[New] Income Tax Law (Draft).

Part 1

General Provisions

Article 1

Field of Law Enforcement

This law establishes the rules regarding:

a. Tax on the income of natural persons and entities;

b. Tax on inheritances, gifts, and gambling winnings.

Neni 2

Definitions

1. The term “person”refers to any natural person and entity.".
2. The term “person" physical”means any individual, self-employed individual, or trader.  It includes employees, the self-employed, individual traders, as well as any other natural person who has income from any source, income received from inheritances or gifts, or gambling winnings under this Law.
3. The term “eentity”  means: (i) any company or any structure of corporate or non-corporate organizations (regardless of form)  profit-making or non-profit, (ii) companies such as organizations, (iii) any form of foreign trust or similar structure, (iv) any form of partnership or any personal-type entity, (v) any form of joint venture, (vi) any form of capital or asset management company, (vii) any form of company under the Civil Code or commercial companies law, (viii) passive or “dormant” partnerships‘  
4. The term “company” means any business or legal entity, or any association of businesses or legal entities.
5. The term “self-employed individual” means any natural person engaged in providing any type of service, or engaged in other professional activities other than commercial activities.
6. The term “trading individual” means any natural person engaged in commercial activities.
7. The term “taxpayer”means any person who is subject to taxation under this Law or under any other law that establishes a special tax regime.".
8. The term “economic activity” means any economic activity aimed at generating profit. It includes the activities of self-employed individuals, merchant individuals, and entities.
9. The term “employee” means a natural person who receives income from employment.
10. The term “employer” means the person who has the right to the work performed and who bears the responsibility and risk associated with its completion.
11. The term “turnover” refers to the total revenue generated from the sale of goods and services (excluding VAT).
12. The term “voluntary pensions” means pensions received from a pension plan, under the terms of the law on voluntary pension funds, excluding the pension paid by the mandatory contribution scheme.;
13. The term “related person” means any person who is connected to another person in a relationship that directly or indirectly affects the determination of the tax base, whether through management, control, or ownership. In general, two persons are related if one or both persons could act in accordance with the instructions, requests, suggestions, or will of the other person or of a third person.

The following persons will be treated as related persons:

1. Husband and wife, descendants and ancestors, between them or among themselves.

2. An economic unit in which each person directly or indirectly owns at least 50 percent of the voting or management rights, dividend distribution rights, or capital rights.

3. Any two or more entities in which another person owns or holds at least 50 percent of the voting or management rights, dividend distribution rights, or capital rights in both economic units.

When paragraphs (2) or (3) above apply, ownership attributed to a person by a related person may not be attributed to another related person. Two persons shall not be considered related solely because one of them is considered an employee or client of the other, or both are considered employees or clients of a third party, unless such a relationship directly or indirectly affects the determination of the tax base.

14. The term “independent parties” means parties that are not connected.
15. The term “incorporation”It means the transfer by a natural person of his or her entire business activity (the transferor) to a company (the transferee) in exchange for the issuance or transfer of shares/quotas representing the capital in the transferee company.  
16. The term “technical service” means a payment, whether periodic or as a one-time amount, including fees for technical services and fees for automated digital services, to the extent that it is reasonable to attribute any type of service, or any other benefit offered by a sole proprietorship. The following cases are not considered service fees:
17. Administrative expenses for supervision and control, transferred from an external central headquarters and for the account of a permanent headquarters operating in the Republic of Albania.
18. Transportation or freight transport.
19. Insurance rates.
20. Services related to the performance of religious rituals.
21. Accommodation in hotels or other places.
22. The term “technical service fee” means a payment for management, technical, or consulting services, including fees for providing technicians or other personnel, a payment for the provision of technical, industrial, commercial, or scientific knowledge,  experience or skills, or a payment for providing assistance that aids matters referred to in the definition of “honoraria.”
23. The term “automatic digital service fee” means a payment for any service offered over the Internet or via an electronic network that requires minimal human involvement from the service provider.
24. The term “securities” means any financial instrument that carries value and can be traded between parties, including the following cases:
    • Shares or quotas in any company;
    • Shares, quotas, or participation in a partnership;
    • Bonos and Treasury bonds, as well as corporate bonds;
    • Derivative instruments, as defined by applicable laws and regulations, or as their meaning is derived from generally accepted accounting principles.
    • Foreign currency instruments, as defined by applicable laws and regulations, or whose meaning is derived from generally accepted accounting principles.

• The term “dividend” includes the following types of income, regardless of whether these dividends are realized within or outside the Republic of Albania and regardless of how these dividends are distributed:

1. Incomes from shares or quotas in any company, founder shares, or other profit-sharing rights that do not constitute claims against debts.
2. Income from other corporate rights, including dividend units and interim dividends.
3. Income from the distribution of partnership profits.
4. Income from the distribution of profits of non-resident entities realized through a permanent establishment in the Republic of Albania.
5. Income from any type of profit distribution from any type of entity.
6. Amounts received from the liquidation process.
7. Amounts received from capital reduction or share repurchase.

• The term “interest” includes interest expenses for all forms of debt, other costs economically equivalent to interest, and expenses incurred in connection with the expansion of financing, including payments on profit-participation loans, interest on bonds, the financial cost element of finance lease payments, capitalized interest or the amortization of capitalized interest, interest amounts under derivative instruments or hedging agreements, certain gains and losses on foreign exchange from borrowings and instruments related to the financing increase, guarantee and agreement fees, and similar costs associated with borrowing funds.

• The term “honorare” refers to payments for the use or the right to use an intangible asset. Honoraria include the following:

1.          The use or the right to use a copyright in a literary, artistic, or scientific work, including films, software, or video or audio recordings, whether the work is in electronic or other format.
2.  The use or the right to use a patent, license, invention, trademark, design or model, plan, formula or secret process, or any other similar property or right.
3. The acquisition or the right to acquire any image or visual sound, or both, transmitted by satellite, cable, fiber optics, or similar technology in connection with television, radio, or internet broadcasting.
4. The use or the right to use information regarding industrial, commercial, or scientific experience.
5. A payment deferral, total or partial, with respect to items (i) – (iv) above.
6. A premium, or something very similar with respect to the cases listed in points (i) – (v) above.
7. Withholding agent, including payroll withholding agents, means any person who is required to withhold tax at source and to transfer it to the state budget in accordance with the provisions of this law.,
8. Corporate income tax refers to the taxation of entities that, under the provisions of this law, pay income tax.

Article 3

Source of income

Income from a source in the Republic of Albania includes, but is not limited to, the following income from:

a. Payments related to employment or fees for services rendered in the Republic of Albania or paid by the Government;

 b. Income from cultural, artistic, or sporting activities carried out in the Republic of Albania;

c. Income that is required to be paid by a resident employer, even if the work is performed abroad;

d. Income from business activities and the income of traders and self-employed individuals for activities and services provided in the Republic of Albania;

e. Business income attributable to a permanent establishment in the Republic of Albania;      

f. Notwithstanding point e) above, the revenues from:

i) immovable property, its accessories and fruits, as well as the income derived from rights over immovable property located in the Republic of Albania;

ii) rights to exploit mineral resources, rights to exploit hydrocarbon resources, or other rights to exploit terrestrial and marine natural resources, including the sea in the Republic of Albania, as well as information pertaining to these rights;

iii) Income from ownership of movable property located in the Republic of Albania.

The rights and information referred to in subsections “(i)” and “(ii)” above, for the purposes of this law, are treated as real property.

g) revenues from the disposal of:

i) of the assets, rights, and information referred to in paragraph (f) of this article;

ii) shares or similar interests, such as partnership or trust interests, as defined in the relevant legislation, wherever located, if, at any time during the 365 days prior to the disposal, such shares or similar interests derive more than 50 percent of their value, directly or indirectly, from the real estate, rights or information referred to in paragraph (f) of this article

h. Dividends, including those from partnerships, distributed by a resident individual;

i. Capital gains from the disposal of shares of resident entities and any securities in the Republic of Albania;

j. Interest paid by local or central government authorities, by a resident taxpayer, or by a permanent establishment in the Republic of Albania;

k. Rents, lease agreements, license fees, service charges, and honoraria paid by a resident individual or by a permanent establishment in the Republic of Albania;

i. Gambling winnings for a resident taxpayer or paid by a permanent establishment in the Republic of Albania;

m. Income from any other activity physically carried out in the Republic of Albania.

Article 4

Permanent Seat

1. The term “permanent establishment” means a fixed place of business where the business activities of a nonresident are carried on wholly or partly.

2. The term “permanent seat” includes in particular:

1. an administrative location;
2. a branch;
3. an office;
4. a factory;
5. a workshop and
6. a mine, an oil or gas well, a quarry, or any other site for extracting natural resources.
7. a building or a construction, installation or assembly project site, or any related supervisory activity, only if such a site, project or activity continues in the Republic of Albania for a total period or periods exceeding six months during any twelve-month period;
8. any activity, including the use or installation of substantial equipment carried out in the Republic of Albania in connection with the exploration, extraction, or exploitation of natural resources for a total period of more than three months during any twelve-month period;
9. the performance of services, including consulting services provided by a person through his employees or other individuals, the assistance of whom is sought by the person for this purpose, only if these activities continue (for the same person or an affiliated person) in the Republic of Albania for a total period or periods exceeding three months during any twelve-month period.

