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ISSUE 7/7 | JULY | 2015 - LEGAL UPDATES

CUSTOMS LEGISLATION

THE DECISION OF THE COUNCIL OF MINISTERS NO. 366, DATED 30.4.2015 ON SEVERAL AMENDMENTS AND ADDITIONS TO DECISION NO. 205, DATED 13.4.1999, OF THE COUNCIL OF MINISTERS, “ON THE IMPLEMENTING PROVISIONS OF THE CUSTOMS CODE”, AS AMENDED”. 

The implementing provisions of the Customs Code have undergone several amendments related to the local clearance.

The local clearance enable customs procedures to be carried out at the premises of the economic operator, putting the goods in the relevant customs regime at the premises of the interested economic operator or in other premises set or approved by the General Directorate of Customs. 

Each person may apply for obtaining a “local clearance” authorization, for personal use or as a representative provided that all conditions and criteria are fulfilled as applied and the competent customs authority is enabled to carry out the identification of the represented persons and the adequate customs controls. 

TAX LEGISLATION 

The Decision of the Council of Ministers no. 434, dated 20.5.2015 On the setting of the regulations for spillages, losses, damages and discards during production, warehouse and transport, etc. as recognized for tax purposes. 

Losses and spillages in the production process, which are not treated by special legal and sublegal acts, as well as their permitted amount and value, are calculated based on the technological cards or schemes of the production process.

Within 45 days from the entering into force of this decision, each taxpayer shall submit to the Tax Regional Directorate the documentation for the approval of spillages, including:

  1. The technological card;
  2. The detailed description of the
  3. production process;
  4. The Plan of the facility;
  5. The consumption regulations of the raw material and the working our per end-product unit (technological card), including data for: the kind of raw material used in the production process; the phases in the production process, where the raw material is used. 

The technological card shall be confirmed/certified by a recognized institution, having the technical capacity to confirm technological cards, such as: National Agency of Natural Resources (AKBN), National Food Authority (AKU), Institute of Building Materials, General Directorate of Standards, Directorate of Patents and Trademarks, relevant State Inspectorates, National Agency of Drugs and Medical Equipment, institutions approving different technological cards or any other institution having the capacity to relate with the relevant technological processes.

Spillages approved by the regional tax directorates (DRT), based on this decision, are recognized for tax purposes for periods not anterior to the official approval date of the DRT.

PHARMACEUTICAL LEGISLATION

The Decision of the Council of Ministers no. 359, dated 29.4.2015 On the approval of the regulation for the principles and instructions of the good practice of drugs, for human use, in the Republic of Albania.

This regulation regulates the domestic pharmaceutical production and sets instructions to be followed by manufacturers for each production phase starting from the premises, human resources, quality control, etc.

LEGISLATION ON WATER USE

The Decision of the Council of Ministers no. 416, dated 13.5.2015 On the approval of the general and special conditions, the accompanying documents, the validity term, the application forms for authorizations and permits, the examination procedures for making decisions and the other authorization forms for water sources’ use. 

THE DCM SETS:

  • The general and special conditions of the authorizations and permits for water use,
  • Requests for authorization and permit for water sources’ use and accompanying documents,
  • The authorization form and permit for the water sources’ use 

ENERGY LEGISLATION

Law no. 43/2015 dated 30.4.2015 On the electric power sector

This is the new law that regulates the relations in the production, transmission, distribution and supply with electric power activities, and sets the rules regarding:

  1. Launching, organizing and functioning of a competitive electric power trade;
  2. Participation in the electric power trade;
  3. Granting authorizations and licenses in the electric power sector;
  4. Regulating the activities in the electric power sector, customer protection, supply security and creation of competitive structures in the electric power trade;

Law no. 9072, dated 22.5.2003, “On the electric power sector”, as amended, and any other legal provision in breach of this law is abolished. 

The sublegal acts regulating the activity in the electric power sector, approved before the entering into force of this law shall be applied to the extent they are not in breach of this law until their review and the issuance of new sublegal acts, in compliance with the terms and requests set in this law.

PETROLEUM LEGISLATION

The Decision of the Council of Ministers no. 411, dated 13.5.2015 “On the procedures and conditions for the granting and repetition of the concessionary license of oil pipelines for import, export and transport of crude oil”

Each legal person organized as a shareholder company may apply to obtain the concessionary license for oil pipelines for the performance of crude oil transport, import and export activities, in compliance with the rules as set in this Decision. 

