Archive for the Tax Alerts Category

Personal Income Tax and Payroll forms to be filed electronically

On 14.12.2011 the Albanian Council of Ministers introduced some changes to Decision no. 5 , dated  03.02.2010, on the Obligatory Declaration of  Tax Forms Electronically.

The Council of Ministers decided that starting from 01.01.2012 all taxpayers the following tax forms shall be filed electronically:

  • Personal Income Tax form for taxpayers of the tax on small business
  • Payroll form E-SIG 025/a,  for employment personal tax, social and health contributions
  • List of new hires and dismissals form E-SIG 025/a

During the fist half of 2012 the taxpayers must submit both in electronic and paper form the payroll and list of new hires and dismissals forms.

Fiscal Representative mandatory for foreign real estate service providers

On 08.11.2011 and 02.12.2011 the Albanian Ministry of Finance introduced some clarifications to Instruction no. 17, on Value Added Tax, regarding the requirement for non-resident taxpayers to appoint a VAT fiscal representative in Albania:

Non-resident taxpayers that provide real estate related services, the place of supply of such services is deemed to be in the Republic of Albania, should appoint a VAT fiscal representative in order to issue VAT invoices in Albania.

The obligation to appoint a local fiscal representative and report VAT in Albania remains regardless of the threshold for VAT Registration.

New VAT rules on services supplied from non-resident companies in Albania

On 08.11.2011 the Albanian Ministry of Finance introduced some clarifications to Instruction no. 17 on Value Added Tax regarding the application of “reverse charge mechanism” for services provided to albanian resident taxpayers by foreign suppliers, as follows:

Resident taxpayers that provide both deductible and exempt supplies should apply partial VAT deduction as per the above mentioned instruction.

Resident taxpayers that are VAT exempt may not deduct reverse charge input VAT.

Resident taxpayers should not apply the reverse charge mechanism if the service provided to them by a foreign supplier is VAT exempt in Albania.

VAT on health services

On 08.11.2011 the Albanian Ministry of Finance introduced some changes to Instruction no. 17 on Value Added Tax regarding the application of VAT on certain Health Services. According to the new instruction the supply of a broad range of health services by both public and private health institutions will be subject to either 10% VAT or 20% VAT depending on the nature of the services supplied.

 The following services are subject to the reduced VAT rate of 10%:

  • Health care services and medical examinations
  • Dental services
  • Medical and biochemical analyses
  • Medical examinations and check-ups
  • Issuance of death certificates

The following medical services are subject to 20% VAT rate:

  • Biological parental tests
  • Medical certificates for the assessment of personal injuries (legal proceedings)
  • Veterinary services
  • Beauty, aesthetic, and cosmetic services, massage services, and reconstructive treatments and services
  • Alternative medical treatment services

Underpayment of Income Tax prepayments may cause additional liabilities

On 07.11.2011 the Albanian Ministry of Finance introduced some changes to Instruction no. 5, on Income Tax, regarding the calculation and payment of Income tax prepayments.

If a taxpayer can prove to the tax authorities, at any time during the year, that the current year income tax will be significantly lower than the previous year income tax then the tax authorities will accept a reduction in the income tax prepayments of the taxpayer.

In case that upon the submission of the year-end income tax form the tax liability exceeds the by more than 10% the prepayments made during the year, the taxpayer will pay an interest of 5% of the difference between the actual income tax obligation and the amount of prepayments made during the year.