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The Instruction of the Minister of Finance No. 7, dated January 10th, 2017 “On some addenda to the instruction No. 24, dated 02/09/2008 “On tax procedures in the Republic of Albania”, as amended, has been published in the Official Journal No. 4, dated January 19th, 2017.
Some of the main amendments deriving from this decision are:
The structure of tax appeal
As of January 1st, 2017, the Directorate of Tax Appeal is an integral part of the organizational structure of the Ministry of Finance. For the review and decision-making on tax appeals related to amounts higher than ALL 20 million, the Commission on Tax Appeal Review is established at the Ministry of Finance.
In case of identification of unregistered commercial activity
When the Tax Administration identifies persons that exercise economic and commercial activities without being registered in the National Business Centre, it shall seize the merchandise and oblige the person to immediately register at the National Business Centre as a taxpayer of the Value Added Tax.
If the merchandise is being transported or is loaded for transportation, the measure of seizure shall be also imposed on the vehicle.
Such measure of seizure on the merchandise and vehicle shall be removed upon registration of the economic activity.
Upon registration, the taxpayer shall be equipped with VAT tax invoices and shall fill in an invoice prepared by the buyer with the merchandise inventory data, later submitting them to the Regional Directorate of Taxes for tax assessment.
If the person exercises activities in the area of services, apart from imposing the measure of seizure on the site where such violation is observed, a proposal is sent to the competent bodies to suspend the permit/license/authorisation related to the performance of activities for 6 months.
If the taxpayer has been imposed with a measure of seizure and he destroys the indicative signs put to seize the activity, then the measure of seizing all the quantity of his merchandise shall be imposed. If a registered taxpayer is identified to exercise his activity in a second address not registered at the NBC, then in such case the taxpayer shall not be considered as exercising an unregistered economic and commercial activity, but sanctions will be applied for not updating the data. Whereas with regards to the merchandise, the sales shall be reassessed at the same value as the one in the market.
Registration of transport vehicles
1. For those transport vehicles which are used for the purposes of:
While being in the passive register, the taxpayer shall not submit periodical tax declarations and no fines shall be imposed against him for lack of tax declaration.
While the taxpayer is in the passive status/register, he shall have the same tax liabilities.
The transfer from the passive register to the active one (reactivation) shall be done immediately, unconditional of the outstanding tax duties and/or declarations not submitted by the taxpayer. Regarding the outstanding duties and/or not submitted declarations, all procedures shall apply and all legal steps shall be undertaken to the completion of such duties.
Regarding taxpayers that are reactivated in the NBC due to the removal of suspension of activity, the transfer from the passive register to the active register of the Tax Administration shall be done automatically from the electronic system of the NBC to the GDT system on the date of approval of reactivation at the NBC.
Those taxpayers that require to be reactivated at the RDTs, the activation shall be done immediately in the system by the Regional Directorate of Taxes and the reactivation date shall be the date on the request for reactivation.
All cases of reactivation shall be notified to the respective taxpayer as well in his electronic account/address or in any of the methods of communication defined by law.
Any transaction performed by the taxpayers in the passive register shall be considered an administrative violation and shall be sanctioned in line with the legal provisions.
Moreover, any transaction performed by a buying taxpayer with a selling taxpayer that is in the passive register, as published in the list of passive taxpayers in the official website of the Tax Authority, shall be considered a violation both for the seller and buyer.
Deregistration of taxpayers
Within 10 working days from the date of submission of the request for deregistration, the Tax Administration shall be obliged to verify the tax situation of the legal person.
When the Tax Authority, based upon the risk analysis, deems as necessary to exercise an inspection at the premises where the entity performs its activity, then this deadline shall not be more than 30 working days, including the performance of inspection.
When the entities appear to have tax liabilities, or financial statements and tax declarations not yet submitted, they shall be deregistered upon having paid all the tax liabilities, as well as upon submitting the financial statements and tax declarations.
Documentation and record-keeping
It is used in cases when the seller (the first) sells the goods to the buyer (the second) who on the other hand sells the same goods to another buyer (the third).
