Tax

Albanian Legislation has been very active in the field of taxes and duties. Tax system in Republic of Albania consists of a package of laws, directives, regulations, tax agreements with other countries, which contain all kinds of taxes and duties applied in Albania, their levels, procedures for setting, changing and removal of taxes, procedures for evaluation and collection of tax liabilities and tax control forms and methods.

Taxes as the main and the most important collection of public revenues appear in a variety of forms. Taking into account the moment of income creation and their expenditure, taxes in Albanian legislation are divided into direct and indirect. So, under this criteria taxes paid at the moment of income creation represent the direct tax group, while those executed at the moment of profited income expenditure are included in the indirect tax group.

Taxation in the Republic of Albania is applied in national and local level. The tax obligation rises when the person generates incomes, becomes owner of a property or executes payments, which are subject to taxation by law. The personal identification number of the individual serves as the identification number for taxation purposes.

VAT Law

Value Added Tax Law and related Instructions issued for the implementation of the law is a well established law in Albania¹. The main law can be easily found also in its English version².

Law 7928 is based on the Sixth Council Directive on VAT³, being by far however a much reduced version of it. In any case such first approximation since its inception, has made this Law subject of very few subsequent amendments, mainly due to the necessity of responding to the new business developments, in the internal and external market and of the attempt to introduce some tax reliefs by reducing/postponing the payment or removing VAT rates for certain economic activities as mentioned in this article.

The general definition of the VAT is missing in the Law, but it is implied within its articles as a tax on sales/ turnover after deducting the VAT on the purchases occurred for the purpose of generating such sales, and “as a tax which is applied on the supplies of the goods and services against payment from a VAT subject as part of its economic activity in Albania as well as on the imports made in the territory of the Republic of Albania by the VAT subjects”⁴.

Money Laundering

The law on money laundering and terrorist financing has been recently updated during year 2012¹, in line with the updated 40 recommendations of the Financial Action Task Force (FATF), the foremost international body active in the fight against money laundering and terrorist financing, as per February 2012, and is fully adopted with the Directive of the European 2005/60/EC².

What is a Double Tax Treaty (DTT)?

A business or individual resident in one country may realize a taxable gain in another country. This gain may be taxed in the country in which the gain was made and in the country of residence. In order to minimize this double taxation, two countries may agree to conclude double tax treaties with each other with the result that the individual or business activity pays tax once only.