{"id":18659,"date":"2023-12-23T18:35:44","date_gmt":"2023-12-23T18:35:44","guid":{"rendered":"https:\/\/alprofitconsult.al\/?p=18659"},"modified":"2023-12-31T13:14:22","modified_gmt":"2023-12-31T13:14:22","slug":"decision-no-753-dated-december-20-2023-on-the-implementing-provisions-of-law-no-29-of-2023-on-income-tax-as-amended-special-regime-for-construction-and-liberal-professions","status":"publish","type":"post","link":"https:\/\/alprofitconsult.al\/en\/vendim-nr-753-date-20-12-2023-per-dispozitat-zbatuese-te-ligjit-nr-29-2023-per-tatimin-mbi-te-ardhurat-i-ndryshuar-regjimi-i-vecante-ndertimi-dhe-profesionet-e-lira\/","title":{"rendered":"Decision No. 753, dated 20.12.2023 \u201cOn the implementing provisions of law no. 29\/2023, \u201cOn income tax\u201d, as amended: (special regime, construction and liberal professions)."},"content":{"rendered":"

Decision<\/strong><\/p>\n\n\n\n

Number. 753<\/a>, December 20, 2023<\/strong><\/p>\n\n\n\n

For the implementing provisions of Law No. 29\/2023<\/a>, \u201cON INCOME TAX,\u201d AMENDED<\/strong><\/p>\n\n\n\n

In support of Article 100 of the Constitution and of Article 14, paragraph 3, 17, paragraph 6, 49 and 69, paragraph 1, letter \u201cdh\u201d, of Law No. 29\/2023 \u201cOn Income Tax,\u201d as amended, on the proposal of the Minister of Finance and Economy, the Council of Ministers<\/p>\n\n\n\n

SET:<\/p>\n\n\n\n

Article 1<\/p>\n\n\n\n

List of activities for implementing the special regime for natural person traders and self-employed individuals<\/strong><\/h2>\n\n\n\n

1. In implementation of Article 14 of Law No. 29\/2023, as amended, the allocation of the activities provided for in this article is made based on the codes specified in Nomenclature of Economic Activities (rev. 2)<\/a>, approved by a decision of the Council of Ministers and published by INSTAT.<\/p>\n\n\n\n

2. Based on the Nomenclature of Economic Activities (rev. 2), the breakdown of economic activity types according to the activities provided for in subparagraph (a) of paragraph 1 of Article 14 of the law is reflected in Analytical Table No. 1 attached to this decision.<\/p>\n\n\n\n

\n

\u201cArticle 14 of Law 29\/2023<\/p>\n\n\n\n

Special regime for sole proprietors and self-employed individuals<\/strong><\/p>\n\n\n\n

1. Natural persons, trading individuals or self-employed individuals with annual turnover of up to 10,000,000 lek\u00eb, for the purpose of recognizing deductible expenses, are entitled to choose one of the following methods:<\/p>\n\n\n\n

a) the adoption of a special regime, through which presumptive expenses are deducted apriori<\/em> according to the amounts specified in this letter and without being subject to accounting record checks related to them by the tax administration;<\/p>\n\n\n\n

i. 60% of income for production activities;<\/p>\n\n\n\n

ii. 90% of revenue for wholesale trading activities;<\/p>\n\n\n\n

iii. 70% of the revenue from retail trade activities and individual transportation;<\/p>\n\n\n\n

iv. 60% of the income from bar, restaurant, disco, etc., activities of this nature;<\/p>\n\n\n\n

v. 50% of revenues for service activities, artisanal and craft activities;<\/p>\n\n\n\n

vi. 30% of income for self-employed individuals; or<\/p>\n\n\n\n

b) calculation of deductible expenses based on respective documentation and invoices for each expense.<\/p>\n\n\n\n

2. Natural persons, sole proprietors, or self-employed individuals, according to point 1 of this article, shall choose and declare to the tax administration the method they will use. Switching from one method to another cannot be done more frequently than once every three years.<\/p>\n\n\n\n

3. The determination of the type of activities carried out by natural persons, merchants, or self-employed individuals, as per point 1 of this article, is made by a decision of the Council of Ministers, in accordance with the applicable regulatory legislation governing these activities carried out by natural persons, merchant individuals, or self-employed individuals.<\/p>\n\n\n\n

4. Natural persons, merchant individuals or self-employed individuals who have applied the special regime under paragraph (a) of point 1 of this article are not allowed to claim any deduction or other compensation except for the personal compensation under Article 22 of this law.<\/p>\n<\/blockquote>\n\n\n\n

