New Law no. 29/2023 on income tax introduces important changes in the way withholding tax is levied.
New Law no. 29/2023 on income tax (dated 30 March 2023)—effective starting from 1 January 2024—introduces important changes in the way withholding tax is levied.
One of the most important changes introduced by the new law on income tax relates to the fact that it differentiates between payments made to registered persons (i.e., local entities) and payments made to non-registered persons (individuals or foreign entities).
The new law also provides a clearer definition of the withholding tax agent and requires the payment of services provided by individuals that are not registered for tax purposes and that are subject to 15% withholding tax, to be declared through the payroll declarations.
Withholding tax rates remain unchanged. Standard 15% withholding tax continues to apply for any type of payment subject to withholding tax and the reduced 8% withholding tax applies to dividends only.
Withholding tax return format during 2024 will be prepared based on the same format used in 2023, while the new withholding tax return format as per the new legal provisions is expected to be adopted from January 2025 and onwards.
In addition, changes were introduced to the law on procedures that affect the double tax treaties (DTT) application procedures, deadlines and applicable penalties—effective 1 January 2024:
Within the first half of 2024, it is expected that the Minister of Finance issue an instruction on the list of the documentation supporting any DTT application filed for approval with the tax authorities.
Read a January 2024 report prepared by the KPMG member firm in Albania