On the main changes to the “Income Tax” law”

The General Directorate of Taxation, in continuation of the information on the 2019 Fiscal Package, informs all taxpayers of the key changes to Law No. 8438, dated 12/28/1998, “On Income Tax,” as amended. More specifically: The income tax rate on employment income, by gross wage level, is applied as follows:

• 0% for the monthly gross salary up to 30,000 lek;
• 13% for the gross monthly salary of 30,001–150,000 lek.;
• 23% for the monthly gross salary over 150,000 lek.

Income of a non-resident person, earned as a result of services provided to a resident person, is also considered income with a source in Albania. For this income, the resident who benefits from the service will withhold tax at source from the payments made to the non-resident. Any non-resident individual who is not registered under Albanian legislation and is not subject to Income Tax will also be subject to Capital Gains Tax. To fulfill this obligation, nonresident persons shall file a special return of taxable income, which must be submitted by March 31 of the following year, and pay the tax at the time of submission. For the purpose of calculating the fiscal year's results, expenses for per diems exceeding 501 TP3T of the annual gross salary fund will be considered unrecognized expenses. Dividend tax will be applied at a 8% tax rate. For undistributed profits realized in 2018 and earlier years, including reserves and capitalized earnings, this rate applies provided that:

• the tax on undistributed profits from 2017 and prior years, to be paid by September 30, 2019;
• The dividend tax on the 2018 profit must be paid by August 20, 2019.

If the above conditions are not met, the taxpayer will pay 15% tax on the dividend. If the movable or immovable property securing the loan is executed before the deadlines set by law for the write-off of bad debt, the prior bank provisions, recognized as deductible expenses, will continue to be recognized as such. All persons resident in the Republic of Albania, central and local government bodies, non-profit organizations, and any other entity recognized by applicable legislation are required to withhold the Withholding Tax from the gross amount of payments for consulting services. The General Directorate of Taxation will continuously inform taxpayers of all turnover brackets about changes to the tax legislation that have already come into effect. Published on the official website of the General Directorate of Taxation https://www.tatime.gov.al/d/8/45/0/863/mbi-ndryshimet-kryesore-te-ligjit-per-tatimin-mbi-te-ardhurat