3. Notwithstanding paragraphs 1 and 2 of this article, the term “permanent establishment” shall be deemed not to include:

i) the use of the premises solely for the purpose of storing, displaying, or shipping goods belonging to the enterprise;

ii) holding a stock of goods belonging to the enterprise solely for storage, display, or distribution purposes;

iii) holding a stock of goods belonging to the enterprise solely for processing by another enterprise;

iv) maintaining a fixed place of business solely for the purpose of purchasing goods or gathering information for the enterprise;

v) maintaining a fixed place of business solely for the purpose of carrying out any other activity for the enterprise;

vi) the maintenance of a fixed place of business solely for any combination of the activities mentioned in subparagraphs i) through v), provided that such activity or, in the case of subparagraph vi), the overall activity of the fixed place of business, is of a preparatory or auxiliary character.

4. Paragraph 3 shall not apply to a fixed place of business used or maintained by a non-resident person if the same person or a person closely associated with him carries on business activities at the same place or at another place in the Republic of Albania, and:

i) that place or another place constitutes a permanent establishment for the person or the closely related person within the provisions of this article, or

ii) the overall activity resulting from the combination of activities carried out by both persons in the same place, or by the same person or by closely related persons in both places, is not of a preparatory or auxiliary character, provided that the business activities carried out by both persons in the same place, or by the same person or by a closely related person in both places, constitute complementary functions that are part of a cohesive business operation.

5. Notwithstanding the provisions of paragraphs 1 and 2, but in accordance with the provisions of paragraph 7, when a person acts in the Republic of Albania on behalf of a non-resident person, the non-resident person shall be deemed to have a permanent establishment in the Republic of Albania in respect of any activities that person undertakes, if such a person;

1. Usually enters into contracts, or typically plays the primary role in entering into contracts that are routinely entered into without material modifications by the non-resident, and these contracts are:

a) in the name of the non-resident person, or

b) for the transfer of ownership or for the granting of the right to use property owned by a non-resident person or that a non-resident person has the right to use, or

c) for the provision of services by the non-resident,

unless the activities of such a person are confined to those mentioned in paragraph 4, which, if carried on through a fixed place of business, would not make that fixed place of business a permanent establishment under the provisions of paragraph 4; or

1. The person does not typically enter into contracts, nor does he play the primary role in entering into such contracts, but he maintains a stock of goods or commercial products from which he regularly delivers goods or products on behalf of the non-resident.

6. Notwithstanding the foregoing provisions of this article, but in accordance with the provisions of paragraph (7), an insurance undertaking of another State, other than in respect of reinsurance, shall be deemed to have a permanent establishment in the Republic of Albania if, through a person, it collects premiums in the Republic of Albania or insures risks situated in the Republic of Albania.

7. Paragraphs 5 and 6 shall not apply when a person acting in the Republic of Albania on behalf of a non-resident person carries on business in the Republic of Albania as an independent agent and acts for the non-resident person in the ordinary course of that business. However, when a person acts exclusively or almost exclusively on behalf of one or more persons with whom it is closely connected, that person shall not be considered an independent agent within the meaning of this paragraph in relation to any such person.

8. The mere fact that a nonresident person controls or is controlled by a resident person, or that it conducts business in the other state (whether through a permanent establishment or otherwise), shall not in itself constitute a permanent establishment of the other.

9. A person is considered to be closely associated with another person if, based on all relevant facts and circumstances, one person controls the other or both are under the control of the same persons. In any event, a person shall be deemed to be closely associated with another person if one directly or indirectly owns at least 50 percent of the beneficial interest in the other (or, in the case of a company, not less than 50 percent of the votes and the total value of the company's shares or of the beneficial equity interest in the company) or if another person directly or indirectly owns not less than 50 percent of the beneficial interest (or, in the case of a company, not less than 50 percent of the voting power and the total value of the company's shares or of the beneficial equity interest in the company) of the person or of both persons.

Article 5

Field of application

1) Individuals resident in the Republic of Albania are subject to personal income tax and corporate income tax on taxable income from all sources, whether earned within or outside the territory of the Republic of Albania in a given tax year.

2) Except as otherwise provided in this Law, nonresident individuals are subject to income tax on the total of:

1. Their worldwide taxable income attributable to a permanent establishment in Albania; and
2. To the extent not included in paragraph (i) above, their taxable income from all sources having a source in Albania, pursuant to Article 3 [Source of Income and Payments], in a given tax year. 

Article 6

Tax period

The tax year begins on January 1 and ends on December 31 of each calendar year. 

Part 2

Personal Income Tax

Chapter 1

General Provisions for Personal Income Tax

Article 7

Personal Income Taxpayer

Any natural person is responsible for personal income tax (‘personal income tax taxpayer’).

Article 8

Residence

A resident personal income tax taxpayer is any taxpayer who meets one of the following conditions:

1. Has a permanent establishment in the territory of the Republic of Albania during the tax year; or
2. Stays in the Republic of Albania during the tax year, and that stay falls within one or more periods totaling 183 days or more within a 12-month period that begins or ends with the relevant tax year. The day of departure from the country and the day of entry into the country shall each be treated separately as days of his presence in the country; or
3. Is a citizen of the Republic of Albania who, outside its territory, performs duties as an employee or official of the Government of the Republic of Albania; or
4. Has a store, professional office, a factory or any other place where the natural person carries on activity in the Republic of Albania, or has habitual residence in the Republic of Albania, except in cases where the natural person has a permanent residence outside the Republic of Albania for the entire tax year and also does not have a permanent residence in the Republic of Albania; or
5. Has vital centers of interest in the Republic of Albania, which implies significant personal or economic ties to the Republic of Albania.

A natural person who is a resident of the Republic of Albania during a tax year under this article, by having permanent residence or a place of business, and who was not a resident of the Republic of Albania in the preceding tax year, is a resident only from the beginning of the 183-day period or from the date on which they acquired permanent residence or the place of business.  Otherwise, a natural person who is a resident of the Republic of Albania during a tax year is treated as a resident for the entire year.

Article 9

Documentation

1. The personal income tax taxpayer is required to retain all documentation necessary to substantiate the information reported on the income tax return.

• Any self-employed individual or trader who is not subject to the legal obligation to maintain accounting in accordance with the Law “On Accounting and Financial Statements,” is required to keep at least a register of income, expenses, accounts receivable, and liabilities/debts, according to a simplified structure as defined in the implementing regulations of this law.

Chapter 2

Provisions for Determining Taxable Income

Article 10

Taxable income

1. The following income is considered taxable income of a personal income taxpayer:

a. Income from employment;

b. Business income;

c. Income from investments.

•  Income is taxable regardless of whether it is paid in cash or in kind.

• In-kind revenues are valued at market value, unless otherwise provided in this law or in the regulations issued pursuant to it.

• The Arm's Length Principle, as defined in Article 44 [Arm's Length Principle], applies to transactions between related parties.

Article 11

Income that is not subject to personal income tax

The following income is not subject to personal income tax:  

1. Incomes received as a result of coverage under the mandatory social security and health insurance scheme.
2. Economic assistance from public budgets for individuals with no income or low income, as defined in the applicable legislation in force.
3. Income exempt on the basis of international agreements ratified by the Assembly of the Republic of Albania.
4. Financial compensation paid to property owners as compensation for expropriations carried out by the state in the public interest, or to former owners for the expropriation of their property in the past.
5. Financial compensation paid to former political prisoners and their descendants.
6. Awards and prizes given by state institutions for achievements in science, sports, and culture. 
7. Scholarships for students and pupils
8. Benefits for damages obtained through final court judgments, as well as certain reimbursements for litigation costs.

Article 12

Income from Employment

1. Employment income includes:
   • Salaries, bonuses, and benefits arising from employment relationships or similar arrangements, whether current, future, or past, and where the taxpayer is required to follow the income payer's instructions in order to receive payment.the remuneration;
   • Director's fees, remuneration as a member of a company's board of directors or legal body, as well as fees for management and participation in supervisory boards.
   • The rewards and benefits paid by the company to its partner for the work performed for this company;
   • The rewards and benefits received by members of parliament, officials, and civil servants for their services, as well as for any activities carried out in connection with their functions;
   • Income earned by a self-employed individual if:
2. 50 percent or more of the earned income is received, directly or indirectly, from a single client; or
3. 90 percent or more of total earned revenues are derived from fewer than three clients; or
4. The person is required to follow the client's instructions in order to receive the income.

• Employment income also includes payments made in cases of layoff, loss, or termination of employment, as well as payments from voluntary pensions.

• When employment income is paid to an employee through an employment agent who is not a resident of the Republic of Albania and the total amount paid includes the commission fee, the employment income is considered to be at least [70%/80%] of the total amount.

• When an employer provides an employee with a vehicle and the employee is allowed to use the vehicle for private purposes as well, the employee's in-kind benefit is considered as [1]% of the vehicle's costs that are or should be depreciable for the employer, for each month in which the vehicle was used, regardless of how many days in that month.

• Incomes under paragraphs “a” through “e” below are income exemptions from employment:

1. The value of meals consumed, non-alcoholic beverages, work equipment, medical treatment, and other benefits provided in the premises where operations are conducted by or on behalf of an employer, and that are available to all employees under similar conditions and that create better working conditions for employees.

• Reimbursement of travel and accommodation expenses and travel per diems, when paid in accordance with the procedure established by the applicable legislation or by subordinate acts implementing this Law.

• Compensation provided to employees in the event of illness, accidents, or living hardships, in accordance with the provisions of the applicable legislation in force and the provisions of the secondary acts implementing this law.

• Contributions to life insurance and other benefits, in addition to the mandatory health care coverage provided by an employer for an employee, up to [5%] of gross pay.

• Incomes arising from salaries and compensation for employment relationships of consular officials, diplomats, or similar personnel of third countries and international organizations who, while carrying out their official functions in the Republic of Albania, in accordance with the international conventions or agreements signed or accepted by the Republic of Albania or the Albanian Government, enjoy diplomatic status.