Neni 2<\/p>\n\n\n\n

Cost and sale price assessment of the building areas obtained as a result of a land-for-building swap agreement.<\/strong><\/h2>\n\n\n\n

1. In implementation of point 6 of Article 17 of Law No. 29\/2023<\/a>, as amended, provides the legal provision regarding the tax on capital gains realized from the disposal of real estate acquired under an exchange agreement. At the moment of exchanging a building plot under a swap agreement, no obligation arises to calculate capital gains on the transfer of real estate for either construction companies or landowners, regardless of status. In this case, capital gain arises at the moment of disposal of the real estate acquired through the exchange.<\/p>\n\n\n\n

2. The term \u201crealized capital gain\u201d means the positive difference between the sale price and the purchase price of the real estate property. In cases where this difference is negative, the capital gain will be considered zero for any transaction.<\/p>\n\n\n\n

3. In the case of the sale of real estate acquired under a land-for-building swap agreement, to calculate the realized capital gain, the cost basis and the sale price are determined as follows:<\/p>\n\n\n\n

a) The purchase value shall be considered the value of the portion of the land plot corresponding to the surface area of the building being sold:<\/p>\n\n\n\n

i. The value of the land, per square meter (m2<\/sup>) Given in exchange for the benefit of the residential\/commercial\/service area is determined based on the value the land had in the last transaction prior to the exchange. When the owner of the plot acquired it through a transaction such as a purchase agreement, exchange, inheritance, gift, waiver or revaluation of real property for which tax has been calculated and which has been registered with the competent authority for real property registration, the purchase value will be the value as per the most recent registration of that property on which tax has been calculated. This value, in the event of a property transfer transaction, is made available to notaries upon request to the competent authority for real estate transfers.;<\/p>\n\n\n\n

ii. In cases where the exchanged plot does not have a value under the provisions of subparagraph \u201ci\u201d of this letter, as the value of the plot per square meter (m2<\/sup>) provided in exchange for the benefit of residential or commercial space, or a service, shall be considered the value, based on prices per square meter (m2<\/sup>) the given plot area as provided in the land value map of the Republic of Albania, in accordance with the Council of Ministers' decision in force at the time the exchange contract between the investor and the plot owner is registered with the authority responsible for real estate registration;<\/p>\n\n\n\n

b) The sale value of the building is determined in the sales contract, which is signed by the parties, the seller and the buyer:<\/p>\n\n\n\n

i. The contract specifies the area in square meters (m2<\/sup>) of the property subject to the contract, the price per square meter (m2<\/sup>) and its value. The contract is accompanied by the map, the floor plan, and other documents that serve to register the real estate property in accordance with the relevant legislation. This sale value specified in the sales contract, for the purpose of calculating the tax liability arising from the transfer of the real estate, is compared with reference prices;<\/p>\n\n\n\n

ii. In cases where the property's value based on the contract's sale price per square meter (m\u00b2) is lower than the value based on the reference prices, then the area\/city reference price is taken as the presumed sale price. Reference prices are the average reference prices per square meter (m2<\/sup>) building area used for the assessment of the taxable value for residential properties, based on the joint guidance of the minister responsible for finance and the institution responsible for the registration of real estate, issued for the implementation of point 8 of article 17 of law no. 29\/2023, as amended.<\/p>\n\n\n\n

Article 3<\/p>\n\n\n\n

Expenditures and revenues in the construction sector<\/strong><\/h2>\n\n\n\n

1. The provisions of this article apply to the determination of the taxable profit of enterprises that operate in the construction and\/or sale of buildings for residential, manufacturing, commercial, or service purposes, as provided for in Article 49 of Law No. 29\/2023, as amended.<\/p>\n\n\n\n

2. Taxpayers operating as contractors for construction works calculate their income and expenses as follows:<\/p>\n\n\n\n

a) In cases where taxpayers operate as entrepreneurs in construction works in the role of contractor, subcontractor, supervisor, overseer, etc., business income is the income invoiced, based on the progress of work performed or the advances received from the work's clients;<\/p>\n\n\n\n

b) Taxpayers operating as entrepreneurs in construction works in the capacity of contractor, subcontractor, supervisor, overseer, etc., incur business expenses within the limits of the Income Tax Law.<\/p>\n\n\n\n

