Tax Card 2013 kpmg.com/al

Transcription

1 Tax Card 2013 kpmg.com/al KPMG in Albania

2 CORPORATE INCOME TAXATION Corporate income tax is applied on the accounting profit after adjustments for tax purposes. The tax period commences on 1 January and ends on 31 December of each calendar year. Under the Albanian Corporate Income Tax (CIT) Law, the tax rate applicable is 10%. Tax depreciation Entities may set depreciation rates for assets in accordance with their accounting policies while, under the provisions of the Albanian CIT Law, there are specified maximum annual rates allowed for tax purposes according to a separate tax depreciation schedule. Intangible assets are depreciated according to the straight line method. The remaining fixed assets are depreciated according to the declining balance method. Maximum depreciation rates for corporate tax purposes Solid buildings including investment properties, facilities, transmitting devices, electricity carriers and lines for communication. Machinery and production equipment which are fixed to the buildings/site of work Intangible fixed assets as patent, start-up expenses, good will Computers, computer peripheral equipment, software and right to use software 5% 15% 25% All other depreciable assets 20% Tax loss carry forward The tax loss can be carried forward for three tax periods. It can be offset against the positive financial result before tax adjustments for the respective tax period according to the first loss before the last one principle. The tax loss can not be carried forward if the ownership of stock capital or voting rights of an entity changes by more than 50% in value or number. Thin capitalization Thin capitalization rules apply in Albania if a company s liabilities exceed four times the amount of its equity (excluding short-term loans). In such a case, the interest paid on the exceeded amount shall not be tax deductible. The thin capitalization restrictions do not apply to banks, insurance companies and leasing companies. In addition, any interest paid that exceeds the average annual interest rate of loans as published by the Bank of Albania is not tax deductible.

3 Transfer pricing There are transfer pricing rules in Albania that allow the tax authorities to adjust taxable profits if the transaction between related parties is not at arm s length. Transfer pricing adjustments are made by the tax authorities through the Commission of Transfer Pricing in the General Tax Directorate. Withholding tax Under the CIT Law, entities which are Albanian residents are obliged to withhold tax at a rate of 10% from the following gross payments sourced in the territory of Albania: Dividends Profit shares Interest payments Copyrights and royalties Payments for technical, management, financial and insurance services Payments for management and direction councils Payments for constructions, instalment, assembly or supervision of work which is related to such services Rental payments Payments for performance of actors, musicians, or sportsmen, including some payments made to persons who employ them or act as intermediaries in arranging shows or performances. When a Double Tax Treaty (DTT) is in force between Albania and another state, its provisions prevail over the local tax regulations. For a listing of the existing treaties, see overleaf. VALUE ADDED TAX (VAT) All taxable persons carrying out independent economic activities are required to apply for a mandatory VAT registration if their taxable turnover exceeds ALL 5,000,000 (approximately EUR 36,000) in a calendar year. Any taxable person that performs import-export activities and any tax registered freelancer should register for VAT purposes regardless of the annual turnover. A taxable person not covering the requirements for a mandatory VAT registration but carrying out an independent economic activity in the country has the right to register voluntarily without fulfilling threshold requirements. VAT is levied on (i) supplies of goods or services with a place of supply in Albania, or (ii) import of goods into Albania. There are three VAT rates applicable in Albania:

4 Rates 20% The general rate is applied on domestic transactions and on imports of goods 10% This rate is applicable in case of supply of medicines and medical services 0% The zero rate is applied on exports and some other supplies explicitly listed in the Law Certain supplies are considered VAT exempt without the right to credit the input VAT. Among others, these include financial services, export of services, supply of packaging materials for drugs, postal services, supply and lease of land and buildings, hydrocarbon operations, supply of books, newspapers, magazines and incorporated advertisements therein, supply of services of gambling activities. VAT is applied at zero percent in the following cases: I. The supply of goods exported outside the territory of Albania II. The supply of goods and services relating to international transport of goods and passengers III. The supply of goods and services relating to maritime commercial or industrial activities. Excise duties Excise duties are levied on certain domestic or imported goods such as alcoholic beverages, fruit juice, water and other refreshment beverages, cigarettes, coffee, fuel oils, cosmetics, perfumes, packaging materials etc. Tax liable persons for excise duties are licensed producers and importers of the goods listed above. Different excise rates apply to the above goods. PAYROLL RELATED TAXES AND CHARGES Rates Monthly taxable income (ALL) Tax (ALL) From To 0 10,000 Non-taxable 10,000 30,000 10% for the surplus over 10,000 30,000 No limit 10% for the surplus over 0