The legal person interested in obtaining the concessionary license of oil pipelines for the performance of crude oil transport, import and export activities shall obtain first the preliminary approval and fulfill the conditions as set in this Decision.

All applications as submitted to the relevant ministry for petroleum before the entering into force of this Decision shall be treated based on Decision no. 553, dated 12.8.2004, of the Council of Ministers “On the procedures and conditions for granting the concessionary licenses for the construction and use of refineries, oil and gas pipelines “. 

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ISSUE 23/12 | DECEMBER | 2015 - LEGAL UPDATES

TAX LEGISLATION

DCM NO. 31 OF THE 27.11.2015 “ON SOME CHANGES AND ADDS ON THE GUIDANCE NO. 24 OF THE 02/09/2008 “ON THE TAX PROCEDURES IN THE REPUBLIC OF ALBANIA”, AS AMENDED”.

Through this Decision of the Council of Ministers, it is provided amongst other thing that each taxpayer, which is found exercising activities in non declared adresses, for which he has not effectuated the uptade of the data, according to the article 43 of the law on tax procedures, but the goods kept by this taxpayer in storage, usage or transport are accompanied by tax documents, this taxpayer is subject to a fine of 500 000 (five hundred thoudand) Leks. Also, each buyer, physical or juridical person or individual, has the right not to perform the transaction for the value of good or service offered, if the seller does not provide him with an invoice or bill, in compliance with this law. For this purpose, the taxpayer is obliged to put in a apparant place in the adress where he exercises his activity, a notice for the customer. The taxpayer is prohibed to keep or use fiscal devices or circulation monitoring systems, different from those provided by the tax procedure law or bylaws in force. The unpayment on the time limits of the installments of the income tax or simplified income tax, is subject to a fine of 15% of the amount of the installment to be paid. The tax authorities control the employer in order to verify if the declarations and payments of the tax obligations, and of the social security obligations are completed properly, in reliance with the real declaration of the wage amount. If by the control it results that in the business location the taxpayer hasen’t declared the real amount of the wage of the emplyees at the tax authorities, the taxpayer is subject to a fine of 500 000 (five hundred thousand) Leks. The taxpayer, which effectuates gross sales of goods, or stores, uses or transports goods unacompanied with tax documents, is subject of a fine of 10 000 000 (ten million) Leks, connfiscation of all the amount of the goods and tax re-evaluation of the income for a 6-months period.

LEGISLATION ON THE GEOSPATIAL INFORMATION

DCM NO. 942 OF THE 18.11.2015 “ON THE APPROVAL OF THE REGULATION ON THE “PLANIFICATION AND REALIZATION OF THE AERIAL PHOTOGRAPHY OF THE TERRITORY OF THE REPUBLIC OF ALBANIA” ”.

This regulation defines the basic rules for the planning and the execution of the aerial photography of the Republic of Albania, for the purposes of national geospatial information infrastructure. Aerial photography is conducted by entities certified by the relevant authorities competent to oversee the safety of flight operations. The authorization for the aerial photography, partial or total, of the area the Republic of Albania by state agencies or private agencies, national and foreign, for the purposes of Law no. 72/2012, is given by the Minister of Defense, after the approval of the project by the ASIG, whereas the permit for the execution of the flights related to the aerial photography of the territory of the Republic of Albania, for the purposes of Law no. 72/2012, is given by the Civil Aviation supervising the safety of flight operations.

MINING ACTIVITY LEGISLATION

GUIDANCE NO. 255 OF THE 03/11/2015 “ON THE DESIGNATION OF THE CONDITIONS AND TARIFFS FOR THE AGREEMENTS OF THE CREATION OF THE SERVITUDE IN THE HORIZONTAL UNDERGROUND MINING WORKS”.

This Guidance provides that the servitudes of the horizontal underground mining works, belonging to any other existing area, is created only by an agreement between the parties, between the holder of the existing mining permit, on which there are horizontal underground works and the holder of the mining permit, which seeks to take advantage of the servitude to permit the achievement of the mineral body.

LEGISLATION ON THE ENERGY SECTOR

LAW NO. 124 OF THE 12.11.2015 “ON THE EFFICIENCY OF THE ENERGY”.

