The addenda and amendments to the Instruction “On Income Tax” have entered into force

The General Directorate of Taxes would like to inform all taxpayers that Instruction No. 4, dated 21/02/2019 “On some addenda and amendments to the Instruction No. 5, dated 30/01/2006 “On income tax”, as amended, has been published in the Official Journal No. 23, dated 26 February 2019.

Below are the main amendments to this instruction:   

The tax rate on income from employment as per the level of gross salary shall be applied according to the following categories:

• 0%    for the monthly gross salary up to ALL 30,000;
• 13%  for the monthly gross salary ALL 30,001 – ALL 150,000;
• 23%  for the monthly gross salary above ALL 150,000.

Subject to the withholding tax shall also be:

• Incomes of a non-resident persons, received as a result of the services performed by a resident person. Regarding these incomes, the resident receiving the service shall keep the withholding tax from the payments performed to the non-resident.
• Incomes received by gross amounts of payments for consultancy services. All persons residing in the Republic of Albania, central and local government bodies, Non-profit Organizations and every other entity, recognized by the effective legislation, shall be obliged to keep the withholding tax from these payments.

Subject to the income tax shall also be:

Every non-resident person who is not registered pursuant to the Albanian legislation and is not subject to the Tax on Income. To fulfil this obligation, the non-resident persons shall fill in the special declaration of taxable profits, which must be submitted by March 31^st of the next year and pay the tax upon submission time.

For the purposes of calculating the fiscal year results:

Un-recognized expenses shall be considered the expenses for per diems that exceed the 50% of the annual gross salary fund.

Tax on Dividend:

The Tax on Dividend shall be applied at the rate of 8%. For non-allocated profits generated in 2018 and before, including reserves and capitalized profits, this rate shall be applied provided that:

• The tax related to non-allocated profits of 2017 and before is paid by 30 September 2019;
• The tax on dividend for profits of 2018 is paid by 20 August 2019.

In case the above conditions are not met, the taxpayer shall pay a 15% Tax on Dividend.

Regarding bad debt (provisions):

In case the movable (personal) and immovable property that ensures the loan is executed prior to the deadlines set by law for writing off the bad debt, the previous banking provisions, recognized as deductible expenses, shall continue to be recognized as such.