• Annual taxable income from employment relationships is defined as the total amount of taxable employment income received by a taxpayer during the tax year.

• The total amount of wages and similar items paid in a single payment in a given year constitutes income for the years in which they were paid.

Article 13

Business income

1. Business income includes, but is not limited to, the income under paragraphs “a” through “j” below, if it is not classified as employment income under Article 12 [Employment Income] of this law:

1. The income of a natural person from any business activity of any kind, including any activity of self-employed individuals or traders. .
   • Income from interest, dividends, and fees that are effectively connected with the business.
   • Income from the sale of securities that are effectively connected with the business. 
   • Revenues from leasing a business, regardless of whether the lease includes all or part of its tangible or intangible assets.
   • Revenues from the sale of any type of business asset or liability, including the sale of the entire business.
   • Income from agricultural or livestock production.
   • Capital gain realized from the transfer of the business's assets and liabilities in a business reorganization, as defined in Article 46 [Rules Applicable to Business Reorganizations] of this Law.
   • Gifts, financing, or subsidies received by a person in connection with his business.
   • Any kind of service fee.
   • Capital gains from the revaluation of business assets when those assets are contributed in kind to a company's capital, whether upon its incorporation or in a capital increase.

• The business's annual taxable income is defined as the total amount of business income, reduced by the corresponding documented expenses incurred for the purpose of earning, maintaining, and securing that income. Annual taxable business income must be calculated in accordance with Part 4 of this law.

Article 14

Special regime for sole proprietors and self-employed individuals

1. If the turnover of the trader or self-employed individual does not exceed [10,000,000For millions of Lek per year, they are entitled, from business income, to deduct the estimated expenses in a single amount as follows, without keeping accounting records.

1. 60 percent of the income from productive activities;
2. 90 % of revenue from wholesale trading activities;
3. 70 % of the revenues from retail trade activities and individual transport;
4. 60 % of the income from activities such as bars, restaurants, discos, etc.;
5. 50 % of the revenue from service activities, artisanal and craft activities.
6. 35 percent tax on the income of self-employed individuals.

Activities under this paragraph are determined by a Council of Ministers' decision, based on the Classification of Economic Activities.

2) A taxpayer who has deducted expenses in a single amount under the above paragraphs is not allowed to claim any other deduction or offset except for the personal allowance under Article 22 [Deductions from Taxable Base] of this law.

Article 15

Investment income

1. Investment income, if not considered business income under Article 13 [Business Income] of this law, includes the following income:

1. Income from interest, dividends, and fees;
   • Capital gains from the disposal of securities;
   • Capital gains realized from life insurance and voluntary pension schemes that are not linked to employment income;
   • Income from the disposal of real estate;
   • Rental income from real estate.

• The income as follows is excluded income from investments:

a) Income from the disposal of movable assets, except:

i. the disposal of vehicles, airplanes, and ships if they are sold within less than 12 months of purchase;

ii. works of art with an individual value of over […] Lek.

• Revenues from the transfer of the right of ownership of agricultural land from a registered farmer to a natural person or entity engaged in agricultural activity, provided that the legal successor retains the land for the same purpose and activity.

• Income from the disposal of real estate in which the taxpayer or his predecessor or successor has continuously lived for at least [5 years] continuously before the sale, or will reside for at least [5 years] in the case of a new property acquired in exchange for the grant of the land.

• Income from Eurobonds when the beneficiary is a non-resident individual.

Income from investments jointly held by more than one family member is considered income of the family member with the highest annual taxable income.

Article 16

Taxable income from the investment in the disposal of securities

1. The taxable investment income from the disposal of securities is determined as the difference between the sale price and the purchase price of those disposed securities. Any expense directly related to the purchase and sale of securities is included in the purchase price and the sale price and is not separately added to or subtracted from them.

• If the taxable income under this Article results in a loss in a tax year, such loss may be offset by taxable investment income from the disposition of securities in the same tax year.

• For securities listed on an exchange, the bid and ask prices are determined by the relevant trading documents on the date of sale.

• For unlisted securities, the sale price is determined based on the equity value of the company issuing the securities at the time of sale or the market value stated in the transfer agreement, if that value is higher. The purchase price is determined based on the equity value of the company issuing the securities at the time of purchase, or the value stated in the transfer agreement at the time the securities are purchased, whichever is lower. If the purchase price cannot be determined, it is considered to be zero.

• In the case of securities acquired by inheritance or gift, the purchase price for tax purposes is the taxable value of the gifted or inherited securities at the time of acquisition.

• Transfer of securities includes the in-kind contribution of securities as initial capital or a capital increase of an entity.

Article 17

Taxable income from investments in the transfer of real estate.

1. Taxable income from investment property disposals is determined as the difference between the sale price and the purchase price of the asset.

• The purchase price in relation to the tax-exempt investment income from the disposal of real estate cannot be deducted from the tax base.

• In the case of real estate acquired by inheritance or gift, the purchase price for tax purposes is the taxable value of the gifted or inherited property at the time of acquisition.

• If the taxable income from the investment under this paragraph results in a loss in a tax year, the taxable income from the investment upon disposition of the asset is deemed to be zero.

• The sale price of real estate is determined as the higher of the contract sale price and the reference price set forth in applicable regulations.

• The purchase value of the land in the case of exchanging the ownership right for the land, with the ownership right to the building constructed on that site, is measured by the reference price of the land per square meter approved by a Council of Ministers' decision for cities and zones within the city. The sale price is measured by reference to the market value of the real estate acquired in exchange for the land, taking into account all portions of the building footprint from which the landowner benefits. The methodology for measuring the purchase and sale prices must be chosen consistently and defined by a Council of Ministers' Decision.

• Personal income tax on investment income from the transfer of real estate must be paid by the individual who transfers ownership of the real estate, before registering the above properties in the real estate registry, in accordance with the relevant legal provisions. The institution responsible for the real estate registry shall not register the real estate until the tax payment has been confirmed. The institution responsible for the real estate register must transfer, by the 20th of the following month, to the tax administration's account the tax collected in accordance with the provisions of this Article.

• The transfer of ownership rights to a dwelling and/or land within the family's kinship ties—spouse, child, sister, or brother—is not subject to tax under this article, provided it occurs only once per beneficiary through gift or renunciation of the property.

Article 18

Annual taxable income from investment

Annual taxable investment income is determined as the total of taxable investment income.

Article 19

Rules for Controlled Foreign Entities

1. When an individual has an interest in a foreign controlled entity, whose profits are not subject to tax or are exempt from tax in Albania, any undistributed profit, which stems from ‘passive income’, must be included in the taxable income from the natural person's investment.

• Any foreign entity is considered a controlled foreign entity when the following conditions are met:

1. the natural person, or together with related persons, has a direct or indirect participation of more than 50 percent of the voting rights, or owns directly or indirectly more than 50 percent of the capital, or enjoys the right to receive more than 50 percent of that entity's profits; and

• The actual tax paid on its profit by the entity is less than 50 percent of the tax that would have been imposed on the entity had it been a resident entity in Albania.

• The following profits are considered to have been derived from ‘passive income’:

          a) interests or any income realized from financial assets;

          b) royalties or any other income derived from intellectual property;

          c) dividends and income from the sale of securities;

          d) income from finance leasing.

• If “passive income” does not exceed 30 percent of the total profit of the foreign controlled entity, the provisions of this article shall not apply.

• When the entity distributes profits to an individual and those distributed profits are included in the individual's taxable income, the amounts of income previously included in the tax base under this article are deducted from the tax base for calculating the amount of tax due on the distributed profits.

• When the controlled foreign entity has paid tax in the state of residence or domicile on the income included in the individual's taxable base under this article, that tax may be credited against the overall tax liability. The tax credit shall be calculated in accordance with Article 25 [Credit for Foreign Tax on Personal Income Tax].

• The Minister responsible for Finance clarifies in the Directive the features for implementing this article.

Article 20

Taxation of voluntary pensions

1) Contributions made by the quota holder to a voluntary pension fund will be deducted from that person's taxable personal income base.

2) Investment returns, including capital gains from investments made with the pension fund's assets, are not subject to taxation by either the pension fund or the management company.

3) Contributions made by an employer on behalf of a quota holder to a voluntary pension fund shall not be considered personal income of that quota holder for tax purposes.

4) The upper limit for the preferential tax treatment of the annual contribution, as described in paragraphs 1 and 3 of this article, is the nationally approved minimum wage in force.

5) The tax rate applicable to advance/early withdrawals under the “Voluntary Pension Funds” law in force shall be the statutory rate applicable at the time of withdrawal.

6) Contributions made by the employer to a voluntary pension scheme for the benefit of his employees are considered deductible expenses up to 50% of the annual amount of the applicable national minimum wage.

7) Any payment from the pension fund to the quota holder under the provisions of the “Voluntary Pension Funds” legislation shall be subject to personal income tax.

Chapter 3

Personal Income Tax Base and Tax Calculation Provisions

Article 21

Annual Tax Base

1. The annual tax base consists of:
   • Annual taxable employment income;
   • The business's annual taxable income;
   • Annual taxable investment income;

• The annual taxable base is reduced by the compensations and deductions provided for under this law. If the difference between the annual taxable income and the total amount of compensations and deductions is negative, the annual taxable base is considered to be zero.

• The amount of income tax payable by a person for a tax year is the total of the amounts payable under this section.

                                                                 Article 22                             

Tax deductions

1. The personal income taxpayer may deduct from the tax base for the tax period:

1. a personal compensation amount of 480,000 lek if annual income is up to 480,000 lek;
   • a personal compensation amount of 360,000 lek if annual income is over 480,000 lek;
   • a compensation amount for each child under his charge who is under 18 years of age and who lives together with the taxpayer in a common household of 48,000 lek.

• A personal income taxpayer with annual taxable income from employment, annual taxable income from business, and annual taxable income from investment of less than 2,000.000 lekë may deduct, in addition to the individual allowances under paragraph 1 above, current expenses for:

1. expenses for the education of his children, up to the maximum amount 100,000 leka;
   1. Medicines for his children or at his expense and for persons under his care, for the portion not covered by mandatory health insurance, as specified in the Council of Ministers' Decision.

Article 23

Request for a discount

1. Child support for the child in his care and expenses for education and medication may be sought from the family member with the highest taxable annual income. .

• Dependency compensation for children cannot be claimed for more than three children per family. .

• A personal income taxpayer with employment income may, through the Declaration, claim personal allowances from his monthly payroll tax agent in an amount equal to 1/12 of the sum specified in Article 22, Paragraph 1. Personal relief may be claimed only once per tax year. A taxpayer who requests personal relief, or any part thereof, may not do so more than once per month.

• Other deductions, other than personal allowances in accordance with Article 22, paragraph 1, may only be claimed through the annual income tax return.

Article 24

Tax rate

1. Employment income and business income for traders and self-employed individuals are taxed at the following rates:

Annual tax base	Tax rate
0 – 2,400,000	13%
Over 2,400,000	23%

• Investment income is taxed at the following rates;

1. Dividend income 8%.
2. Any other income from investment 15%.

3) Except as otherwise provided in this law, no costs shall be deducted from investment income.

Article 25

Foreign Tax Credit

1. If during a tax year a resident taxpayer of personal income tax earns taxable income from sources outside the territory of the Republic of Albania, the tax payable by that taxpayer on such income shall be reduced by the amount of tax paid in a foreign country on that income. The amount of foreign tax payable must be evidenced by documentation as specified in the implementing regulations of this law.

• The amount of foreign tax paid credited, as described in the first paragraph of this article, may not exceed the amount of personal income tax that would have been payable on those income if it had been earned in the territory of the Republic of Albania. 

• The credit for foreign tax must be calculated separately for each country if the income is earned from foreign sources in more than one country.

• The credit for foreign tax must be calculated separately for income included in the annual taxable base and for annual investment income.

Article 26

Calculation of Tax Due on Personal Income

1. The personal income tax payable is calculated by applying the relevant rates set forth in Article 24 [tax rates] to the person's taxable income and by deducting any:

1. Foreign tax credit in accordance with Article 25 of this law;

• Withholding tax in accordance with Chapter 5 of this law,

• The withholding tax on payroll withheld by the payroll tax agent during the tax year;

• Personal income tax payments made during the tax year.

• If the difference calculated in paragraph 1 is negative, the personal income taxpayer may claim the overpaid tax and the tax administration will refund the overpaid amount no later than 60 days from the date of the request. If the taxpayer does not request the refund of the overpaid personal income tax, that amount is considered an advance payment for the personal income tax of the next tax period.

Part 3

Corporate Income Tax

Chapter 1

General Provisions for Corporate Income Tax

Article 27

Corporate income tax payer

1. Every entity is subject to corporate income tax (‘the corporate income tax taxpayer’), in particular:

1. General Partnerships ;
2. Commandite Partnerships ;
3. Limited Liability Companies;
4. Stock corporations; and, 
5. Any other entity, including nonresident entities, not provided for in points “i” through “iv” of this paragraph, including entities subject to a special tax regime.

2) The following entities are exempt from corporate income tax:

1. Central and local governing bodies;
2. Bank of Albania;
3. Foundations or non-bank financial institutions established or transferred by a Council of Ministers' decision, which aim to support the government's development policies by providing loans;
4. The voluntary pension fund managed by the management company, as well as the fund administration company.;
5. Entities that engage solely in religious, humanitarian, charitable, scientific, or educational activities, whose assets or profits are not used for the benefit of their organizers or members and within the limits of the non-commercial activity they carry out;
6. Labor organizations or chambers of commerce, industry, or agriculture, the assets or income of which are not used for the benefit of an individual or of one of their members;
7. Entities provided for in international agreements ratified by the Assembly;
8. Film production studios licensed and subsidized by the National Center of Cinematography.

All entities mentioned in paragraph 2 of this article, regardless of the corporate income tax exemption, are required to submit to the tax authorities the tax return and the Financial Reporting Statements, within the same deadlines as entities subject to corporate income tax.

Article 28

Residence

1.  An entity is resident in the Republic of Albania in a tax year if:

1. the entity is established in the Republic of Albania, or,  
2. At any time during the tax year, the management and control of the entity's affairs are exercised in the Republic of Albania.

• For purposes of, and without limiting, the foregoing paragraph, the management and control of an entity's affairs is deemed to be exercised in the Republic of Albania if the entity's board of directors meets in the Republic of Albania, or at least two of the following conditions are met:

1. Decisions regarding the daily management of the entity are made in the Republic of Albania.;
2. At least 50 percent of the entity's board members or executives are residents of the Republic of Albania.;
3. At least 50 percent of the entity's capital or voting rights are owned, directly or indirectly, by persons resident in the Republic of Albania.

Chapter 2

Specific Provisions of Corporate Income Tax

Article 29

 Exclusion from Participation

1) In determining the taxable profit of a resident entity, dividends received are excluded from taxable income if:

a) the receiving entity holds shares or participations of at least 10%, in value or number, in the share capital, or voting rights of the distributing entity; and

b) the shares or minimum participation have been held for an uninterrupted period of at least 24 months.         

2) The above paragraph also applies to the non-resident entity for corporate income tax purposes if the participation relates to business activities carried out by a non-resident in Albania, or through a permanent establishment in the Republic of Albania.               

3) If dividends have been distributed by the paying entity to a receiving entity that has not yet held the shares or participation for a period of 24 months, but that meets the conditions of paragraph 1(a) or 2 above, the receiving entity may temporarily request the exemption provided in these paragraphs, provided that it posts with the tax administration a guarantee for the amount of tax that would be payable in the absence of that exemption. The tax administration may revoke the guarantee if the receiving entity does not hold the shares or participations for at least 24 months. The exemption becomes final, and the guarantee is returned to the recipient on the date the shares or participation have been held for at least 24 months.

Article 30

Interest limitation rules

1) To the extent permitted by this law, interest is deductible from income from operations in the taxable year in which it is incurred, up to thirty percent (30%) of the entity's earnings before interest, taxes, depreciation, and amortization (EBITDA).

2) EBITDA will be calculated by adding to taxable income the tax-adjusted amounts for excess interest and for depreciation. Tax-exempt income will be excluded from the entity's EBITDA.

3) For purposes of this section, “excess interest” means the amount by which an entity's deductible interest exceeds the taxable income from interest and other economically equivalent taxable income received by the entity.

4) The interest for which the deduction is denied as a result of applying the first paragraph is carried forward for the next five years.

5) This article does not apply to:

a. banks, non-bank lending financial institutions, insurance companies and leasing companies;

b. interests on loans used to finance a long-term public infrastructure project where the project operator, borrowing costs, assets, and revenues are all in the Republic of Albania.

6) The minister responsible for finance shall clarify, by directive, more detailed rules for the implementation of this article. .

Article 31

 Bad debt reserve for financial institutions

1. In determining the taxable profit of financial institutions regulated by regulatory authorities, a deduction is allowed for amounts that will be allocated and/or increase:
2. Mandatory technical reserves created in compliance with the law in force for insurance and reinsurance activities; and
3. Mandatory provisions for commercial banks and other financial institutions established under the supervisory rules issued by the Bank of Albania for this purpose.                       

• The full write-off of bad debt is permitted if the following conditions are met simultaneously:
• Bad debt is removed from the entity's accounting; 

b) All possible legal actions have been taken to collect the debt; and                     

c) The reserve or provision created under paragraph 1 of this Article shall be added to taxable profit.                                 

3) When a bad debt reserve has previously been applied to a claim that has been settled or resolved, the amount recovered must be added to taxable income in the year it is recovered, only if it is transferred in connection with a business reorganization under section 46. [Business reorganization rules] of this Act.

Article 32

Transfer of Prices

1. In accordance with this Law and the applicable regulations, an entity that participates in one or more controlled transactions: 

1. Determines whether the terms of a controlled transaction comply with the arm's-length principle.
2. Adjusts the tax base when the terms set or dictated in one or more controlled transactions do not comply with the arm's-length principle.                                

• The term “Controlled transaction” means:

a) any transaction between related persons when:

i) one of the parties to the transaction is a resident and the other is a non-resident;

ii) one of the parties to the transaction is a non-resident that has a permanent establishment in Albania to which the transaction is attributed, and the other party is another non-resident;

iii) one of the parties to the transaction is a resident and the other party is a resident who has a permanent establishment outside Albania to which the transaction is attributed;                           

b) any business relationship between a non-resident and that non-resident's permanent establishment in Albania;

c) any business relationship between a resident and his permanent establishment outside Albania;

d) any transaction between a resident or a non-resident who has a permanent establishment in Albania to which the transaction is attributed, and a resident of a jurisdiction listed by order of the Minister responsible for Finance.

3) The terms of a transaction include, but are not limited to, the financial indicators measured in the application of the appropriate transfer price method.

Article 33

Comparability

1) An uncontrolled transaction is comparable to a controlled transaction in the following cases:

a) when there are no material differences between them that could materially affect the financial indicators under review, according to the appropriate transfer pricing method; or
b) When such differences exist, a reasonable adjustment is made to the relevant financial indicator of the uncontrolled transaction in order to eliminate the effects of these differences in comparison.