5 Albanian tax residents for personal income tax purpose are: I. Individuals who (i) have permanent residence in Albania or (ii) are Albanian citizens and consular or diplomats working out of Albania II. Individuals who are present in Albania for more than 183 days within a period of 365 days. Albanian resident individuals are subject to personal income tax (PIT) on their worldwide income, whereas non-resident individuals are subject to tax only on income derived from Albanian sources (unless a DTT provides otherwise). Income tax credit may be granted on the grounds of a specific DTT or on the basis of the general provisions of the PIT Law. Exemptions Pensions and other social security benefits received from the Albanian mandatory social security system, and economic benefits for individuals without income or with low income Scholarships for education of pupils and students Benefits in cases of hardships due to illness Benefits given to real estate owners as a bonus for expropriation made by the state for public interest Income exempted on the basis of international agreements ratified by the Albanian Parliament Interest generated from Government treasury bills or other securities issued before 1999 Income from wages and compensations for labor relationships of consular, diplomatic or similar officials of other countries and international organizations attributed with diplomatic status Contributions made by the employer for life and health insurance of employees. PIT allowances The Albanian Tax Law does not provide for any specific tax allowances. Social security and health insurance Mandatory social security and health insurance contributions are due on employment, civil and management income up to a maximum monthly insurable income of ALL 91,475 (approximately EUR 650). Social security and health insurance contributions are paid by the employer at the rate of 16.7%. Social security contributions paid by the employee are rated at 11.2%. The mandatory contributions made by the employee are not deductible from the taxable income.

6 LOCAL TAXES AND FEES Tax on small business applies to small businesses with an annual turnover of less ALL 8,000,000 (approximately EUR 57,500), and is up to 1.5% of the annual revenue Real estate tax on buildings calculated on the surface (square meters) of the buildings its amount depends on the region where the building is located Real estate tax on agricultural land calculated on the surface (hectares) of the agricultural land its amount depends on the region where the land is located Tax on infrastructure effect of new constructions from 1% to 3% of the new investment value; in Tirana Municipality it varies from 2% to 4% of the investment value Tax on environment and waste collection determined at a municipal level and it is due from individuals and legal entities who live and perform economic activity within the territory of the municipality Tax on boards is paid yearly for the boards placed for identification and publicity purposes. It ranges from ALL 120 (approximately EUR 1) per square meter for boards placed for identification purposes to ALL 810,000 (approximately EUR 5,800) for boards over 18 square meters placed for publicity purposes Motor vehicles tax its amount depends on the type of the vehicle and its technical characteristics Fees on occupying a public place in the market for business purposes. CORPORATE INCOME TAX AND VAT INCENTIVES Deferral of VAT paid on importation of machinery and equipment till 12 months from the moment of importation. The deferral of VAT on importation for a longer term is allowed in special cases VAT credit for fuel expenses when used for technological processes necessary in view of the main purposes of the business activity The import of machinery and equipment for investment purposes is considered a VAT exempt supply under certain conditions The import and supply of iron and cement for entities constructing hydropower plants is a VAT exempt supply Currently, there are no corporate income tax incentives available.

7 FILING DEADLINES Annual corporate income tax return 31 March of the following tax year Monthly personal income tax return by the 20th of the month following the month to which the PIT return relates Starting from 2011, Albanian tax resident individuals generating an overall income of more than ALL 2,000,000 (approximately EUR 14,000) per year are obliged to submit with the Albanian tax authorities the annual personal income tax return by end of April of the year following the period to which the return relates. The same rule is applicable to non tax resident individuals generating an Albanian sourced income of more than ALL 2,000,000 (approximately EUR 14,000) per year. Monthly VAT returns by the 14th of the month following the month to which the VAT return relates Monthly excise returns by the 15th of the month following the month to which the excise return relates Social security and health insurance contributions returns (i) by the 20th of the month following the month to which the social and health insurance return relates (for individuals of legal entities registered as taxpayers of VAT) (ii) by the 20th of the first month following the end of each quarter of the calendar year (for the legal entities and individuals registered as taxpayers of local tax on small business). Albania s Double Tax Treaties Austria Belgium Bosnia and Herzegovina Bulgaria China Croatia Czech Republic Egypt Estonia France Germany Greece Hungary Iran* Ireland Italy Kosovo Kuwait* Latvia Lebanon* Luxembourg* Macedonia Malaysia Malta Moldova Netherlands Norway Poland Romania Russia Serbia and Montenegro Singapore Slovenia South Korea Sweden Switzerland Spain Turkey Ukraine* * Signed but not yet effective (not ratified)

8 For more information, please contact: KPMG Albania Shpk Dëshmorët e Kombit Blvd. Twin Towers Buildings Building 1, 13th floor Tirana, Albania Tel.: / Fax: Arkadiusz Mierzejewski Partner, Tax Tel.: / Fax: arekmierzejewski@kpmg.com al-office@kpmg.com kpmg.com/al This card was prepared in March 2013 as a quick reference tool for the most common tax rates and issues. Any special regimes have been deliberately omitted. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.