Income Tax

The nonprofit organization is required to register for income tax, if it carries out economic activity and generates taxable incomes under the provisions of the Law no.8438, dated 28.12.1998 “On Income Tax”.

THE POSSIBILITY TO DECLARE

A. In those cases where the taxpayer, which although can be established as an NGO or public agency / state enterprise, is obliged to submit the declaration of income tax, or in other cases even more specific when it is not exempt from the profit tax and the turnover, subject to tax is less than 8 million ALL per year, in those cases the taxpayer refers respectively to provisions that is made by the law no.9632, dated 30.10.2006, "On the local tax system", as amended.

B. The taxable profit for the taxable period is determined based on the balance sheet and its annexes, which must be drafted in accordance with the law "On accounting and financial statements".

• For the determination of profit is very important to identify the recognized expenses, those that are performed for profit purpose, insurance and storage of profit to the extent that these expenses must necessarily be proven and documented by the taxpayer through tax invoice with VAT, invoice of simple tax and any other document compiled and issued in accordance with the guidance of the Minister of Finance, pursuant to tax legislation.

C. The nonprofit organization prepares the annual declaration of taxable income in the form specified in the guidance of the Minister of Finance, and submits it to the tax authorities before March 31 of the following year, by submitting at the same time the balance sheet, along with the annexes thereof, as well as any other data.

• The tax is calculated on the basis of the annual taxable income, less the amounts specified as input, and prepayments made during the tax period, paid by the taxpayer on account of tax authorities at the time of submission of the annual declaration of the taxable incomes.

What are the prepayment installments of income tax?

1. The income tax is paid every quarter or every month in the form of down payments during the year, based on monthly installments.
2. The tax administration, based on the data of the declaration of taxable profit of the preceding year, submitted by the taxpayer before March 31th of the following year, calculates the monthly prepayment installments of the profit tax for the period April-December of the following year and for the period January-March of the next year.
3. The monthly prepayment installments of the profit tax for the period April-December of the following year and for the period January-March of the next year, are notified to the taxpayer by 30th April of each year.
4. The down payment installments of the income tax, as defined above are paid by the taxpayers on a quarterly basis or on a monthly basis.

The calculation of the monthly down payment installments

A. In the case when the taxpayer initiates the activity in the coming year, the monthly down payment installments of profit tax are calculated based on the forecast statement for the amount of estimated tax on profits made by the taxpayer himself, divided by the number of months remaining until the end of the year, without taking into account the first month of registration. This calculation formula will also be used to determine the monthly down payment installments of profit tax for the first 3 months of the following year.

• Subsequently, the following 9 months of the next year (April-December) the monthly down payment installments of profit tax are calculated using the data of the declaration of taxable profit of the previous year.

B. 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 down payment installments according to the rules established by the Guidance of the Minister of Finance.

• 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, according to rules set by the Guidance of the Minister of Finance.

C. If the tax organs estimate that the profit tax for the following tax period will exceed by more than 10 per cent the profit tax in 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.