2. To determine whether two or more transactions are comparable, will
are taken into consideration, to the extent that they are economically appropriate to the facts and
the circumstances of the transaction, these factors:

1. the characteristics of the transferred property, goods, or services;
2. the functions undertaken by each party in relation to the transactions, taking into account the assets used and the risks assumed;
3. the contractual terms of the transactions;
4. the economic circumstances in which transactions take place; and
5. Business strategies pursued by the parties in connection with the transactions

Article 34

Price Transfer Methods 

1. The compliance with the arm's-length principle of a controlled transaction shall be determined by applying the most appropriate transfer pricing method, according to the circumstances of the case, as specified in the instructions issued by the minister responsible for finance. In addition to what is provided in point 2, the most appropriate transfer pricing method will be selected from among the following methods:

a) the comparable uncontrolled price method, which consists of comparing the
the price set for goods or services transferred in a controlled transaction with the price set for goods or services transferred in a comparable uncontrolled transaction;

b) the resale price method, which consists of comparing the resale margin that a
A buyer of goods in a controlled transaction profits from reselling that property in a
an uncontrolled transaction, with the resale margin derived from comparable uncontrolled sale and purchase transactions;

c) the cost-plus method, which consists of comparing the increase (the profit margin) on the direct and indirect costs of supplying goods and services in a controlled transaction with the increase in the profit margin on those direct and indirect costs of supplying goods and services in a comparable uncontrolled transaction;

c) the transaction net margin method, which consists of comparing the net profit margin against an appropriate base, e.g., costs, sales, assets, that a party achieves in a controlled transaction, with the net profit margin on the same basis achieved in comparable uncontrolled transactions;

d) the profit-splitting method of the transaction, under which each related party participating in a controlled transaction is allocated its share of the joint profit/loss that would be realized by an independent person from participating in a comparable uncontrolled transaction.

2. The taxpayer may apply a transfer price method other than the above-mentioned methods, when it proves that none of the approved methods can reasonably be used to determine market conformity for the controlled transactions and that this other method yields a result consistent with the market principle. The taxpayer who uses a method other than the approved methods mentioned in paragraph 1 of this article shall bear the burden of proof to demonstrate that the requirements have been met.

3. To determine compliance with the arm's-length principle for a controlled transaction, it is not necessary to apply more than one method.

4. When a taxpayer has used a transfer pricing method to determine the remuneration of his controlled transactions and this transfer pricing method is in accordance with the provisions of this article, then the tax administration's review of whether the terms of the taxpayer's controlled transactions comply with the arm's-length principle is based on the transfer pricing method applied by the taxpayer.

Article 35

Assessment of combined controlled transactions

If a taxpayer carries out, under the same or similar circumstances, two or more controlled transactions that are economically closely linked to each other or that constitute a continuity/a specific combination, such that they cannot be reliably analyzed separately, these transactions may be combined:

a) to carry out the comparability analysis, as defined in Article 33; and
b) to apply the transfer pricing methods set forth in Article 34.

Article 36

Range of Market Indicators

1. A market range is a group of relevant financial indicators, e.g., prices, margins, or profit shares, derived from the application of the most appropriate transfer price method to a number of uncontrolled transactions, each of which is substantially comparable to the controlled transaction, based on a comparability analysis conducted in accordance with Article 33.

2. A controlled transaction or a group of transactions shall not be subject to adjustments, pursuant to paragraph 1 of Article 32, when the relevant financial indicator derived from the transaction/controlled transaction(s) being tested under the most appropriate transfer price method is within the market range.

3. When the relevant financial indicator, which stems from controlled transactions, falls outside the market range, the tax administration may adjust it in accordance with paragraph 1 of Article 32, and any such adjustment shall be at the midpoint of the market range, except in cases where the tax administration or the taxpayer can prove that the circumstances in that case warrant an adjustment at a different point within the market range, as specified in the guidance issued by the minister responsible for finance.

         Article 37

Documentation requirements

A taxpayer must provide sufficient information and analysis to demonstrate that the terms of his controlled transactions are in accordance with market principles.
The transfer pricing documentation must be made available to the tax administration upon its request, within 30 days of receiving the tax administration's request. The content and form of the transfer pricing documentation are determined by a directive of the Minister responsible for finance.

2. Taxpayers involved in controlled transactions above a specified value must submit an annual notification/form for controlled transactions. The minister responsible for finance shall, by directive, determine the aforementioned threshold/value, the format, and the deadline for submitting information on controlled transactions.

Article 38

Corresponding adjustments

When, under the conditions of controlled transactions, an adjustment is made by the tax administration of another country and this adjustment results in the taxation in that country of profits for which the taxpayer has already been taxed in Albania, and the country proposing the adjustment has an agreement with Albania for the elimination of double taxation, then, under these conditions, the Albanian tax administration, upon receiving a request from the Albanian taxpayer, will verify the conformity of that adjustment with the principles of the market, as defined in Article 44. If the tax administration concludes that the adjustment is in accordance with
In accordance with market principles, it makes the necessary adjustments to the tax amount imposed on the Albanian taxpayer.

The procedure for requesting a corresponding adjustment under this article shall be determined in the Finance Minister's guidance.

Article 39

Advance pricing agreements

1. An advance pricing agreement is a procedural agreement between one or more taxpayers and one or more tax authorities, with the aim of resolving potential advance pricing transfer disputes by establishing, before controlled transactions, a set of appropriate criteria for determining the compliance of those transactions with market principles.        

• A taxpayer may request that the tax administration enter into an advance pricing agreement to establish an appropriate set of criteria for compliance with the arm's-length principle for future controlled transactions over a specified period of time.

• When the tax administration enters into an advance pricing agreement with a taxpayer, no transfer pricing adjustment is made under paragraph 1 of Article 32 for controlled transactions that fall within the scope of the advance pricing agreement, provided that the deadlines and conditions set by the advance pricing agreement have been met.
  
• The minister responsible for finance is charged with issuing a special directive regarding advance pricing agreements.

Chapter 3

Provisions for the Calculation of Corporate Income Tax

Article 40

Income and the calculation of tax payable on corporate income.

Except as otherwise provided in this law, all activities of an entity are treated as business activities, and all of an entity's revenues constitute income from operations.

2) The tax payable on corporate income is calculated by applying the corporate income tax rates set forth in Article 41 [Tax Rates] to the entity's taxable income and is reduced by:

a) the credit for foreign tax under Article 42 [Credit for Foreign Tax on Corporate Income Tax] of this Law;

b) the tax withheld at source pursuant to Chapter 5 of this law,

c) Advance payments of corporate income tax made during the tax year.

3) If the difference calculated in paragraph 1 is negative, the taxpayer may claim the overpaid tax and the tax administration will refund that amount to the taxpayer no later than 60 days after the application. If the taxpayer does not claim the overpaid corporate income tax, this tax is considered a prepayment for the corporate income tax of the following tax year.

Article 44

Tax rate

The corporate income tax rate is 15%. Exceptionally, the tax rate on dividends is 8%, with no deductions.

Article 42

Credit for foreign tax for corporate income tax

1. If during a tax year a resident entity earns taxable income from sources outside the territory of the Republic of Albania, the tax payable by that entity on that income must be reduced by the amount of tax paid in a foreign country on that income. The amount of foreign tax payable is verified with documentation as specified in the instructions of the Minister responsible for Finance.

• The credit for foreign tax paid described in the first paragraph of this article may not exceed the tax payable on the taxable profit for corporate income from the foreign source, as if that income had been realized in the Republic of Albania.

• The tax credit, as described in this Article, must be calculated separately for each foreign country that is a source of income or gains, if the income is derived from foreign sources in more than one country.

Part 4

General provisions on the determination of profit

Article 43

Taxable Profit

1) Taxable profit includes any income realized by a person subject to this section during the tax year, after deducting deductible expenses.

2) Taxable profit and deductible expenses are determined on the basis of the trading balance sheet and its annexes, which must be prepared in accordance with the Law “On Accounting and Financial Statements,” as well as the secondary legislation implementing this law.

Article 44

Market Principle

Transactions between related parties must be in accordance with the arm's-length principle. The taxable profits of a person who participates in one or more controlled transactions will be considered in accordance with the arm's-length principle if the terms of those transactions are not different from the terms that would have been applied between independent parties in comparable transactions. conducted under comparable circumstances.

Article 45

Long-term contracts

1. A long-term contract is a contract that meets the following conditions:
   1. Is connected for the purposes of production, installation, construction, or the provision of services;
   1. Its term exceeds, or is expected to exceed, 12 months.

• Revenue related to a long-term contract must be recognized, for purposes of Personal Income Tax and Corporate Income Tax, in the amount that corresponds to the portion of the contract completed in the relevant tax year. The completion percentage will be determined either by referring to that year's cost report with estimated overhead expenses or by referring to the experts' assessment of the completion phase at the end of the tax year.

• Tax-deductible expenses related to long-term contracts are taken into account in the tax year in which they are incurred.

Article 46

Applicable rules on business reorganizations

1) Business reorganizations include mergers, divisions, partial divisions, stock exchanges, and transfers of business units.

2) A business reorganization will not give rise to capital gains tax on the assets transferred to effect the reorganization, except for any cash payment in excess of the qualified cash payment.

3) For the purposes of this article:

• The term “absorption merger” means any transfer by an entity of all of its business activities (the transferor) to a company (the absorbing company) in exchange for the issuance or transfer of shares or quotas representing the capital of the absorbing company.;

• The term “Transfer of a branch of activity” is any operation by which a company (the transferor company) transfers, without being dissolved, one or more branches of its business to another company (the acquiring company), in exchange for the issuance or transfer of shares or quotas representing the capital of the acquiring company. A “branch of activity” means all the assets and liabilities of a sector of a company which, from an organizational point of view, constitute an independent economic activity and also includes the transfer of all the assets and liabilities of a company.

