Proposals for draft laws in the new fiscal package 2022

Since the beginning of November this year, the Albanian Parliament has received 4 proposals to change the fiscal package, reflecting these changes in the laws “On income tax”, “On Excises”, “On Income Tax” and “On Value Added Tax in the Republic of Albania”.

The proposal of the draft law “On an amendment to law no. 8438, dated 28.12.1998,” On income tax “aims to:

  • increase of non-taxable floor salary for salary income in the range from 30,001 ALL / month to 40,000 ALL / month. For this salary range the tax to be paid on salary income is 0%, enabling every citizen who provides less income not to pay income tax.
  • reduction of the tax rate by 50% for taxpayers with salary income from 40,001 ALL / month to 50,000 ALL / month. These taxpayers will pay 0% tax up to the amount of 30,000 ALL monthly income from salary, and on this amount they will pay half of the tax rate of 13% (ie 50% * 13%). This ensures that citizens with lower incomes pay lower income tax.
  • supporting the middle class, revising the upper band of progressive taxation. The 23% tax is expected to start to be applied on salaries over ALL 200,000 / month, from the current ALL 150,000 / month.

The other proposal for amending the law “On Excises” aims to consolidate excise revenues, through their gradual approximation to the level of excises provided in the EU Directive, as well as not allowing legal loopholes to avoid paying excise tax, utilizing its differentiated rates for different users. These changes consist of:

  • Changing the level of excise duty on Tobacco and its by-products.
  • Unification of excise tax on “Petroleum gases and other gaseous hydrocarbons”.
  • Indexation of the excise level based on the price increase index.
  • Abolition of reimbursement of excise duty on fuels for industry, which are used for technological needs of production of products in these sectors (pharmaceuticals, bricks, cement, beer and crude oil).
  • Unification of procedures and penalties with the provisions of law no. 102/2014 “Customs Code of the Republic of Albania”, as amended.

The third proposal comes from the Council of Ministers again and is related to some changes in the law “On National Taxes”. The draft law provides for the imposition of a tax of 100 lek / kg on milk powder for trade. This proposal specifically aims to incentivize the production and trade instead of milk, with the aim of supporting local farmers. This, taking into account the fact that the dairy sector is considered a priority sector given the potential for import substitution.

Finally, the other proposal for amendments to the law on “Value Added Tax” (VAT) provides:

  • treatment with a reduced VAT rate of 10 percent of the supply of agricultural inputs, such as: chemical fertilizers, pesticides, seeds and seedlings, 2 in addition to hormones classified under codes 2937 of the Combined Nomenclature of Goods;
  • VAT exemption for the import of machinery and equipment for the purpose of carrying out investment contracts with value equal to or greater than ALL 500 million;
  • replacing the agricultural producer compensation rate from 6 percent to 0 percent.

This new fiscal package has gone to the Assembly for discussion this year-end and in case of approval the changes are expected to enter into force in July next year.

For more click below: