General Taxation Department Albanian Tax Legislation

LAW No. 8978, dated 12.12.2002 FOR LOCAL TAX ON SMALL BUSINESS On the basis of Articles 78, 83 item 1, Article 155 and 157 item 3 of Constitution, on the proposal of the Council of Ministers, THE ASSEMBLY OF THE REPUBLIC OF ALBANIA D E C I D E D: Article 1 The meaning of local tax on small business Local tax on Small Business is a local tax, classified as income of municipalities and communes, according to the criteria defined in the law nr.8652,dated 31.7.2000On the organisation and functioning of local government. Article 2 Subject and object of the law 1. Object of local tax on small business is an annual fixed amount, payable for any business location where a person exercises business activity. 2. Subject to local tax on small business is a person carrying on business activity in the territory of local government unit of the Republic of Albania, at any period in the calendar year, and which is not subject to VAT.

Article 3 Definitions The terms below, under this law, shall mean: 1) "Tax body" means local tax office, responsible for the administration of such tax . 2) "Business" means any economic activity aiming at making a profit. 3) "Business Location " means any shop, separate unit or other fixed place where business is conducted. When there is no fixed place of business, business location ,for
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General Taxation Department Albanian Tax Legislation

the purpose of this law, is defined in accordance with provisions of item 7 of article 6 of this law. 4) "Instruction" is a common instruction issued by the Minister of Finance and the Minister of Local Government and Decentralisation, on the application of this law. 5) "Person " shall mean any physical or juridical person carrying on business. 6) "Tax" means local tax on small business, defined by this law. 7) Taxpayer" means any person, that, under this law, is subject to local tax on small business. 8) "Tax level reference " implies local tax level on small business, defined in table 1, attached to this law. Article 4 Tax Body For the two first years upon entry into force of this law, local tax offices are tax bodies, except the cases where tax body is defined by the Council of Ministers, based on the recommendation of the Minister of Finance, according to the request of local government bodies. Article 5 Tax level reference and tax obligation 1. Any business activity, in any location business, is taxed separately. 2. Obligation to pay tax on each business, at any business location is defined according to business category at registration and re-registration time. Business categories are defined in table 1, attached to this law. 3. When a person conducts more than one activity at the same place, tax level reference is determined according to activity that has a higher turnover. 4. Tax level reference is determined in fixed amounts (quotas) on each business category, that are defined in table 1, attached to this law. Municipality or commune council in which business place is located, may increase or reduce tax level, but not more than 30 %. Any increase or reduction is applicable in the same manner for all business categories. 5. Municipality or commune notifies tax body on fixed quotas applicable for the following calendar year not later than 15 December of the current year. If the municipality or commune fails to do so, tax body applies automatically tax levels defined in table 1, attached to this law. 6. If business activity commences or ceases during a calendar year, or is interrupted temporarily, tax due for such year is calculated on the basis of the number of effective months of such activity. Method of tax calculation, method of temporary activity interruption, permitted period for temporary interruption and the manner of tax liability reduction, are defined in the Instruction.
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General Taxation Department Albanian Tax Legislation

7. Instruction defines cases where, for tax purposes, an economic activity, at a business location, is composed of one or some business activities. Article 6 Registration requirements 1. Taxpayer shall register any business location to the responsible tax body for any such business location. Registration is carried out before taxpayer commences activity. 2. Taxpayer shall submit the following data at registration time: a) the court decision for registration; b) personal certificate(with photo); c) business location(s) address(es); ) type of business activity) at such business location; d) TIN issued by GTD; dh)registration number in tax office of local government; e) any other data or document defined in the Instruction. 3. Taxpayer, after first year registration, shall be reregistered each following calendar year ,and not later than 31 March. Registration procedure is defined in the Instruction. 4. If taxpayer fails to register, or is not registered at proper time, local tax office registers such taxpayer. Such registration shall have the same effects as the registration or re-registration carried out by taxpayer and sanctions are applicable, under provisions of article12, item 1 of this law. 5. Responsible tax body shall issue a licence (registration certificate) to each taxpayer that has concluded registration process according to instruction. Certificate comprises TIN, type of business activity and address of business location ,as well as registration number of local government tax office. 6. When the taxpayer conducts business in more than one place, such taxpayer is issued a registration certificate for any business location. 7. If the taxpayer has not a fixed place conducting any of businesses, then: a) in the case of a physical person ,location of exercising business activity shall be considered private dwelling(house) of such taxpayer. b) in the case of a juridical person, business location shall be deemed to be the establishment defined by court decision. Article 7 Obligation on informing

1. The taxpayer is obliged to inform, in writing, the responsible tax office where such taxpayer is registered or re-registered , for any changes regarding the submitted data
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General Taxation Department Albanian Tax Legislation

at the time of registration, such as the name, address, business location, etc. Manner and form of notification are defined by Instruction. 2. The taxpayer shall display prominently the licence(registration certificate) issued by the tax organ in his business location. If the taxpayer has no fixed place for economic activity , he shall submit such licence upon each request of tax body employees. Article 8 Exchange of data 1. Instruction defines co-operation procedures between central tax bodies and municipalities or communes on the administration of this law. 2. Such co-operation includes not only exchange of data between central bodies and local government units on tax amount collection, which shall be performed ,at least ,on quarterly basis, but also information on the taxpayer ,in cases where tax collection efficiency is requested. 3. This co-operation and exchange of information include sending in time data on taxpayer and on tax collection, enabling municipalities and communes to, in time, prepare and manage the budget. Article 9 Payment 1. Tax due is payable in two equal instalments .The first instalment is paid at registration or re-registration time. The second instalment is payable no later than 30 September, except the cases where business activity has commenced after March 31 of the concerned year. In such case the second instalment shall be payable no later than 31 December. 2. If the taxpayer pays in full the fixed amount tax at the moment he is issued the licence(at registration or re-registration time), then his tax due shall be deducted by 10 per cent. 3. If the taxpayer concludes the re-registration process and is supplied with a registration certificate by tax bodies prior the last working day of January of each of reregistration year, such taxpayer has the right of 2 %reduction on the total amount payable. If the taxpayer concludes the re-registration process and is issued a registration certificate by tax bodies prior the last working of February of each registration year ,such taxpayer has the right of 1 % reduction of the tax due payable. 4. If the responsible tax body finds that taxpayer, at registration or re-registration time has failed to submit accurate declaration and ,the fixed amount that should have
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General Taxation Department Albanian Tax Legislation

