On the main amendments to the legal acts and by-laws carried out in 2018

The General Directorate of Taxes would like to bring to the attention of all taxpayers that during 2018 several legal amendments have been undertaken, which we will present in a nutshell as follows:

INCOME TAX

Exempted income

The following have been exempted from income tax:

• Income generated from the transfer of property title on agricultural land from one registered farmer to another farmer, or natural or legal person that conducts an agricultural activity.
• The cases of transfer of property title within gender relationships man, woman, child, through donation and/or waiver from the property, if the property derives from mandatory co-ownership gained pursuant to the Law No. 7501, dated 19/07/1991 “On land”, as amended.

The transfer of property title on real estates in case of exchanging land with a construction surface area. Exchanging the land with a construction surface area, based on an exchange contract, shall not constitute an instance to calculate any capital gains from the real estate property transfer.

Article 20 “Recognized expenses”, has repealed the part of calculating the income tax in case of exchanging land with a construction surface area.

Article 28 “Tax rate”. The income tax rate shall be 5% for:

• Legal persons that operate in the area of software production/development. The Council of Ministers determines in its decision the activities which shall be included in the production/development of software, as well as the procedures to implement this paragraph.
• Legal persons that operate pursuant to Law No. 38/2012 “On agricultural cooperation companies”.
• The entities that conduct hosting activities certified as “agritourism”, pursuant to the legislation in force in the area of tourism. Such rate shall be applied for a 10-year period for legal persons that receive the status of “certified entity in agritourism”, till 31 December 2021.

The application of the reduced tax rate shall begin in the following tax year, upon the receipt of the status of “certified entity in agritourism”.

Submission of the decision on approving the annual outcome and profit destination:

• The obligation of the natural person to submit the decision of the responsible body has been removed.
• Whereas a penalty of ALL 10,000 shall be applied to legal persons that submit in delay the decision of the responsible body.

VALUE ADDED TAX

A reduced VAT rate of 6% shall be applied on the provision of accommodation and restaurant services, excluding beverages, for structures that operate in hosting activities certified as “agritourism”, pursuant to the legislation in force on tourism. The taxable person who applies the reduced value added tax rate of 6 per cent shall be the person registered with a NUIS just for the provision of hosting activities certified as “agritourism”.

NATIONAL TAXES

• The tax on used vehicles shall be called “the annual tax on used vehicles”.
• The coefficient of vehicles age has been approved for the purpose of calculating the annual tax on used vehicles.
• “Luxury vehicle” shall be considered a vehicle up to 6+1, which meets at least one of the following conditions:

1. Has cylinders larger than 3000 cm³, or
2. Its price/value is equal to or higher than ALL 5,000,000.

• Enforcement measures for natural or legal persons shall be implemented pursuant to the legal provisions of the Law No. 9920, dated 19/05/2008 “On tax procedures in the Republic of Albania”, as amended.

LOCAL TAXES

The investment of entities that provide hosting activities as certified in “agritourism” have been exempted from the payment of the tax of impact on infrastructure, pursuant to the legislation in force on tourism.

BY-LAWS

On 1 April 2018, the Decision No. 652, dated 10/11/2017 entered into force, which determined the minimum threshold of registration for value added tax at ALL 2,000,000 (two million) in a calendar year.

Decision No. 212, dated 20/04/2018 on some addenda and amendments to the Decision No. 953, dated 29/12/2014 of the Council of Ministers “On the implementing provisions of the Law No. 92/2014 “On value added tax in the Republic of Albania”, as amended.

The minimum threshold of registration for value added tax has been determined for:

• Agricultural manufacturers for whom a compensation scheme special regime is applied and that operate as individual farmers.

Joint instruction No. 29, dated 30/07/2018 “On taxing the transfer of property title on real estates”.

Investors in the construction business registered in the Tax Authorities as: 

• A legal person (trade company) with an object in construction and sale of real estates, shall not be subject to the “tax” on personal income from the transfer of property title on real estates. They shall be subject only to paying the local “tax” on transferring the property title on real estates.
• A trade natural person shall be subject to the “tax” on personal income from the transfer of property title on real estates. They are also subject to paying the “local tax” on transferring the property title on real estates.