The Council of Ministers approved the draft law “For certain amendments to Law No. 8438 of December 28, 1998, “On Income Tax"”.
The purpose of this draft law is to help implement the reforms recently undertaken by the government in response to the situation created by the COVID-19 pandemic, and to ease the fiscal burden on certain business categories by zeroing the tax rate.
More specifically:
- The applicable tax rate on taxable profit for taxpayers subject to the simplified small business profit tax, with annual turnover between 5 and 8 million lek, is 5% percent.
- The simplified profit tax for taxpayers with annual turnover of 0 to 5 million lek is 0 lek per year.
It is also proposed that taxpayers with turnover of up to 14 million lekë not be taxed, meaning the profit tax rate would be 0.3%.
Among other things, the proposed amendments in this draft law also aim to harmonize with the proposed legislative changes regarding value-added tax, which provide for raising the VAT threshold from the current annual turnover of 2 million lekë to 10 million lekë.
The Ministry of Finance estimates that the effects on the state budget from these changes will amount to –300 million lek per year and will benefit approximately 12,257 entities.
In recent years, the Albanian government has undertaken a series of significant reforms regarding income tax and simplified income tax for small businesses.
Source: Ministry of Finance.
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“P R O J E C T L A W
FOR
Certain Amendments to Law No. 8438 of December 28, 1998, “On Income Tax,” as Amended
In accordance with Articles 78, 83(1), and 155 of the Constitution, on the proposal of the Council of Ministers, the Assembly of the Republic of Albania
DECIDED:
In Law No. 8438 of December 28, 1998, “On Income Tax,” as amended, the following changes are made:
Article 1
At point 1 of Article 16, “Scope of the Tax on Profit,” the following changes are made:
1. In letter “a,” the words “… and that are registered for VAT …” are replaced with “… with revenues exceeding 8,000,000 lekë per year ….”.
2. In letter “c,” the words “… when it is subject to value-added tax …” are removed.
Neni 2
Point 1 of Article 28, “Tax Scale,” is amended as follows:
“1. The rate of the profit tax is:
• 0% for taxpayers with income up to 14,000,000 lekë per year.
• 15% for taxpayers with income over 14,000,000 lek per year.
Article 3
This law takes effect 15 days after its publication in the Official Gazette and its effects extend from January 1, 2021.“