been paid results higher than tax paid ,such tax body ,as the case may be, notifies taxpayer. Taxpayer shall pay the additional tax liability within 15 days upon notification receiving. 5. Tax is payable in the manner and at the place as defined in Instruction. 6. When a business activity is closed during the year and the tax amount paid for assessed tax should have been lower, in conformity with item 5 of article 5 of this law, the difference is paid back to taxpayer within 30 days upon receiving notification for closing the activity. Article 10 Tax Payment Transfer Tax amounts collection shall be transferred under provisions of this law each month within the 10 of the following month to the budget of the municipality or commune where the taxable person has business location. Article 11 Verification Taxpayer is obliged to allow responsible tax body inspectors enter the business premises for business data registration reviewing and checking of registration certificate. Article 12 Violations and Penalties 1. In the meaning of this law, when violations do not constitute a penal act they shall consist administrative breaks: a) Failure to file registration or re-registration of business activity location ,as defined in article of this law, or failure to paying tax due by defined deadline, are punished with a fine of 25% of tax due. b) Failure to file accurate data at registration or re-registration time is punished with a fine of 10.000 Leks. Such fine is payable together with additional tax due ,according to item 4 of article 9 of this law. c) Failure to display registration certificate, under the requirements of article 7 of this law is fined at 10.000leks. ) In cases where responsible tax body inspectors are not allowed to enter business premises , such taxpayers are fined at 10.000 Leks. 2) Fines are payable to municipalities and communes within 15 days upon assessment issuance by tax body.
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3) In case of failure to pay the tax due or penalty by taxpayer, tax body withdraws registration certificate and closes business until payment is made.

Article 13 Appeals 1.Taxpayer has the right to appeal in writing against any responsible tax body official decision on the amount and manner in which tax liabilities are assessed ,to request reimbursements, as well as to appeal against any other action or non-action of the tax body or officials of such. 2.Any appeal is submitted to responsible tax body within 30 days upon receipt of action notification, that is subject to appeal. Form and manner of appeals is defined in Instruction. 3.Responsible tax body issues a decision within 30 days upon appeals submission. If taxpayer is not satisfied by tax body decision ,such may be appealed by taxpayer to tax appeals commission within 30 days upon receipt decision notification. 4.Tax appeals commission issues a decision within 30 days upon appeals receipt date. If taxpayer does not agree with tax appeals commission decision ,he may send such case to the court within 30 days upon receipt of written notification of such decision. 5.When tax appeal is reviewed ,appealing taxpayer has the same rights as tax body that has prior assessed tax liability. 6.Taxpayer has the right to be present himself at the court or be represented by legal adviser in all appeals stages and explain the bases of such appealing. 7.A tax appeal may not be withdrawn in cases where additional facts are brought ,that tax liability amount assessment is not as such that it ought to be. Article 14 Repeals Law no.8313, dated 26.03.1998 On Small Business Tax, with respective changes, is repealed. Article 15 Transitional provisions 1.For fiscal year 2003,taxes levels on any business category shall be such as defined in table 1, attached to this law, and councils of municipalities and communes can not exercise their right to change such tax levels during the 2003 fiscal year, under item 4 of article 5 of this law. 2.Appeals procedures are, exclusively for all taxpayers appealing cases, under law no. 8560,dated 22.12.1999 On tax Procedures, with respective amendments, for as long as such tax shall be collectible by GTD, under article 4 of this law.
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General Taxation Department Albanian Tax Legislation

Article 16 This Law comes into force 15 days after publication in Official Gazette. Chairman Servet Pellumbi

Table no. 1 Tax level references on local taxes of small business, under categories(in thousand Leks) Nr. A B C D DH E 1. Type of Business Retails Wholesales Production Services Free professions Ambulatory seller (trade services) Transport Passengers transport Transportation means up to 5 seats (driver included) Trans. Means 6 to 9 seats (driver included) Trans. Means 10 to 25 seats (driver included) Trans. Means 26 to 42 seats (driver included) Trans. Means above 42 seats (driver included) I 60 60 35 20 45 15 II 20 20 15 10 30 10 III 15 15 10 10 15 10

35 70 80 90 95

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General Taxation Department Albanian Tax Legislation

2.

3.

Transportation of goods Vehicles up to 2 tons ------------2,1to 5 tons --------- 5,1 to 10 tons ---------- 10,1 to 16 tons ---------- above 16 tons Transportation by water Transportation by sea (within the country

55 80 95 100 150 110

Transportation by lake 95 (within the country) By boat for leisure 30 Classification Category I: Municipalities of Tirana and Durres Category II: Municipalities of Shkodra, Korca,Vlora, Sareanda,Gjirokastra,Elbasan, Fier,Lushnje, Pogradec, Berat and Lezha. Category 3 :All other municipalities. Tax level references for communes is as 50% of each category.

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