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Amendments and amendments to the Instruction “On Income Tax”

Amendments and amendments to the Instruction “On Income Tax”

The General Directorate of Taxation notifies all taxpayers that it is published in the Official Gazette no. 23, dated February 26, 2019, instruction no. 4, dated 21.02.2019 “On some additions and amendments to guideline no. 5, dated 30.01.2006 “On Income Tax”, amended “.

The following are the main changes under this guidance:   

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The tax rate of income tax on employment by gross salary level is applied according to the following categories:

  • 0% for monthly gross salary up to 30,000 lek;
  • 13% for gross monthly salary 30,001 – 150,000 lekë;
  • 23% for gross monthly salary over 150,000 lekë.

They are subject to Taxes on:

  • Income of a non-resident person, obtained as a result of services rendered to a resident person. For such income, the resident who benefits from the service will withhold the withholding tax from the payments he will make on the non-resident.
  • Revenue obtained from gross amounts of payments for consultancy services. All resident persons in the Republic of Albania, central and local government bodies, non-profit organizations and any other entity recognized by the applicable legislation are required to bear the withholding tax on these payments.

The Profit Tax is also subject to:

Any non-resident person, who is not registered under Albanian legislation and is not subject to Income Tax. For the fulfillment of this obligation, non-resident persons will complete the separate declaration of taxable income, which must be submitted by March 31 of the following year and pay the tax at the time of delivery.

For the purpose of calculating the result of the fiscal year :

Expenditures will be considered, diet costs that exceed 50% of the gross annual salary fund.

For Dividend Tax:

Dividend tax will be applied to the tax rate of 8%. For retained earnings realized in 2018 before, including reserves and capitalized gains, this rate is applied on the condition that:

  • the tax on retained earnings from 2017 onwards should be paid by 30 September 2019;
  • the dividend tax for the profit of 2018 be paid by August 20, 2019.

If the above conditions are not met the taxpayer will pay 15% tax on the dividend.

For bad debt (provisions):

In case the movable or immovable property securing the loan is executed before the deadlines set out in the law for the cancellation of bad debt, the previous bank provision, known as deductible expenses, will continue to be recognized as such.

News Source: GDT

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