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Changes to the Tax Procedures Law

Changes to the Tax Procedures Law

On 18 December 2019 the Albanian Parliament approved the Law 83/2019 introducing amendments to the Law No. 9920 dated 19.05.2008 on Tax Procedures in Albania. This publication highlights the main changes approved concerning new administration procedures.

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Offset of taxes 

In particular cases, the tax obligations towards to the Albanian Tax Authorities may be offset with taxes paid/payable in excess towards the Customs Authorities by the same taxpayer. The criteria and procedures for implementation of this provision will be provided in the Instruction of the Minister of Finance and Economy. 

VAT refund on installment basis

The VAT for refund may be paid by the Albanian Tax Authorities on installment basis in a pre-agreed schedule with the taxpayer. During the execution of the agreement, no interest for late payment would be accrued and paid by the Albanian Tax Authorities. 

Payment of tax liabilities on installment basis by the taxpayer

An installment agreement entered between a taxpayer and the Tax Authorities for payment of tax liabilities cannot cover the payment of withholding tax and mandatory social security and health insurance contributions.

An exception from the rule may be allowed for central and local public institutions or state/public entities, in situations of safeguarding significant public interest, national security or public order and the agreement may be concluded only for the mandatory social and health insurance contributions. 

Uncollectible tax liabilities

A new procedure and hierarchy are set for determining whether a tax liability is treated as uncollectible by the Tax Authorities. Depending on the outstanding amount, the decision to declare a certain tax liability as non-collectible will be in the discretion of the Regional Tax Director, General Tax Director or either of the Minister of Finance and Economy.

Penalties in relation to the issuance/receipt of the tax invoice

Many of the penalties encompassed by the Law on Tax Procedures are redefined and aligned with provisions of the Law on Invoice and Circulation Monitoring. Most penalties vary from ALL 25 thousand to ALL 75 thousand depending on the category of the taxpayer and the nature of the violation. Penalties are applied for supplies not supported with tax documents, failure to make the necessary registrations in the central invoicing platform within the required deadline, failure to issue a tax invoice or an accompanying invoice for goods. The penalties related to the issuance of an invoice cannot be less than the VAT due (if any).

Further measures can be undertaken for VAT registered taxpayers starting from a revaluation of the last 3 months to duplication of the penalty in the second incidence or suspension of the activity if non-compliance lasts more than 30 days. A criminal charge may be filed for third incidence or if the taxpayer is involved in tax evasion.

Non receipt of a tax invoice for which the payment is done in cash would be subject to penalties varying to ALL 1 thousand to ALL 50 thousand depending on the category of the buyer. 

Penalties in relation to the issuance, delivery and acceptance of the e-invoice

Failure to issue, deliver, process and accept an e-invoice as per the rules defined by the Law on Invoice and Circulation Monitoring would be subject to a penalty from ALL 50 thousand to ALL 150 thousand depending on the category of the taxpayer. In any case, the penalty could not be less than the VAT due for the transaction.

Penalties for software developers and software maintenance providers

Software developers and software maintenance providers not registered in accordance with the rules of the Law on Invoice and Circulation Monitoring or developing/trading with a software not allowing or avoiding the fiscalisation process will be subject to a penalty of ALL 1 million. 

Penalties for banks or financial institutions

A penalty at the amount of ALL 100 thousand is set for banks or financial institutions if they fail to record the payment of an invoice issued in accordance with the Law on Invoice and Circulation Monitoring and do not notify the tax authorities for such a payment.

Entry into force

Law No. 83/2019 dated 18 December 2019 is published in the Official Gazette 184 dated 31 December 2019 and becomes effective 15 days after publication. Provisions related to the issuance of an invoice and related penalties 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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