Simplified tax on small business profit

Every taxpayer who conducts a business with an annual turnover of less than or equal to 8,000,000 (eight million) lekë is subject to the simplified small business profit tax. Taxable Income Total revenue from small business activity means any type of revenue earned during the tax period and includes, but is not limited to:

• revenue generated from the supply of goods and services,
• income from participations,
• interest income,
• income from the use of movable and immovable property, etc.

Taxable income or taxable profit results from the difference between:

• total revenues realized during the tax period with,
• known expenses.

Clarification:

• Deductible expenses are those incurred for profit, security, and profit retention purposes, to the extent that these expenses are proven and documented by the taxpayer, and when they are subject to limitations specified by this law.
• Unknown expenses are those defined in Article 13 of Law No. 9632, dated 10.30.2006, “On the Local Tax System,” as amended.

Tax Rates The applicable tax rate on taxable income for taxpayers subject to simplified tax on small business profits, with an annual turnover from 5 (five) to 8 (eight) million ALL, is 5%. The simplified tax on profits, for taxpayers with an annual turnover from 0 (zero) to 5 (five) million ALL, is 0 (zero) ALL per year. Documentation Managemen For every sale made, they are obligated:

• issue a simple tax invoice to each taxable buyer who receives the supply.
• For every final individual consumer buyer, it is mandatory to issue a tax receipt from the fiscal device.
• Other documents approved in other legal or regulatory acts (e.g., passenger transport tickets, tax certificates).

Each of their purchases must be justified with:

• Tax invoice with VAT, when the purchase was made from persons registered as VAT payers.
• simple tax invoice, when the purchase was made from persons registered as taxpayers of simplified profit tax and are not VAT taxpayers.

Taxpayers are required to keep:

• sales book, where they chronologically record every sale made with a simple tax invoice as well as the total daily sales made with tax coupons;
• the purchase book, where they record chronologically every purchase made with a tax invoice, with VAT, with a simple tax invoice;
• expenditure and income book;
• business activity report.

Clarification For taxpayers who are subjects of simplified business profit tax and are registered for VAT, the sales and purchase ledgers kept for VAT purposes also serve for simplified business profit tax purposes. Tax payment Advance payments of simplified profit tax, for the following year, for taxpayers with an annual turnover from 5 (five) to 8 (eight) million lekë, are calculated based on the data from the tax declaration of the previous year. Clarification For taxpayers registered for the first time during the year, the simplified profit tax is calculated based on the turnover and taxable profit, as forecast by the taxpayer themselves, for the period from the date of registration until the end of the first calendar year. The form and content of the annual tax return are determined by directive from the Minister of Finance. During the subsequent tax period, the taxpayer pays, to second-tier banks and the Albanian Post, on behalf of the tax administration, each year, according to deadlines:

• Brenda datës 20 Prill, payment installment I.;
• Brenda, July 20th, installment II payment;
• Brenda datës October 20, installment III payment;
• Brenda datës 20 Dhjetor payment of installment IV.

After making the payment and receiving the bank confirmation of the payment, the taxpayer goes to the regional tax offices and, upon presentation of the bank payment document, receives the installment “Tax Stamp,” which is affixed to the top of the registration certificate (NIPT). Warning! In case the business activity is opened, closed, or suspended during the fiscal year, the simplified tax on small business profits is proportional to the duration of the activity and is calculated based on the taxpayer's self-declaration. Declaration

• Every taxpayer subject to the simplified tax on small business profits, with a turnover from 5 (five) to 8 (eight) million Lek, is obliged to submit the annual tax declaration by February 10 of the year following the tax period, which details the total income, deductible expenses, taxable profit, tax to be paid, as well as any other details determined by the instruction of the Minister of Finance for the completion and submission of the annual tax declaration.
• The obligation to submit the annual declaration within the aforementioned deadline also applies to all taxpayers of simplified profit tax with an annual turnover of 0 (zero) to 5 (five) million ALL. These taxpayers complete this declaration according to the method defined in the instructions of the Minister of Finance.

Source: General Directorate of Taxes.