With Law no.33/2017, which was approved on the 21st of April 2017 and entered into force on the 7th of May 2017, the Albanian Parliament relieved businesses from old unpaid tax and custom duties. The Law completely dismissed tax and custom duties arising before 2010 irrespective of their type and origin, whether liabilities or fines. For the period between January 1st 2011 and December 31st 2014, the Law provides the possibility of deleting all fines and interests from the system. The Law was drafted through consultations with both IMF and local businesses. The purpose of this Law is to formalize the entrepreneurship's activities and increase the state budget's revenues. According to the Ministry of Finances' data, the majority of these tax and custom duties were too old and the chances of them being paid were scarce. On the other hand, these obligations hindered the businesses' activity and their relation with the tax and custom authorities.
The Law provides for the ability of local or central authorities to delete the tax and custom duties, including social security's fines, registered in any entity's name before December 2010. For the timeframe between January 1st 2011 and December 31st 2014, custom and tax authorities will delete only the fines and interests provided that by 31.12.2017 the relevant entity pays the pertaining tax liabilities.
The Law provided the remission of several tax duties regardless of the period during which the liabilities were generated. These include:
- The tax duties of unregistered subjects;
- The administrative penalties automatically calculated by the system due to the late declaration according to article 113 of the law 'On tax procedures in Albania';
- The administrative penalties for the late delivery of financial statements, calculated until 31.12.2016;
- The administrative penalties for the delayed declaration, on the condition that the appropriate declaration was delivered by 30.06.2017;
- The administrative penalties for authorized companies, provided by article 123, of the Law 'On tax procedures', evidenced through an ascertainment act;
- The administrative penalties based on the provisions of Law no.99/2015, which were abolished by the Albanian Constitutional Court.
- The unpaid tax duties created between 01.01.2011 and 31.12.2013 for commercial companies that operate in the electro-energetic and water supply sector, which have the state as a sole shareholder;
- The tax effects for liabilities that are not due within the tax period of the supply performance, of the relevant document that proves the VAT exemption, with the condition that the application at the National Natural Resources Agency has been done within 31.12.2014;
- Fines and interests for the social security and health contributions for agricultural self-employed individuals, for the period between January 1st 2011 and up to December 31st 2016, with the condition that the appropriate duties are paid within 31.12.2017.
The Law provides for the possibility to compensate the tax duties with the subject's VAT surplus. If any of the beneficiary subjects have filed administrative or judicial complaint, they will benefit from the law provisions only if they withdraw the appeal, judicial sue or complaint.
In addition, the Law gives the possibility to 140, 000 car owners to benefit from full or partial unpaid tax duties deletion. There are two benefiting categories. The first includes car owners that between 2000 and 2011 have not paid any taxes for their vehicle and who want to get it out of circulation. They will benefit from the deletion of all their duties, under the condition that they make a request within 6 months to the General Directory of Road Transport. In case the owners don't want to get the car out of the circulation they need to pay only the tax duties. The car owners' that have duties and fines after January 2012 will benefit from the deletion of fines only if they pay the tax duties.
The Law has already entered into force and its effects will only last until the end of 2017.
The Law no.33/2017 does not apply to legal or physical subjects against whom there is a final court decision for criminal acts related to tax and customs. The law focuses on two time periods and tax duties, those between 2000 and 2010 (which are deleted irrelevant of the type of obligation) and the more recent ones between 2011 and 2014 for which only the custom and tax fines will be deleted, provided that the relevant subject will pay the late tax and custom duties.
Given the benefits provided by the new Law, commercial companies and physical persons in Albania should take advantage by settling all of their overdue duties within the required timeframes.
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.