Albania: Changes to tax legislation effective 2023 include temporary windfall profits tax on energy producers

Several changes to the tax legislation become effective in 2023

Several changes to the tax legislation become effective in 2023

Several changes to the Albanian tax legislation (approved in the last months of 2022) become effective in 2023.

  • Amendments to law of tax procedures: Law no. 83/2022 (dated 24 November 2022) enacted amendments to Law no. 9920 (dated 19 May 2008) on tax procedures, including the expansion of certain definitions, additional anti-avoidance rules and measures, increases in penalties, and other changes to the functions of the tax administration.
  • Value added tax (VAT): Law no. 82/2022 (dated 24 November 2022) enacted the following amendments to the VAT law.
    • The list of VAT-exempt supplies is extended to supplies and import of fuel wood (in logs, billets, twigs or similar forms) until 31 December 2023.
    • Exemption on import is also extended to goods destined for realization of projects financed based on a donation or grant agreement entered by the Council of Ministers, provided that such agreements stipulate for non-use of the funds for the payment of the taxes in Albania. In addition, the supply of goods and services intended to be used under the same contracts will be treated as supplies similar to exports.
    • A new VAT regime for energy producers trading through the Albanian Power Exchange is introduced. Under the new regime the import and domestic supply of electricity traded on the Albanian Power Exchange is considered as supply taxable by the recipient under the reverse charge mechanism for VAT purposes.
  • Temporary windfall profits tax on energy producers: Law no. 98/2022 (dated 22 December 2022 and published in the official gazette dated 18 January 2023) introduces a temporary windfall profits tax (solidarity contribution) on energy producers until 31 December 2024. The tax is triggered if by 30 September of the respective year, the expected price for the sale of energy in the Hungarian Power Exchange for the following year is higher than 180 EUR/MWh. The tax rate is 50% on the additional income deriving from the sale of the energy with a price higher than ALL 8.5/KW and by following a specific formula. Taxpayers must calculate and report the tax based on the data of prior year by 31 January and must pay the tax in two equal installments by 31 March and 30 November.
  • Excise tax: Law No. 81/2022 (dated 22 November 2022) enacted amendments to Law No. 61/2012 on excise tax that increase the excise tax on all products and subproducts subject to the tax. The changes to the excise tax law also introduce a new method of indexing the excise tax every two years based on the inflation rate for the two proceeding years and introduce increased penalties for certain excisable products.

Read a January 2023 report prepared by the KPMG member firm in Albania


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