• “Exchange of shares or quotas” means any operation through which a company (the acquiring company) obtains a share in the capital of another company (the acquired company), in exchange for issuing or transferring to the shareholder or quota holder of the acquired company, in exchange for their shares or quotas, shares or quotas representing the capital of the acquiring company and, where applicable, a cash payment, provided that the acquiring company obtains the majority of the voting rights in the acquired company through this operation.

• “Melting/joining” is any operation through which:

1. one or more companies (transferor companies), which are dissolved without entering into liquidation proceedings, transfer all their assets and liabilities to another existing company (acquiring company), in exchange for the issue or transfer to the shareholder or partner of shares or quotas representing the capital of the acquiring company and, where applicable, a cash payment; or
   • or transfer companies, which are dissolved without going through a liquidation process, transfer all their assets and liabilities to a company they form (the acquiring company), in exchange for the issuance or transfer to the shareholder or partner of shares or quotas representing the capital of the acquiring company and, where applicable, a cash payment; or
2.  a company (transferor company), which is dissolved without going through the liquidation process, transfers all of its assets and liabilities to the company (acquirer company) and retains all shares or quotas representing its capital.

dh) “Division” is any operation by which:

i. a company (the transferor company), which dissolves without going through a liquidation process, transfers all its assets and liabilities to two or more existing or new companies (the recipient companies), in exchange for the issuance of proportional shares or interests or the transfer to its shareholder or partner of shares or interests representing the capital of the receiving company and, if applicable, a cash payment; or

ii. a company (the transferor company) transfers one or more lines of business to a company it establishes (the recipient company), in exchange for the issuance or transfer to the shareholder or partner of shares or interests representing the capital of the recipient company and, if applicable, a cash payment.

e)  “Qualified cash consideration” is cash payment made by an acquiring or absorbing company, other than the issuance or transfer of shares or interests, which in the aggregate do not exceed 101 TP3T of the nominal value of the shares or interests issued or transferred in exchange.

f) The term “taxable value” means the value on the basis of which any gain or loss would be calculated for income tax purposes, the gains or capital gains of the transferor company if those assets or liabilities had been sold at the time of the reorganization but independently of it.

4) The company that receives assets during the business reorganization:

a) Assesses the assets and liabilities assumed at their accounting value in the transferor company at the time of the reorganization.

b) Writes down the business assets in accordance with the rules that would have applied to the transferor company had the reorganization not occurred.

c) Assumes the reserves and provisions created by the transferor company, subject to the conditions that would have applied to the transferor company had the reorganization not occurred. The acquiring company assumes the rights and obligations of the transferor company with respect to such reserves and provisions.

5) In the case of the transfer of a line of business, the transferor company is exempt from tax on capital gains realized as a result of the reorganization, except for any cash payment in excess of the qualified cash payment. The transferor company assigns to the securities received in the business reorganization their fair market value at the time of the reorganization. If the transferor sells the securities received within three years of the business reorganization, the cost basis for capital gains calculation will be lower than;

a) the market value of the securities at the time of reorganization; and

b) the cumulative carrying amounts of the assets and liabilities transferred as a result of the reorganization, as they were in the transferor company before the reorganization.

6) In the event of a merger, division, or exchange of shares, the shareholder or partner of the transferor company:

a) It is not subject to tax on any capital gain realized as a result of the reorganization, except for any cash payment in excess of the qualified cash payment.

b) Shareholders or partners do not attribute to the securities they receive in exchange a value for tax purposes greater than the value of the securities they held immediately before the reorganization.

7) This article applies only to the transfer of a branch or branches of activity located in Albania if both the transferring company or individual and the acquiring company are resident in Albania.

                                                                                    Article 47 

Tax calculated for the transfer of business assets

1. The transfer of business assets is considered taxable in the following cases:

a) a resident taxpayer transfers business assets from his domestic head office to a permanent establishment abroad, and the Republic of Albania no longer has the right to tax the transferred business assets due to the transfer;

b) a resident taxpayer transfers his tax residence to another country, except for those business assets that remain effectively connected with a permanent establishment in the Republic of Albania.

2) The taxable base subject to tax is the amount equal to the market value of the transferred business assets minus their tax basis at the time the business assets are disposed of.

3) When the transfer of business assets or tax residence takes place in Albania, Albania will accept the incoming market value as the initial value of the business assets for tax purposes.

4) For the purposes of paragraphs 1 through 3 of this article, the term “market value” means the amount for which a business asset can be exchanged or the mutual obligations between unrelated buyers and sellers can be settled in an arm's-length transaction.

Article 48

Discountable Expenses 

Deductible expenses are all expenses incurred by a person subject to this law during the tax year, to the extent that these expenses are incurred for business purposes, are documented by the taxpayer, and are not subject to any limitation specified in this Law. The minister responsible for finance shall, by directive, clarify the manner of applying this article.

Article 49

Deductible Expenses for Land Exchanged for Construction

In determining the taxable profit of enterprises operating in the construction and/or sale of buildings for residential, manufacturing, commercial, or service purposes, The methodology for recognizing revenue from sales and operating expenses, as well as the consideration of the landowners' share of profit and the land costs themselves, is approved by a Council of Ministers' Decision.

Article 50

Non-deductible expenses and the limitation of the deduction

The following expenses are non-deductible:

1. The costs of purchasing and improving land and building lots;
2. The cost of acquiring, improving, renovating, and reconstructing depreciable assets;
3. Depreciation expenses according to accounting rules;
4. Increase in the company's share capital or in the capital contributed to a partnership.;
5. Dividends to shareholders or partners, as well as dividends of other entities subject to this Law;
6. Interest paid that exceeds the 12-month average interest rate on annual market interest credit as officially published by the Bank of Albania;
7. Fines and penalties paid to a public authority for violations of legislation;
8. Expenditures for the creation or increase of provisions, reserves, or other special funds, except when otherwise provided by this Law;
9. Corporate income tax, creditable VAT, excise duty; ;
10. Representation and hospitality expenses that exceed 0.3 percent of annual revenue. For exporting taxpayers, excluding manufacturers using commissioned materials, who in the last three years have generated over 70 percent of their revenue from exports, Documented expenses incurred for participation in, or presentation at, fairs or exhibitions abroad are recognized as deductible expenses up to 3 percent of annual revenue.
11. Expenses incurred as personal consumption by shareholders, partners, administrators, and their family members;
12. Expenditures that exceed the limits set by law, by secondary legislation, as well as amounts that exceed the limits established in the Law “On Sponsorships,” as amended;  
13. Gifts and donations;
14. Expenses for technical, consulting, and management services invoiced by non-residents, provided they are not paid by the taxpayer within the period for filing the tax return. If such expenses are paid later, they are deductible in the tax year in which they are paid.;
15. Expenses for wages, bonuses, and other forms of personal income related to employment relationships, paid to employees, including administrators, and not made through the banking system. The Council of Ministers shall determine by decision the cases of exemption from this rule.;
16. Amounts paid in cash in excess of the limits set by the provisions of the Law “On Tax Procedures in the Republic of Albania.”.  
17. The costs of life and health insurance for the taxpayer's employees that exceed 51% of their gross wages for the tax year;
18. Scholarships awarded to students of public and private educational institutions, as distinct from those determined by the Council of Ministers.
19. Expenses for contributions made by the employer on behalf of his employees to a voluntary pension plan that exceed the limits of paragraph 6 of Article 20 of this Law.  
20. Expenses related to income that are not included in taxable profit under this Law;
21. Bribes and kickbacks.
22. Sponsored amounts, within the limits provided in the Law “On Sponsorships,” as amended, for the activities of sports teams, Sponsored amounts, within the limits provided in the Law “On Sponsorships,” as amended, for the activities of sports teams, The provisions of this paragraph apply after the issuance of the "Sponsorship Authorization" by the Director General of Taxes, in accordance with the procedures provided in the law. The provisions of this paragraph apply after the issuance of the "Sponsorship Authorization" by the Director General of Taxes, in accordance with the procedures set forth in the guidance of the minister responsible for finance. This provision applies only to sponsoring entities that realize an annual taxable profit exceeding 100 million lekë,
23. losses, damages, spoilage and shortages during production, transit, storage, and trade, beyond the limits set forth in applicable special statutory and regulatory acts.

The minister responsible for finance shall determine by directive the manner of implementing this article.

Article 51

Depreciation

1. For determining taxable profit, depreciation on fixed business assets is calculated and deducted from;

1. The owner of the business's assets, except in the cases mentioned in subparagraph (b) of this paragraph;
2. The person who bears the risk of loss or damage to assets in cases of leased assets, usufruct, or any other form provided for by legal provisions.   

• Financial assets and tangible fixed assets that are not subject to consumption and wear and tear, such as land, real estate, works of art, antiques, jewelry, metals, and precious stones, are not depreciated.  

• Costs associated with the purchase, construction, or improvement of fixed assets that are not subject to depreciation are deductible in the taxable year in which the fixed assets are disposed of, provided that the proceeds from the disposal are included in taxable income.   

• Full annual depreciation is deductible in the year the asset is purchased or placed in service, whichever is later. In the year the asset is retired from service, depreciation is nondeductible. 

• Depreciation of the costs of purchase or construction, as well as the costs of improvement, renovation, and reconstruction of buildings, installations, and structures that serve for a period of more than 15 years are calculated individually for each asset at the 5% depreciation rate of these costs for the tax year.       

