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The Albanian Parliament has approved in principle the government's new initiative for a fiscal package that includes a tax amnesty and "Fiscal Peace Agreement", a voluntary agreement framework designed to reduce past problems and increase compliance going forward.
How will the Tax Amnesty work?
The amnesty is designed as a multi-level relief system, addressing unpaid obligations accumulated over the past decade.
- Full write-off of liabilities over 10 years old
All unpaid tax and customs liabilities created up to 31 December 2014, estimated at approximately €525 million, will be fully written off.
It is important to know that the principal amounts of unpaid social and health insurance contributions are not included in this category. However, the penalties and interest linked to these contributions will be forgiven.
- Partial forgiveness for obligations (2015–2019)
For liabilities created between 1 January 2015 and 31 December 2019:
- Penalties and interest on unpaid tax obligations will be fully erased.
- A partial write-off of the principal will be granted, only if the remaining principal will be fully paid within 2026.
- Penalty forgiveness for obligations (2020–2024)
For obligations incurred from 1 January 2020 to 31 December 2024, penalties and interest, including those related to social and health insurance schemes, will be written off, only if the taxpayer pays the entire principal by 31 December 2026.
What is the "Fiscal Peace Agreement" and how it will work?
The Fiscal Peace Agreement is is a voluntary mechanism intended for businesses with annual gross revenues above ALL 14 million. Companies that choose to participate will sign an agreement with the tax administration to prepay corporate income tax for one year, calculated on the basis of the previous year's declared profit plus an additional 18% margin. In return, the business will be exempt from tax audits for the entire year. If the actual profit declared at year-end exceeds the prepaid projection, the excess amount will be taxed at a preferential rate of 5%. Another optional benefit for participating large businesses, will be the possibility to re-declare their financial statements for the previous five years, subject to a 5% tax on the revised amounts.
What is the purpose of these measures and how each entity can benefit?
The government has described this package as the final round of amnesty before a planned tightening of tax controls and enforcement across the business sector.
Businesses are encouraged to conduct a thorough review of their financial position to assess:
- whether they can benefit from penalty and interest forgiveness,
- whether entering the Fiscal Peace Agreement would reduce compliance risks,
- and whether correcting past financial statements under preferential terms is advantageous.
To make an informed decision, companies will need professional analysis, accurate financial documentation, and a clear understanding of the long-term implications of participation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
