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Albania: 0 profits tax for companies with turnover up to 14 million lek (130 thousand euro)

The Council of Ministers approved on 28 July 2020, the decision according to which the rate of profit tax will be zero for taxpayers with a turnover of 0-14 million Lek (about 130 thousand euros, previously exempt from tax they were entities with a turnover of 0-5 million LEK).

With 87 votes in favor, the Albanian parliament approved the abolition of the profit tax and the increase in the VAT threshold.

Legislative Law n. 30, dated 20.07.2020 “On some additions and changes to legislative act n. 3, dated 15.03.2020 of the Council of Ministers “on the adoption of special administrative measures during the period of infection caused by” modified “COVID-19” “received 87 votes in favor, 11 against and abstention.

According to the decision, the profit tax rate will be zero for taxpayers with a turnover of 0-14 million Lek (previously entities with a turnover of 0-5 million ALL were exempt from tax). While the increase in the VAT threshold from 2 million Lek goes to 10 million Lek (about 80 thousand euros).

According to tax data and processed by ‘Monitor’, in total in 2019, the companies affected by these two changes paid LEK 4.3 billion in taxes and VAT (78% of this amount belongs to the VAT paid ), or 34 million euros. This amount represents 1.4% of the total tax and customs revenue collected in 2019, according to data from the Ministry of Finance.

But how many businesses should benefit from these initiatives and how many profits and VAT taxes were paid in 2019 by entities affected by these changes.

94 thousand small businesses do not pay tax on profits even today

According to official tax data, there are 94 thousand small businesses in the country, which have a turnover of 0-5 million LEK, from the income declared for 2019 by the simplified tax return (TFTH). These entities, which make up 83% of the total entities in the country, are not affected by the latest change, as even today they do not pay tax on profits.

9,305 small entities will no longer pay the simplified income tax

According to fiscal data, the number of companies with a turnover of 5-14 million Lek from the income declared for 2019 by the TFTH declaration is 9,305. These companies pay a simplified 5% profit tax. In value, the profit tax (or TFTH) paid by them in 2019 was LEK 945 million, or 7.6 million euros.

This amount represents 2.6% of the tax on the total profit paid by businesses in 2019, according to other data from the Ministry of Finance. In total, in 2019, companies pay 36.6 billion in profit taxes, which represents 12% of the country’s total tax and customs revenue.

For information on Albania and free consultancy on accounting, taxation, labor law, investments, internationalizations, relocations, research, selection and training of human resources, real estate, transfers of residence, certifications, do not hesitate to contact us:

Roberto Laera

Roberto Laera È laureato in Scienze Aziendali presso l’Istituto Superiore di Finanza e Organizzazione Aziendale di Milano, con circa 20 anni di esperienza nell’ambito della consulenza aziendale, organizzativa risorse umane, della formazione. È senior consultant di numerose aziende nazionali e internazionali. Ha lavorato tra le altre per George S. May, Telecom Italia Learning Services, Bosch. Dal 2008 amministratore unico di IN Italian Network Sh.p.k. e Albania Investimenti Sh.p.k. con sedi a Tirana in Albania e Bari in Italia, offre consulenza all’internazionalizzazione delle imprese, fiscale, finanziaria e servizi fiduciari. È professore a contratto della Facoltà FASTIP dell’Università Aleksander Moisiu di Durazzo per la materia di “Introduction to Business”. È componente del Advisory Board dell’Università Nostra Signora del Buon Consiglio di Tirana. È delegato per l’Albania di ASSORETIPMI. È referente per i rapporti istituzionali per l’Italia dell’Albania Development Fund
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