• Depreciation of intangible asset costs will be calculated individually for each asset in the amount of 15% of those costs for the tax year.           

• When an asset, as referred to in paragraphs 5 and 6, is retired from service during a taxable year, the remaining book value for tax purposes is deductible in that year, provided that the gain from its retirement is included in taxable income.        

• Depreciation for the following asset categories will be calculated on a grouping basis, with percentages as follows:;

1. Computers, information systems, computer software products, and data storage devices with 25%;
2. All other assets of business activities with 20%.

• In each category described in paragraph 8, the depreciation percentage specified in this article shall be applied on the basis of the depreciation of the respective category.             

1.  ‘Depreciation base’ is equal to the tax accounting value for the relevant category as recorded on the opening balance sheet of the tax year:

1. by adding the cost of acquiring or creating assets and the cost of reconstructing assets of the relevant category during the tax year; and
2. by deducting the sale price of assets and the compensation received for the replacement of assets due to natural disasters or other involuntary changes during the tax year.

1. If the depreciation base is a negative amount, that amount is added to taxable income and the depreciation base will be considered equal to zero.

1. If the depreciation base does not exceed 50,000 lekë, the entire depreciation base will be considered a deductible expense.        

1. In cases of revaluation of business assets, depreciation will not be allowed on the revalued amount.

Article 52

Inventory Assessment

The taxpayer must consistently use the same accounting method for inventory valuation, including work-in-process inventory. The accounting method may not be changed more than once every five tax years.

Article 53

Bad Debt Write-offs

1. A deduction is allowed for a portion of the nominal value of any collection from an unrelated party that was recognized as income, which remains unpaid, and for which the taxpayer believes the debt will not be fully or partially settled and the taxpayer has taken the necessary steps to collect the bad debt as follows;

1. Up to 20% of bad debt, when at the end of the tax year the bad debt has been irrecoverable for more than six months.;
2. Up to 40% of bad debt, when at the end of the tax year the bad debt is irrecoverable for more than 12 months;
3. Up to 60% of bad debt, when at the end of the tax year the bad debt has been irrecoverable for more than 24 months.;
4. Up to 85% of bad debt, when at the end of the tax year the bad debt has been irrecoverable for more than 36 months.

• The full write-off of bad debt is permitted if the following conditions are met simultaneously:

1. Bad debt is removed from the taxpayer's accounting books, and 
2. All possible legal actions to collect the debt have been taken.

• When a write-off of a bad debt has previously been applied to a claim that has been settled or not, the amount recovered must be added to taxable income in the year the amount is recovered, except in cases where it may have been transferred in a business reorganization.

• Paragraph 1 of this Article does not apply to financial institutions (including insurance companies).

Article 54

Carrying the Losses

1. If taxable income results in a loss in a tax year, such a loss may be offset by taxable income in the following five tax years, according to the “first loss, first out” principle.               

• The provisions of the above paragraph do not apply to losses incurred in the tax year and previous years if there is a change in ownership exceeding 50% of shares, quotas, or voting rights, provided that this is accompanied by a change in activity. The minister responsible for finance clarifies the application of this paragraph by directive.             

• For losses carried forward in connection with business reorganizations, the above paragraph does not apply. The carried-forward losses may be used by the acquiring company to offset its taxable profits in the remaining taxable years as provided in paragraph 1.

Article 55

Tax on the transfer of ownership for specific sectors

1. This article applies to entities that:

1. hold rights for the exploitation of mineral resources, rights to exploit hydrocarbon resources or other rights to exploit terrestrial and aquatic natural resources, including the sea in the Republic of Albania, as well as information pertaining to these rights, which for the purposes of this law are treated as real estate;
   1. engage in activities in the field of telecommunications;
   1. They carry out activities as financial institutions.

• If during a tax period the direct and/or indirect ownership of the share capital, quotas, or voting rights of an entity mentioned in paragraph “1” above, changes by more than 20 % in value or number of shares or quotas, the entity is treated as if it had sold a proportionate share of all its assets immediately before the change (“deemed sale”). The entity is treated as:

1. beneficiary of the proceeds from the sale, equal to the proportional share of the asset's market value at that time; and

• Reseller of the activity for the same value.

Paragraph 2 applies in cases where the entity has achieved an average turnover of 500,000,000 (five hundred million) lek for the three preceding years.

• When an entity is subject to corporate income tax under this law, based on paragraph 2 of this article, any change in ownership of shares or similar interests that gave rise to the change is exempt from income tax.

• An entity that is subject to a change referred to in paragraph 2 of this article must notify the tax authorities of the details of the change within 45 days from the time the change occurred.

• The entity must notify the tax administration of a change of ownership of
  directly or indirectly of 10 percent or more of its capital or voting rights. The change of ownership must be subject to subsection (ii) of paragraph (g) of section 3 of this Act. Notice must be given within 45 days of the change of ownership. This provision does not apply in cases where paragraph 4 of this article applies.

• In the event of failure to notify the tax authorities, the entity is subject to the penalties set forth in the Law “On Tax Procedures in the Republic of Albania.".

• The provisions of this article apply in all cases, except when a change in the ownership of the share capital, shares, or voting rights of an entity is subject to the provisions of ratified double taxation avoidance treaties in force.

Part 5

General Provisions for Withholding Tax at Source

Article 56

Withholding Agent

1. Every “Withholding Tax Agent” is required to:

1. To withhold tax when paying any income or any payment that is subject to Article 58 (Incomes and payments subject to withholding tax at source) of this law;

• To transfer the exact amount within the required deadline for withholding tax to the account of the competent tax authority, together with the withholding tax statement, as provided for in Article 57 (Declaration of Withholding Tax).;

• To keep records of income and payments, and of the tax paid, and to make them available to the competent tax authority upon request for the purpose of verifying the accuracy of the calculation, withholding, and/or payment of tax under this Law.

• The date of payment of income and payments subject to withholding tax means either the date on which the income is paid or the payment is made, or the date on which the withholding agent has calculated the said obligation, whichever of these events occurs first. In the case of dividends subject to withholding tax obligation that have not been paid, the tax must be withheld and remitted by the end of the third month following the month in which the entity's governing body decided on the distribution of the relevant profit.

• Tax withholding agents are responsible for paying the tax on behalf of another taxpayer just as if it were their own tax liability.

• The withholding agent is required to report and pay the withheld tax to the tax authorities' revenue account by the 20th day of the month following the month in which the tax was paid or withheld, in accordance with paragraph 2 of this article.

Article 57

Withholding Tax Declaration

1. The withholding tax statement must include at least the following information:

1. The identifying information of the withholding agent;
   1. The identifying information of the taxpayer from whom tax is withheld.;
   1. The tax residence of the taxpayer from whom tax is withheld, in the event the tax is withheld at source for a non-resident taxpayer;
   1. The type of income or payments;
   1. Amounts deductible, if applicable;
   1. The amount of tax withheld at source;
   1. The date of the income or payments.

• The withholding tax statement does not serve as a certificate of tax paid in the Republic of Albania until it is certified by the competent tax authority.

• The minister responsible for finance determines the form and content of the statement for withholding tax.

• The withholding tax statement is filed in accordance with the requirements set forth in the Law “On Tax Procedures in the Republic of Albania.”.

Article 58

Incomes and payments subject to withholding tax

1. The following income and payments are subject to withholding at source, as opposed to the final tax liability when paid to a resident taxpayer or to a permanent establishment in Albania of a non-resident taxpayer:

1. dividends;
2. interested;
3. honorariums;
4. Revenues from gambling.

1. The following payments are subject to final withholding tax when paid by a resident taxpayer or a permanent establishment in Albania to a non-resident individual or a non-resident entity without a permanent establishment in Albania:

1. dividends, interest, and fees;
2. gains from gambling;
3. service fees;
4. insurance premiums;
5. fees for participation in governing boards and councils or other steering bodies;
6. payments for construction, installations, assemblies, or related supervisory work;
7. payments for the performance of actors, musicians, or athletes, including such payments made to persons who employ artists or athletes or act as intermediaries in organizing shows or performances.

• The following income is not subject to withholding tax:
• Incomes paid to persons exempt from corporate income tax;
• Dividends under the conditions specified in Article 29 [Participation Exemption] of this Law;

Article 59

Withholding Tax Rate

The rate of withholding tax on dividends is 81 TPB. The rate of withholding tax on income and payments under Article 58 [Income and Payments Subject to Withholding Tax] of this Law is 15 TPB.

Part 6

General Provisions on the Taxation of Inheritances, Gifts, and Gambling Winnings

Article 60

Inheritance, gift, and gambling winnings tax

1. Section 6 of this Law applies to natural persons and entities that are:

1. residents of the Republic of Albania who receive a gift or inheritance of assets located in Albania or abroad, or who receive gains from gambling conducted in Albania or abroad; and
   1. non-residents of the Republic of Albania who receive a gift or inheritance of assets located in Albania, or who receive gambling winnings from games held in Albania.

• The term “gaming revenue” means the revenue generated from the gaming categories, as defined in the applicable gaming legislation.

• The term “gift” means movable or immovable property or money obtained without any compensation in return.

• The term “inheritance” refers to movable or immovable property or money acquired by heirs as a result of its transfer upon the death of the deceased.

• Gains from gambling are assessed separately and cannot be grouped.