When a taxable person (the seller) supplies goods to another taxable person (the buyer), but the goods are not transported in the buying taxable person-reseller direction, but in the direction of a third person (receiver/third buyer), as per the contract of sale/order of the buying taxable person (reseller), the following steps follow:
The selling taxable person shall issue the accompanying document where he shall identify the buying taxable person and the data of the receiver of the goods.
Such accompanying document of the goods shall accompany the goods throughout the transport.
The sales invoice of the goods shall be issued by the supplying taxable person (who sells) to the buying taxable person (reseller).
The latter shall immediately issue the sales tax invoice and shall make it available to the third person, receiver of goods, where the goods are destined to go.
The sales tax invoice issued by the reselling buyer to the receiver of the goods is attached by the latter to the accompanying document by which the goods have been transported and made available.
In any case the transactions carried out in the abovementioned manner shall be documented with the respective contracts, which clearly identify the seller, buyer and receiver of the goods.
Such procedure shall be implemented only when the goods are destined to a third taxable person, receiver of the goods, that differs from the buying taxable person – reseller, whom the seller has issued the sales tax invoice, despite who is the taxable person that carries out the transport.
The accompanying document of the goods shall be allowed for use only for purposes of implementing this procedure. In any other case foreseen in this instruction, the accompanying invoice, as per the standard template, shall be used.
The goods sold, transported or bought without any tax document (tax invoice, accompanying invoice or accompanying document) shall be subject to sanctions in compliance with Article 121 of the law.
The General Director of Taxes, at the taxpayer’s request and despite the number of transactions performed, shall allow the lack of use of VAT tax invoices with a pre-pressed serial number, when the taxpayer is able to issue e-tax invoices for each taxable transaction, with a unique and particular serial number printed from his registration system.
Thus, the taxpayer shall submit at the General Directorate of Taxes:
A written request accompanied with the respective declaration or certificate, which shows that his registration system is computer-based and able to generate tax invoices with a unique and particular serial number for each transaction.
The e-invoice template he requires to use, which shall contain all the elements and data defined by the Law “On VAT”;
Within 15 days the General Directorate of Taxes shall give the approval for the taxpayer by concurrently notifying in written form the taxpayer and the Regional Directorate of Taxes.
If there is an observation that the taxable person has misused the e-tax invoice, in order to evade tax liabilities, the General Director of Taxes shall have the right to review the given approval for a period of at least 2 years.
The limitation on transactions above ALL 150.000 carried out in cash shall not be applied when the payment is performed for a transaction between a commercial person and an individual, despite the transaction value being above ALL 150.000.
The payment performed through e-money financial institutions licensed by the Bank of Albania or payments performed with a credit card shall not be considered a transaction carried out in cash.
Payments performed with credit card among two taxable persons shall not be considered as performed in cash.
In case of taxpayers that are legal persons, the obligation to declare shall be interrupted at the moment of submission of the final report of liquidation/merge/division at the NBC or court.
The taxpayer can submit a new changed tax declaration only once, within 36 months, upon submission date of the initial declaration, provided that such declaration has not been previously inspected by the Tax Administration. The taxpayer can change a previously submitted declaration, only if he has to declare a tax liability higher than the liability resulting from the inspection.
The taxpayers shall declare at the tax body the employees (including also the unpaid employees of the family of the natural person with whom he works and legally co-lives), who start working for the first time or are recently employed by him. He shall fill in the respective forms with the respective data for each one.
Such declaration shall be done at least one calendar day prior to the beginning of work from the employees.
Agreement to pay in instalments
Under financial difficulties, the taxpayer might be allowed at any time and whenever necessary to enter into an agreement to pay in instalments.
Such agreement is done in writing, within 10 working days from the date of submission of the request, provided that the taxpayer will immediately pay 20% of the liability value related to which such agreement is endorsed.
The agreement to pay in instalments can be entered into for tax liabilities resulting from the self-declaration (self-evaluation) as well as for tax liabilities resulting from the tax assessment conducted by the Tax Administration.
The agreement to pay in instalments cannot be entered into for the tax liability that has been declared by the taxpayer himself, which has been calculated, collected or kept by him, including the health care and social security contributions.
