Tax News: Amendments to the implementation provisions of the Law on Value Added Tax

Tax News

Amendments to the implementation provisions of the Law on Value Added Tax were adopted by the Albanian Council of Ministers on 10 November 2017 as set out in Decision No. 652. The main changes consist of the following:


Changes in the VAT registration threshold

Small businesses

Starting from 1 April 2018, taxpayers registered under the regime of small businesses realizing a turnover which exceeds ALL 2 million (approximately EUR 15,000) in a calendar year will be obliged to register for VAT purposes. Until the enforcement of this clause, the VAT registration threshold for these categories of taxpayers will remain ALL 5 million (approximately EUR 37,000) in a calendar year.

In this regard, the taxpayers having an annual turnover above ALL 2 million have the obligation to comply with the declaration and payment of the VAT liabilities in a similar way to other VAT registered taxpayers. The VAT compliance procedures and deadlines for taxpayers registered as small businesses are expected to be introduced soon in the VAT Law no. 92/2014 dated 24 July 2014.

Agricultural producers

The VAT registration threshold for agricultural producers registered under the compensation scheme regime will continue to be the annual turnover of ALL 5 million. Additionally, agricultural producers may decide to register voluntarily according to the normal VAT regime, regardless of the annual turnover realized.

Application of a reduced VAT rate on accommodation services

As highlighted in our previous publication, starting from 6 June 2017 the services supplied by accommodation operators (regulated in the specific legislation on tourism activities) are subject to a 6% VAT rate. The new Decision determines that the reduced rate of 6% will also be applied to the price of breakfast if this is included in the accommodation price, while any other services or goods supplied by these operators shall be subject to a 20% VAT rate and should be presented separately in the invoice prepared by the supplier.

Taxpayers operating in the tourism sector and benefiting from the reduced VAT rate are allowed to credit, with no limitations, the input VAT charged to the supplies received, unless an exception to this rule is specifically mentioned by the VAT legislation.

However, within 3 months from the entry into force of this Decision, taxpayers performing simultaneously accommodation services and other business activities should reorganize their business by registering the accommodation services separately from any other business activities. The division of the accommodation services should be performed in accordance with the Albanian Company Law requirements and duly registered with the National Business Center.

Entry into force

Decision of the Council of Ministers no. 652 dated 10 November 2017 is published in the Official Gazette no. 200 dated 20 November 2017. The provision related to the VAT registration threshold becomes effective from 1 April 2018, while other provisions enter into force upon their publication in the Official Gazette.

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