.
Declaration and final calculation of tax
By the end of the calendar year, the taxpayer drafts the annual declaration of taxable incomes in the form defined by the Guidance of the Minister of Finance as follows:
Form of Declaration of Payment on Profit Tax must be submitted at tax authorities no later than 31st of March of the succeeding year, submitting at the same time the Balance Sheet accompanied with annexes.
If the declared and paid tax according to annual declaration is more than:
If the declared and paid tax according to the annual declaration is less than:
When the taxpayer does not have other unpaid tax liabilities, upon his written approval, the remaining amount, if any:
The commercial companies together with the assembly of shareholders or respective competent decision-making organ of the company, in accordance with the profit tax payment and within 6 months from the closure of the financial year, must approve:
And also define:
The commercial companies and natural persons, no later than the 31st of the calendar year, shall deposit at the tax administration office, the decision of the responsible organ/natural person that approves the amount and destination of the taxable profit. Such obligation remains unaltered even if the current year has resulted in loss or zero.
Attention: In case of failure to present this document in due time, shall be applied a fine of 10 000 ALL for every month of delay.
The legal person shall declare and pay on the account of the tax administration, the tax on payable dividend, no later than the 20th of August of the same year when the approval of the results has been made, despite if the distribution of the dividend has been completed or not.