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Amendments to the Value Added Tax Law

Amendments to the Value Added Tax Law

On 18 December 2019 the Albanian Parliament approved the Law 85/2019 introducing amendments to the Law No. 92/2014 on Value Added Tax (VAT). This publication highlights the main changes and additions related to certain VAT exempt supplies and new rules on preparation and issuance of the invoices for VAT purposes by implementing the new provisions of the Law on Invoice and Circulation Monitoring.

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VAT Exemption on supply of electric vehicles

Supply of new vehicles, with electric engines which were not placed in circulation in any other country, will be treated as an exempt supply for VAT purposes. Moreover, the supply of public transport buses with more than 9 seats equipped with electric engine only will be subject to reduced VAT rate of 6%.

VAT exempt supplies

Construction process and supplies of goods or services related to the reconstruction process authorized as part of the reconstruction program in case of proclamation of natural disaster status, will be treated as VAT exempt supplies. The constructors benefiting the VAT exemption should be authorized by the General Tax Director as per the rules defined in the Decision of the Council of Ministers. Procedures are to be defined also for the suppliers of goods and services to the authorized constructors involved in the reconstruction process related to the natural disasters.

Moreover, materials, equipment and prefabricated buildings imported by public authorities, non for profit and philanthropic organizations during the period of natural disaster and aligned with the reconstruction program will be treated as VAT exempt supplies. The implementation procedures will be determined by the Albanian Council of Ministers. 

Invoicing

Invoice elements, preparation and issuance procedures set out by the Law on VAT are adopted in line with the Law on Invoice and Circulation Monitoring. The existing rules of the VAT Law in relation to the invoice issuance and related procedures will be valid until  provisions of the Law on Invoice and Circulation Monitoring become effective and in accordance with the deadlines set therein. 

VAT Return

Upon implementation of the Law on Fiscal Invoice and Circulation Monitoring, the monthly VAT purchases and sales books will be automatically populated with the transactions performed by each taxpayer and which are reported in the central platform of monitoring the invoices issuance. The same approach will be adopted also for the monthly tax return, which will  be automatically populated with the information generated from the purchases and sales books. However, the taxpayer should verify the accuracy and completeness of these documents and make the necessary amendments where relevant. The deadlines for submission of the VAT books and VAT return remain unchanged.

Entry into Force 

Law 85/2019 is published in the Official Gazette No. 184 dated 31 December 2019 and enters into force 15 days after its publication. Provisions related to the issuance of the invoice become effective as per the deadlines which will be stipulated in the Law on Invoice and Circulation monitoring system.

© 2020 KPMG Albania Shpk, an Albanian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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