This section of issue 2 of KPMG’s Tax News for 2019 summarises the main amendments to the Law on Value Added Tax effective from 1 January 2019.
Reduced VAT rate on advertisement services, supply of books and buses used in public transport
The VAT applicable on supply of advertisement services provided by audiovisual media and supply of books of any kind will be subject to a reduced 6% VAT rate.
The reduced VAT rate of 6% will also be applied on the supply of electrical buses (+9 seats) used for public transport. The rate of 6% on the supply of electric buses will be applied until 31 December 2021; after this date, the 10% VAT rate will be applicable to such supplies.
VAT exemption on inputs and machinery used in agriculture and veterinary services
The supply of agricultural machinery and inputs (i.e. chemical fertilizers, pesticides, seeds and seedlings, except for the hormones classified by the code 2937 as per the Combined Nomenclature of Goods) will be exempt from VAT. The list of the machinery and inputs used in agriculture benefiting from a VAT exemption will be determined through a Decision of the Council of Ministers.
Furthermore, the supply of veterinary services, except for the veterinary services for pets, will also be exempt from VAT.
VAT on import of raw materials used for medicinal products
The import of raw materials used for the production of medicines (except for the raw materials used for double purposes) performed by the authorized producers will be exempt from VAT. The Council of Ministers will set out the list of the raw materials to be used for the production of medicines.
VAT on exports
Apart from the authorized taxable persons supplying services for the processing of non-Albanian goods intended for re-export under the inward processing regime, the VAT at 0% rate will also be applied to their subcontractors. The necessary documentation for the application of this provision will be determined through an Instruction of the Minister of Finance.
Agricultural compensation of producers
Starting from 1 January 2019, the compensation rate for the agricultural producers will be 6% compared to 20% previously.
Entry into force
Law no. 96/2018 dated 3 December 2018 on Additions to Law No. 92/2014 on Value Added Tax is published in the Official Gazette No. 187 dated 28 December 2018 and becomes effective from 1 January 2019.
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