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Recent Amendments to the Tax Legislation

18 June 2013

On 24 May 2013, the Minister of Finance approved Instruction No. 14 adding a new provision to Instruction No. 5 dated 30 January 2006 on Income Tax. Furthermore, the Albanian Parliament approved Law No. 154/2013 launching a new deadline for application of Law No. 10418 on Legalization of Capital and Partial Cancellation of Tax and Customs Debt. The main amendments consist of the following:

Addition to the Instruction on Income Tax

Bad debts

Law No. 8438 dated 28 December 1998 on Income Tax, Article 24 and the related Instruction of the Minister of Finance No. 5 dated 30 January 2006 provide for certain conditions to be fulfilled in order that bad debts may be considered deductible expense for income tax purposes when written off. In addition to existing provisions, the new Instruction No. 14 dated 24 May 2013 introduces specific conditions applicable only to banks and non-banking financial institutions.

In the context of Article 24 of the above Law, the new provisions of Instruction No. 14 set out that banks, branches of foreign banks and non-banking financial institutions licensed by the Bank of Albania for providing lending may write off bad debts from the financial statements in the following conditions:

  • 365 days after submission of a request to the bailiff’s office for the initiation of compulsory enforcement procedures if the loan is secured by movable or immovable properties; or
  • 365 days after the issuance of a writ of execution by the court if the loan is not secured by movable or immovable properties.

Extension of the deadline for application of the Law on Legalization of Capital and Partial Cancellation of Tax and Customs Debt

Based on Law No. 154/2013, the application date of the Law on Legalization of Capital and Partial Cancellation of Tax and Customs Debt has been extended until 31 December 2013. Previously, the deadline was 31 March 2012.

Entry into force

Instruction No. 14 dated 24 May 2013 is published in the Official Gazette No. 93 dated 4 June 2013 and became effective after its publication date.

Law No. 154/2013 was approved on 30 May 2013 and is published in the Official Gazette No. 95 dated 7 June 2013. This Law enters into force 15 days after its publication date.

For Information

Arkadiusz Mierzejewski
Partner, Tax
Tel: +355 (4) 2274 524
Fax: +355 (4) 2235 534
arekmierzejewski@kpmg.com

Alba Paparisto
Senior Manager, Tax
Tel: +355 (4) 2274 524
Fax: +355 (4) 2235 534
apaparisto@kpmg.com

In this issue

Addition to the Instruction on Income Tax

Extension of the deadline for application of the Law on Legalization of Capital and Partial Cancellation of Tax and Customs Debt

Entry into force

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