• Items received by gift or inheritance are valued at their nominal value or at their market value, whichever is higher. The valuation rules for calculating capital gains under this Law also apply to items received by gift or inheritance.
• Exempt from tax:

1. Gifts and inheritances received by those who would qualify as first- and second-degree legal heirs, respectively under Articles 361 and 363 of the Civil Code.
   1. Donations and inheritances received by those who would qualify as legal heirs, other than first- and second-degree relatives, up to [XX million] lekë per taxpayer.
   1. Income from gifts and inheritances received from any other person up to [XX million lekë] per taxpayer.
   1. The transfer of ownership rights to first and second degree legal heirs, pursuant to Articles 361 and 363 of the Civil Code, respectively, through gift and/or waiver of the property, when the property derives from compulsory co-ownership acquired under Law No. 7501 of July 19, 1991, “On Land,” as amended.

• Paragraph 7 of this article applies only if the heir or beneficiary of the gift proves that the gifted or inherited items were previously tattooed or reported by the deceased or the donor.

• The tax rate on inheritances, gifts, and gambling income under this article is 15 percent, without any deduction of costs.

Part 7

Tax Collection Provisions

Chapter 1

General Provisions

Article 61

Annual Tax Return

1. Every person subject to this Law is required to declare to the tax authority all income, whether taxed in any way or exempt from tax. For natural persons under 18 years of age, the tax return is filed by their legal guardian.
2. The annual tax return is filed with the tax authority no later than March 31 of the year following the tax year to which it relates.
3. Only persons who receive payments subject to withholding under paragraph 2 of Article 58 [Incomes and Payments Subject to Withholding Tax] of this Law are exempt from the obligation to file the declaration.
4. If the taxpayer has died, the return is filed by his legal heirs for the total income earned up to the date of death.
5. If the taxpayer changes their tax residence, they must file a tax return for any income earned up to the date of the change in residence.

• The method of filing, including electronic filing, and the relevant filing forms shall be submitted in accordance with the provisions of the Minister of Finance's Directive for the implementation of this law. Taxpayers who maintain accounting in accordance with the requirements of the relevant law submit the annual return, together with the financial statements, as well as other data specified in the Directive of the Minister responsible for Finance for the implementation of this law.

• The tax payable by the taxpayer is paid into accounts authorized by the state budget treasury.

Article 62

Documentation Requirements

1. The tax base is determined by adjusting the expenses and revenues reported on the income and expense statement, in the manner prescribed by this Law.

• The document used as the basis for justifying expenses for tax purposes is the invoice, as defined in the Law “On the Invoice and the System for Monitoring Turnover” for cashless sales, as well as any other document prepared or issued in accordance with the guidelines approved by the minister responsible for finance.

Article 63

Prepayments

1. This article applies to:

1. Self-employed individuals or sole proprietors, for their business income; and
   1. Entities.

• During the following tax period, the taxpayer prepays, into the account of the tax authorities, the quarterly installments of the profit tax by March 31 for the months of January, February, and March; by June 30 for the months of April, May, and June; by September 30 for July, August, and September; and by December 31 for October, November, and December. Installments may also be paid on a monthly basis, no later than the 15th of each month, in the following amounts:

1. for each of the months of January, February, and March of the following tax period, the amount of income tax for the tax period two years earlier divided by 12;

• for each of the other nine months of the following tax period, the amount of income tax for the preceding tax period divided by 12.

• The cases of tax prepayments when the taxpayer commences operations during the tax period of the second preceding year, during the immediately preceding tax period, or in the subsequent tax period are detailed in the Minister responsible for finance's guidance.

• In the event that the taxpayer, at any time during the tax period, demonstrates to the tax authorities that the income tax for this tax period will be, in a material manner, lower than the income tax for the preceding period or the second preceding period, the tax authorities shall approve the reduction of prepayments in accordance with the rules provided in the instruction of the Minister responsible for Finance.

• If the tax authorities assess that based on the indicators of the first nine months, if the tax authorities assess that, based on the indicators for the first nine months, the revenues for the upcoming tax period will exceed by more than 10 percent the average monthly revenues of the previous period each month, they may increase the prepayments for the last quarter of the year, in accordance with their estimated revenues.

Article 64

Supplemental tax return

1. In the event that the taxpayer finds that the tax payable on his most recent income tax return should have been higher or the tax loss lower, he is required to file an additional tax return and pay the difference between the previously declared payable tax and the supplementary payable tax within 30 days of discovering the discrepancy, without any penalty for late filing but with the application of the applicable interest.

• In the event that the taxpayer determines that the tax payable on his most recent income tax return should have been lower or the tax loss higher, he is required to file an amended tax return within 30 days of discovering the discrepancy. Higher amounts relating to credits or deductions may be claimed only on the supplemental personal income tax return that shows a higher tax payable, in accordance with paragraph 1 of this Article.

Chapter 2

Provisions for the Collection of Personal Income Tax

Article 65

Tax Agent Payment List

1. Any employer who is obligated to pay employment income must withhold tax on that income, to submit the payroll list and transfer the tax withheld from the payroll list to the budget treasury account no later than the 20th of the following month.

The payroll tax agent is required to withhold tax in accordance with paragraph 1 above on:

1. The progressive rate of taxation under Article 24 [Tax Rates] of this law, if the personal income taxpayer signs the Declaration of Personal Status with this employer, pursuant to Article 66 [Declaration of Personal Status] of this law.
   1. 15% in other cases not covered by paragraph (a) above.

• The tax agent of Payment List is required to take into account on a monthly basis 1/12 of the deductions from the tax base, in accordance with Article 22, paragraph 1, [Taxable income deductions] when calculating income tax on the payroll for an employee who has signed the Personal Status Declaration with this payroll tax agent. Deductions and offsets under Article 22, paragraph 2 [Deductions from the tax base] and Article 23 [Claim for Deductions] for business income may be claimed by personal income taxpayers only on the annual tax return.

• Every employer must keep records of the wages paid and the tax withheld, and submit the payroll list in accordance with the guidelines issued by the Minister responsible for finance. The form, content, deadlines, and procedures for submitting the payroll list are determined in the instructions issued by the Minister responsible for finance under this law.

• Payroll tax agents are responsible for paying the tax on employment income, with the same liability as if it were their own tax debt.

Article 66

Personal Status Declaration

1. A payroll tax agent requires every employee to sign a Personal Status Declaration before the first payment of taxable employment income.

• An employee cannot file a Personal Status Declaration with more than one payroll tax agent for the same monthly calendar period.

• The personal status declaration includes all information necessary to claim deductions from taxable income under Article 22, Paragraph 1 [Deductions from the tax base]. .

• The instruction from the Minister responsible for finance provides for the Personal Status Declaration Form to be completed by the employer.

Article 67

Annual Personal Income Statement

1. A person is required to file an annual personal tax return when his or her taxable income is:

1. More than [1,500,000] lekë of income from employment, or
   1. More than [50,000] lekë and any other income that is not subject to final withholding tax, in accordance with Chapter 5 of this law.

• Personal identity card number/Unique Identification Number of the Entity,    is used as a tax identification number for resident personal income taxpayers for personal income tax return purposes. Non-resident taxpayers are issued a tax identification number as determined in the Guidance of the Minister Responsible for Finance.

“Article 68

Declaration and payment by entities specific non-residents

1. A nonresident person, as defined in Paragraph 1(v) of Article 27 [Taxpayers for Corporate Income Tax] of this law, is required to prepare an income tax return in accordance with the instructions of the minister responsible for finance. The return must be filed by the deadline specified in Article 61, Paragraph 2 [Annual Tax Return] of this law.

• At the time of filing the declaration, pursuant to paragraph 1 of this article, the nonresident must pay the amount of tax declared. Article 63 [Withholding Payments] of this law does not apply in these cases.

Part 8

Transitional and final provisions

Article 69

Tax incentives

Tax incentives and exemptions provided for in Law No..  8438, dated December 28, 1998, “On Income Tax,” as amended, shall continue to apply as follows:

2. For entities engaged in economic activities under Law No. 38/2012 “On Agricultural Cooperatives,” the 51 percent income tax rate will apply until the end of 202X.
3. For persons engaged in certified hospitality activities classified as “agritourism,” under the tourism legislation in force, the 5% income tax rate shall apply as provided in paragraph 4 of Article 28 of the Law. Number.  8438, dated December 28, 1998, “On Income Tax,” as amended.
4. For entities engaged in economic activities in the automotive industry, the 5% income tax rate will apply until the end of 202X.
5. For entities operating in accommodation structures “Four- and five-star hotels/resorts with special status,” as defined in the tourism sector legislation, and that are holders of a registered and internationally recognized trademark “Brand name”The corporate income tax exemption shall continue to apply as provided in paragraph (g) of Article 18 of the Law. Number.  8438, dated December 28, 1998, “On Income Tax,” as amended.
6. For:
   1. individual traders and self-employed persons, as well as;
   1. entities with revenues up to 14 million lekë per year,

The income tax rate of 0% will apply until the end of 202X. The income tax rate of 0% will not apply to taxpayers referred to in paragraphs (i) and (ii) above who provide professional services. The analytical list of professional services is determined by a Decision of the Council of Ministers.

Article 70

Regulations

1. The Council of Ministers is charged with adopting, within three months of the entry into force of this Law, the Decisions as provided for in Articles ………… of this Law.

• The Minister of Finance is charged with issuing, within three months of the entry into force of this Law, the legislative acts, including the General Directive for the implementation of this Law.

Article 71

Cancellations

Law No. 8438 of December 28, 1998, and all subordinate acts issued for its implementation are repealed upon the entry into force of this Law.

Paragraph 1 of Article 9, as well as Chapter 3 of Law No. 9632 of October 30, 2006 “On the Local Tax System,” as amended, is repealed.  

Article 73

Entry into force

This law takes effect 15 days after its publication in the Official Gazette and its effects extend from January 1, 2023. 

Download here the draft of the new tax law.

Source: Monitor Magazine.