Annual Personal Income Tax Declaration for 2019
Legal requirements, deadlines, registration procedures, compliance benefits and noncompliance risks
It is that time of the year for individuals to complete and file the Annual Personal Income Tax Declaration, and thus make their own contribution to the whole tax system puzzle by self-declaring their income and respective taxes for 2019.
Filing the Annual Personal Income Tax Declaration is not only a legal obligation, but also a matter of social responsibility. There has been a considerable increase over the years in the public’s awareness to self-declare their annual income and related tax obligations to the Albanian tax authorities. The authorities have undoubtedly placed a major focus on the matter, but that is not the only factor that has been driving compliance. Individuals can extract some other benefits from the declaration process, such as increase their tax knowledge and understanding of the tax system; play a role in the battle against informality; strengthen their credibility in front of financial and non-financial institutions with which they interact; gain easier access to personal and business financing (loans, grants); receive deductions in their tax liability if they have incurred certain expenses provisioned in the legislation.
Moreover, being compliant with this particular tax requirement can be a reputation booster for both the individual and the employer (if that is the case). It takes many good deeds to build a good reputation, and only one slip to undermine it. In the current dynamic environment, tax transparency at the individual level and at the company level feed into each other. A company is the sum of its individual employees. Thus, in the spirit of ensuring tax compliance consistency at all levels, it is in the companies’ best interest to encourage their employees to file the Annual Personal Income Tax Declaration every year.
Compliance requirements in Albania
Based on Law no. 8438 “On Income Tax”, dated 28.12.1998, resident and non-resident individuals whose annual gross income for the calendar year (worldwide income for residents and Albanian sourced income for non-residents) equals or exceeds the threshold of 2,000,000 ALL (≈16,000 EUR), have the obligation to file the Annual Personal Income Tax Declaration online in the e-tax system. For the purpose of this declaration, annual gross income refers to all types of income, i.e. employment, lease/rent, dividends, bank interests, capital gains, lottery gains, intellectual property, etc.
Other individuals who do not meet the income threshold mentioned above may voluntarily file the Annual Personal Income Tax Declaration.
The Annual Personal Income Tax Declaration consists of two sections, A and B requesting the following respective information:
Section A: Identification data
Section B: Tax calculation data
b. Individual identification data
c. Individual additional data
d. Residential address
e. Persons under custody
a. Gross annual income
b. Deductible expenses
c. Calculated tax
d. Taxes paid during/for the tax period
e. Tax liability to be paid/tax credit to be reimbursed
Registration and submission process
Albanian citizens should register electronically in the e-tax system by inputting their personal data (personal insurance number, ID card number, name, surname, parents’ names, date of birth, e-mail, telephone number, the respective Regional Tax Directorate) and setting a password.
Foreign citizens should visit the nearest Regional Tax Directorate, either in person or through an authorized representative, and present a set of documents to register and activate a profile in the e-tax system. Once registered, they will be able to access their personal e-filing profile by simply inputting their personal number and password.
Deadline and penalties
The Annual Personal Income Tax Declaration for 2019 should be filed no later than April 30, 2020. If material errors are detected in the declaration after it has been submitted, the form can be amended and re-submitted up to two times within a 3-month period from the date of the initial submission, without incurring any penalties. Any Annual Personal Income Tax Declarations filed later than the aforementioned deadline will be subject to a penalty of 5,000 ALL. In case there are any additional taxes due at the time of the filing, failure to pay them within April 30, 2020 will result in penalties and interest charges, which are automatically calculated by the e-tax system.
Our GES professionals will be happy to assist you with any aspect of the Annual Income Tax Declaration through conference calls and/or virtual meetings.