Albania: Corporate income tax, VAT changes effective 2021

Albania: Corporate income tax, VAT changes

Changes to the income tax, value added tax (VAT), and local tax measures are effective 1 January 2021.

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Corporate income tax

Among the corporate income tax measures are changes to the definition of taxable persons to include any legal entity or partnership meeting an annual income threshold and changes to the rate of corporate income tax. Effective 1 January 2021, taxpayers with annual taxable income up to ALL 14 million (approximately €113,000) is subject to corporate income tax at a rate of 0% (reduced from 5%). The rate of corporate income tax for taxpayers with annual income above ALL 14 million remains at 15% of the taxable profit. The rate does not change for other categories of taxpayers subject to corporate income tax of 5% (i.e., software developers and producers, automotive industry, certified agritourism, and agriculture cooperatives).


VAT

Regarding VAT, beginning 1 January 2021, VAT registration will be required if the annual taxable turnover exceeds ALL 10 million (approximately €80,000). In any event, taxpayers may register voluntarily for VAT purposes if their annual turnover is above ALL 5 million (approximately €40,000). The new VAT registration threshold will be uniformly applied to all categories of taxpayers, and will be applied for registration of entrepreneurs providing certain services categorized as “regulated professions” (such as public notaries, lawyers, dentists, nurses, doctors, pharmacists, engineers, architects, accountants, auditors, etc.). In 2021, the new VAT registration threshold will apply also to agriculture producers that previously were obliged to register only if the annual taxable turnover exceeded ALL 5 million.

Effective 1 January 2021, all VAT registered taxpayers will be required to submit on a monthly basis reports of VAT purchase and sales books and the related VAT return. The VAT purchase and sales books will be due no later than the 10th day of the following month, while the monthly VAT return will be due no later than 14th day of the following month. Previously, certain categories of taxpayers were filing quarterly VAT purchase and sales books and VAT returns.


Local taxes

Registered taxpayers performing a business activity and having an annual turnover ranging between ALL 0 – ALL 8 million are subject to the simplified tax on small business (the local tax). Effective 1 January 2021, the simplified tax on small business for this category will be imposed at a rate of 0%. Once the turnover threshold is exceeded, the taxpayer must be registered for corporate income tax purposes and act in accordance with the provisions of the income tax law.

Previously, taxpayers with annual turnover in the range of ALL 0 – ALL 5 million were subject to local tax at a rate of 0%, whereas taxpayers with annual turnover in the range of ALL 5 million – ALL 8 million were subject to tax at a rate of 5%.

Read a January 2021 report prepared by the KPMG member firm in Albania

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