The agreement to pay in instalments can be also entered into in cases when the forced collection of tax liabilities has already started for the taxpayer.
An agreement cannot be entered into if the procedures for property sequestration have already started for the taxpayer.
Auditing from audit companies.
If the taxpayer has tax declarations certified by recognized auditing companies or companies classified as such by a special law whereby it is certified that they are in compliance with the fiscal legislation, the Tax Administration shall include such element in the risk analysis of the taxpayer.
In order to be listed to obtain the right to conduct such a service, the auditing companies/or companies classified as such by a special law shall comply with the following conditions:
They shall be statutory auditing companies published at the public register of Certified Auditors at the Institute of Authorized Chartered Auditors or companies classified as such by a special law, registered pursuant to the conditions set out in the law;
They shall be experienced in the area of auditing, accounting and tax consultations;
They shall have as a partner an experienced statutory auditor.
In order to participate in the competition tender, the auditing companies/companies classified as such by a special law, shall comply with the following criteria:
Includes the certification that the applying entity fulfils the following conditions:
a)Has 10 years of experience in the area of auditing, accounting and tax consultations;
b)Has at least one statutory auditor in the role of engagement partner with a work experience not less than 5 years;
In order to certify the technical capacity, the applicant shall submit:
A short history and a description of the auditing company/company classified as such by a special law, including a presentation of the staff and their qualifications (CV);
A declaration of the company’s administrator stating that the company shall not perform the service of verification and certification of the tax declarations of a taxpayer, in the cases where them, their employees or related parties, as defined in the Code of Ethics of IEKA/special law, have provided accounting services, fiscal consultancy services or other similar services to the taxpayer regarding the preparation of tax declarations.
The commission shall have 30 working days available to review the requests upon submission of applications being completed.
The evaluation of proposals shall be carried out by a commission which members are appointed by the Minister of Finance.
If a taxpayer has been previously inspected for income tax but has not been inspected for purposes of transfer pricing, then the inspection on transfer pricing shall not be considered a tax re-inspection.
The notification on the initiation of the tax inspection shall be sent to the taxpayer at least:
30 calendar days prior to the date of initiation of the full tax inspection,
10 calendar days prior to the date of initiation of the fiscal visit.
In case of tax inspection being conducted as a result of a request from the taxpayer for tax reimbursement, the above deadlines do not apply.
The deadline for conduction of the inspection can be extended upon approval from the General Director of Taxes, but not more than 15 working days.
If the taxpayer has performed transactions that he has not declared, he can do so by means of a “Questionnaire Form”, by immediately paying the tax liability and late payment interests.
The declaration pursuant to this paragraph is valid only when it is done within 30 calendar days, prior to the initiation of the full tax inspection.
Collection of tax liability
After having exhausted the procedures of forced collection of the outstanding tax liability, the Tax Administration can collect the outstanding tax obligation also through a public legal person.
Thus, the General Directorate of Taxes endorses an agreement in any case with the public legal person, which shall be a person specialized in conducting procedures for such purpose.
Regarding administrative penalties
If the verification and inspection on the premises of the business show that the taxpayer has not declared at the tax body every employee recently employed, at least one calendar day prior to beginning work, apart from the obligation to pay the amount of tax liabilities and health care and social security contributions, calculated from the date of observation, he shall be sanctioned with a fine for each employee not declared.
Such fine shall not be applied in case when the verification and inspection at the premises of the activity of the self-employed natural person identifies persons older than 16 years old, who are categorized as unpaid family persons. The identification of the unpaid family person is carried out through the ID card, driving license or passport.
Lack of exposure of the selling prices for goods and services shall be sanctioned with a fine.
When the prices are written on the packaging box like in the case of medications, then the commercial entities shall not be subject to the obligation to expose the list of selling prices.
Also, those taxpayers that cannot determine fixed prices beforehand related to the services they perform, due to the costs that can burden the service price, shall not be subject to the obligation to expose the prices.
In case of services of a special nature (e.g. ticket prices of tour agencies), whose price changes and is not predetermined, can be exposed as hourly service fees.
For more information on the full content of such Instruction, please click on: https://www.tatime.gov.al/c/6/69/procedurat-tatimore