New Law on cancellation of outstanding tax liabilities and customs duties
New Law on cancellation of outstanding tax liabilities
The Albanian Parliament approved a new Law no. 33/2017 on the conditions to be fulfilled for payment and cancellation of the tax liabilities and customs duties incurred for the periods before 31 December 2016. In addition, on 8 May 2017, the Ministry of Finance published a related Instruction for the implementation of the Law.
The Law lists the beneficiaries and conditions to obtain the cancellation of outstanding tax liabilities (such as value added tax (VAT), corporate income tax (CIT), payroll liabilities, local taxes, etc.) and customs duties. It became effective on 6 May 2017 and the period to claim the cancellation of the outstanding liabilities terminates on 31 December 2017.
Who is eligible to benefit from the provisions of the Law?
Active, passive and deregistered taxpayers having outstanding liabilities towards the tax and/or customs administration which are covered by this Law.
However, taxpayers penalized through an executive court decision for criminal acts in relation to taxes and/or customs duties are not eligible to benefit from the provisions of this Law. Based on the Instruction published by the Ministry of Finance, the tax administration, within 30 days, shall complete a list of the taxpayers who are not eligible to benefit from the cancellation of the liabilities. The list shall be updated periodically.
Conditions to be fulfilled
In order to benefit from the Law, taxpayers are obliged to fulfill certain conditions depending on the period the outstanding tax liabilities or customs duty refer to.
Based on the Law, several unpaid tax obligations including related penalties and interests arising before 31 December 2010 will be cancelled or written off without further conditions to be fulfilled, except from the mandatory social and health insurance contributions.
In addition, penalties and interest arising during the period between 1 January 2011 and 31 December 2014 in relation to tax liabilities, mandatory social security and health insurance contributions, local taxes and tariffs may be cancelled upon the condition that the taxpayer pays the due tax, fee, tariff or contribution no later than 31 December 2017. The penalties and interest will be cancelled also if the due tax, fee, tariff or contributions were paid before the entry into force of this Law.
Cancellation of other tax liabilities, penalties and interest for late payment
Subject to the new Law are also other liabilities recorded up to 31 December 2016 such as:
- Tax liabilities applied to the taxpayers deregistered from the National Business Center or tax administration up to the date on which this Law entered into force
- Penalties imposed for late submission of tax returns filed up to 31 December 2016, including the declaration of employees
- Penalties imposed for late submission of the resolution approving the financial statements and destination of profit calculated up to 31 December 2016
- Penalties for late submission of tax returns of prior periods, provided that the taxpayers file the tax returns by 30 June 2017
- Penalties imposed according to provisions of the Law on Tax Procedures which were based on articles abolished by a decision of the Constitutional Court
- Tax liabilities and related penalties or interest deriving from non-proper documentation of VAT exemptions (as provided by the VAT Law) for companies operating in the hydrocarbon sector provided that the exemption procedures were completed by 31 December 2014
- Other unpaid tax liabilities for state owned entities operating in specific sectors as defined by this Law.
Compensation of outstanding tax liability
Taxpayers resulting with a VAT or any other tax credit balance may benefit from the provisions of this Law by compensating the outstanding tax liabilities with the accumulated credit balance (up to the amount covered by the credit balance). The compensation procedure will be applied automatically by the tax authorities without rendering any tax audit procedure.
The compensation procedure shall not be applicable for mandatory social security and health insurance contributions.
Cancellation of customs duties
The Law provides for the cancelation of customs liabilities arising up to 31 December 2010. In addition, the cancellation of customs liabilities is extended up to 31 December 2016 for unpaid customs duties, penalties and interest related to:
- Import of machinery and equipment under the VAT deferral scheme;
- Import of tobacco products by individuals.
The Law also sets out the cancellation of the penalties and interest arising during the period 1 January 2011 – 31 December 2014, provided that the customs duty is paid no later than 31 December 2017. The period covered is extended to 31 December 2016 if penalties are imposed in relation to the temporary regime applicable on the import of vehicles.
Procedure in case of administrative appeals or court cases
The taxpayers under an administrative appeal or court case process may benefit from the provisions of this Law provided that they waive the administrative appeal or the right to sue/appeal/recourse at each stage and instance of trail at the competent administrative court. In such a case, the tax or customs authority interrupts any compulsory actions for collection of the liabilities which may be subject to the provisions of this Law.
Based on the Instruction issued by the Ministry of Finance, the tax administration shall publish, within 30 days, a list of the taxpayers in process of an administrative or court appeal.
Entry into force
Law no. 33/2017 dated 30 March 2017 is published in the Official Gazette no. 85 dated 21 April 2017 and entered into force 15 days after its publication. In addition, the related Instruction of the Ministry of Finance on implementation of Law no. 33/2017 was published on 8 May 2017 and entered into force immediately after the publication in the Official Gazette no. 99 dated 8 May 2017.
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