3. Taxpayers operating as builders and sellers of construction works calculate their income and expenses as follows:<\/p>\n\n\n\n

a) In cases where taxpayers operate as builders of construction projects and are simultaneously full or partial owners of the construction product, which they sell or lease, business income is the income from the portion of the construction product that is sold, as well as rental income for the portion of the construction product that is leased:<\/p>\n\n\n\n

i. In cases where the taxpayer is the owner of the land on which the construction is carried out, the income from the sale or lease of the construction product shall be calculated for 100 % of the construction product;<\/p>\n\n\n\n

ii. In cases where the taxpayer is not the 100% owner of the land on which the construction is taking place, but has a land\u2013building swap agreement with the landowners, The income from the sale or lease of the construction product is calculated for the beneficial portion of the construction product based on the land-for-building exchange agreement between the parties;<\/p>\n\n\n\n

b) Revenues from the sale of construction products, as well as revenues from their rental, are calculated based on sales contracts, but taking into account the minimum sale prices or minimum rental rates established in the laws and regulations in force in the Republic of Albania.;<\/p>\n\n\n\n

c) The expenses of taxpayers operating as builders of construction projects and who are simultaneously full or partial owners of the construction product consist of deductible business expenses for the construction phase, the sales or maintenance phase for the portion of the facilities that are leased, in accordance with the provisions of the income tax law;<\/p>\n\n\n\n

c) In cases where construction companies have purchased land in their assets and, based on building permits, use parts of it to construct buildings for resale, for the portion of the land that corresponds to the sold part of the building, the land is deregistered as the entity's property at the ASHK and passes into ownership\/co-ownership of the buyers of the building product, its accounting value is transferred as a deductible expense of the construction activity for the purpose of sale. If the entity holds construction products for its own operational needs\u2014such as offices, warehouses, rental properties, bars, restaurants, etc.\u2014the portion of the land that proportionally relates to these assets will not be recognized as a deductible business expense.<\/p>\n\n\n\n

3. Taxpayers operating as investors and sellers of construction products calculate their income and expenses as follows:<\/p>\n\n\n\n

In cases where taxpayers operate as investors or financiers of a construction product, business income includes the proceeds from the sale of the construction product as well as rental income on the portion of the product they retain for leasing.<\/p>\n\n\n\n

a) Revenues from the sale of construction products, as well as revenues from their rental, are calculated based on the legal sales contracts, but taking into account the minimum sale prices or minimum rental fees established in the laws and regulations in force in the Republic of Albania.;<\/p>\n\n\n\n

b) Expenses of taxpayers operating as investors (financiers) of the construction product and who are simultaneously owners of that product, consist of the expenses invoiced to them by the contractors or other expenses necessary at the time of sale or lease, in accordance with the provisions of the law on income tax.<\/p>\n\n\n\n

Article 4<\/p>\n\n\n\n

List of taxable services as of January 1, 2024<\/strong><\/h2>\n\n\n\n

1. Pursuant to Article 69 of Law No. 29\/2023, as amended, the detailed list of economic activities of taxpayers, self-employed individuals, and entities providing professional services with annual revenues of up to 14,000,000 (fourteen million) lek per year, who will pay personal income tax on business income or corporate income tax, starting from the 2024 fiscal year. The analytical list consists of activities according to the codes provided in the Nomenclature of Economic Activities (rev. 2), as presented in analytical table no. 2 attached to this decision.<\/p>\n\n\n\n

2. In cases where taxpayers are unclear about the categorization of the economic activity they carry out or about the income tax rate applicable to their activity, the General Directorate of Taxes, based on the Nomenclature of Economic Activities (rev. 2), determines the division and the activity to which the respective taxpayer belongs.<\/p>\n\n\n\n

\n

\u201cPart of Article 69 of Law No. 29\/2023<\/p>\n\n\n\n

Transitional provision<\/strong><\/p>\n\n\n\n

1. Tax incentives and exemptions provided for in Law No. 8438, dated December 28, 1998<\/a>, \u201cFor the income tax,\u201d as amended, continue to apply as follows:<\/p>\n\n\n\n

...<\/p>\n\n\n\n

dh) for:<\/p>\n\n\n\n

i. merchant individuals;<\/p>\n\n\n\n

ii. the self-employed, as well as;<\/p>\n\n\n\n

iii. entities:<\/p>\n\n\n\n

For gross income up to 14 million lek per year, the 0% income tax rate will apply until December 31, 2029. The 0% tax rate does not apply to taxpayers specified in subparagraphs \u201cii\u201d and \u201ciii\u201d of this letter who provide professional services. <\/strong>The analytical list of professional services is determined by a decision of the Council of Ministers in accordance with the applicable regulatory legislation governing these professional services.<\/p>\n\n\n\n

\u2026<\/p>\n\n\n\n

\u201c<\/p>\n<\/blockquote>\n\n\n\n

This decision takes effect upon publication in the Official Gazette.<\/p>\n\n\n\n

Download Decree No. 753, dated December 20, 2023
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