In the framework of the 2023 fiscal package, the Ministry of Finance has announced several draft laws that will enter into force during the coming year, affecting some of the most important taxes in Albania, such as, Income Tax, VAT and Excise. There are also changes in some of the penalties for different categories of tax violation.
Specifically, regarding the draft law on Income Tax, the following changes will be implemented:
For individuals, the tax-free salary limit will increase from ALL 40,000 to ALL 50,000, which will reduce the tax income in state budget, but in the meantime, it will increase the net income of employees by the same amount, which means more money circulation in family budgets, and more consumption in the economy. Over 70,000 employees whose salary pertains to this interval will be affected by the aforementioned changes.
Freelancers will also be affected by the changes as they are expected to be included in the personal income taxation scheme. A measure that aims to limit tax avoidance through the transition of individuals from the status of employees where they pay tax to the status of self-employed without tax.
Meanwhile, for the small business with a turnover of up to 14 million ALL, the application of the 0% tax until 2029 is reconfirmed.
As for large entities, the draft law provides changes such as the extension of the period of carrying losses from 3 years to 5 years, and the application of individual linear depreciation of machinery/equipment and software/hardware groups to simplify and facilitate long-term expenses.
Measures will be also taken to regulate the taxation of long-term contracts related to business reorganizations and assets transfer, and it will be certain rules established for bad debt and lending interest limits between companies.
A reinforcement of the fines and penalties for tax avoidance is also predicted to enter into force during 2023.
Other details regarding these changes that affect corporates, will be announced in due course.
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