On some amendments to the Law “On income tax”

The General Directorate of Taxes would like to inform all taxpayers that in the Official Journal No. 134, dated 18/09/2018 the Law No. 39/2018, dated 09/07/2018 has been published – “On some amendments and addenda to the Law No. 8438, dated 28/12/1998 “On income tax”, as amended.

Due to the market development needs, the amended legal provisions have clarified some issues that will be addressed below in a summarized way:

• In Article 8/1 which determines the categories of personal incomes exempted from taxation. Paragraph 11 sets out the handling of the agricultural land ownership right transfer for those cases when the origin of property is obtained as per the Law No. 7501. As per this provision, the cases of ownership transfer within the gender relation husband, wife, children, by means of donation and/or waiver from the property shall be also exempted, when the property derives from the mandatory co-ownership obtained by means of the Law No. 7501, dated 19/07/1991 “On land”, as amended.
• Article 11 “Transferring the immovable property ownership right” clarifies the concept land and agricultural land. Moreover, this article stipulates that exchanging the land with a construction area, based on an exchange contract, shall not constitute a moment to calculate any capital gains from the transfer of immovable property.
• Following the above clarifications, paragraphs 3 and 4 have been abolished in Article 20, which addressed recognized expenses in the construction activity related to the exchange contracts.
• Article 28 makes some differentiations of the Income Tax rate for some categories: (Such amendments shall enter into force on January 1^st, 2019)
  
  - 5 % for taxpayers with incomes up to ALL 14,000,000 a year;
  
  - 15 % for taxpayers with incomes above ALL 14,000,000 a year;
  
  -  5% for legal persons that conduct economic activities as per the Law No. 38/2012 “On agricultural cooperation companies”;
  
  - 5 % for entities that conduct hosting activities certified as “agritourism”, as per the effective legislation in the area of tourism. (Such rate is applied for a 10-year period for legal persons that receive the status “certified agritourism entity”, until December 31^st, 2021. The application of the reduced rate shall begin in the next fiscal year, upon receiving the status of a “certified agritourism entity”.)

• A very important amendment reflected in Article 33/1 “Submitting the decision on the approval of the annual result and income destination” is the removal of the obligation of the entity “natural person” to submit the decision on the dividend distribution, despite the tax liability, given that the natural person, pursuant to the concept of the trade law, does not have a legal personality and shall be responsible will all its assets.

Finally, in the transitional provisions, due to the need to harmonize the provisions of the Law No. 155/2015 “On gambling in the Republic of Albania”, as amended, the tax rate on gambling has been specified, which is 15% on the gross incomes, that on the other hand mean the difference remaining to the organizer from the difference between the total amount played by the gamblers and the amount won by them. Such changes shall enter into force 15 days upon publication in the Official Journal.