This law is applicable to the legal persons who perform the activities of production, transmission, distribution and supply of energy; natural persons and / or legal, public or private , that are final consumers of energy and natural persons and / or legal entities that provide energy services in order to improve the energy efficiency. The purpose of this law is the development of national policies and regulations in order to encourage and promote the improvement of the efficient use of energy, with the aim of saving energy and enhancing the security of supply, as well as removing the obstacles in the energy market; the establishment of national objectives of the energy efficiency and the increase of the competitiveness of the operators. The Agency of Energy Efficiency, monitors the implementation of the National Plan of the Energy Efficiency Action and is responsible for overseeing the implementation of the energy efficiencymeasures.

ENVIRONMENTAL LEGISLATION.

DCM NO. 912, OF THE 11.11.2015 “ON THE APPROVAL OF THE NATIONAL METHODOLOGY OF THE ASSESSMENT OF THE ENVIRONMENTAL IMPACT (AEI) PROCESS”

This decision of the council of ministers approves the national methodology of the assessment of environmental impact process, where are defined the methodologies and requirements for the drafting of the reports on environmental impact assessment. The methodology provides tables with consecutive steps and checklists showing exactly what is required from each party responsible for managing of the preliminary and deep process of theAEI.
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ISSUE 23/12 | DECEMBER | 2015 - LEGAL UPDATES

AMENDMENTS IN THE LABOR CODE OF THE REPUBLIC OF ALBANIA

LAW NO. 136/2015 ON SOME AMENDMENTS IN THE LAW NO. 7961 OF THE 12.07.1995, “LABOR CODE OF THE REPUBLIC OF ALBANIA”, AS AMENDED.

At the Labor Code of the Republic of Albania the following amendments are effectuated, entering in force six (6) months from the date of the publication at the Official Journal of the 22/12/2015.

So, according to the abovementioned Law No. 136/2015, it is provided among other provisions, the Article 3/1 entitled “Temporary employment of the foreign employees in Albania”. 

This article is applicable in cases when a foreign company sends the employees in Albania, for a period up to 12 months, on behalf of the company and under its direction, or sends the employees in a company, part of the mother company, in the territory of Albania, beeing a temporary employment agency, hires an employer on behalf of the receptive company, created or exercising its activity in the Republic of Albania.

This employment relationship created according to the abovementioned cases, is regulated by the provisions of the albanian legislation, concerning the maximum work period and minimal rest period, the minimal duration of the paid vacations, the minimal wage rate etc. 

Among other provisions of the abovementioned Law, the Article 13 providing the conditions of the “Group Contract”, a contract signed with a group of employees as a whole, is abrogated.

At the article 18/1 entitled “Temporary employment from the Agency”, from now on is provided that the Temporary employment Agency signifies the employer which based on an employment contract, hires an employer to work temporarily at a receptive company and which exercises the rights and obligations of the employer jointly with the receptive company. 

The receptive company is every employer, hiring temporarily an employee, decided by the Agency, and exercising jointly with the Agency the rights and obligations of the employer. Temporary employment from the Agency will be considered the peroid when an employee is contracted by the company, at the condition that between the Agency and the employee a employment contract must exist.

The Agency and the employee have the right to terminate the employment contract and the Agency is responsible to pay the remuneration and the other benefits to the employee.

All the charges related to the tax declarations at the tax authorities, the confidentiality of the personal data, as well as all the deductions from the salary regarding the income tax and health and social security contributions of the employee, are the responsibility of the Agency.

It is also provided in the abovementioned Law that the employer has the obligation to respect and protect during the work relation the personality of the employee, and the employer undertakes all the necessary meausures to guarantee the safety and the protection of the physical and mental health of the employees. Regarding the Data protection, the Employer during the work relation should not gather informations about the employee, except from the cases when these informations are related to the profesional skills of the employees and are necessary for the performance of the contract.

In the abovementioned law, it is provided that the work effectuated at the day of the week holiday is compensated with an increase of the salary, not less than 25 percent, or with a paid vacation, equal to the duration of the effectuated work plus an extra vacation, not less than 25 percent of the duration of this work.

The employer can effectuate extra working hours, but not for a longer period than 200 hours per year.
It cannot be required to the employee to perform extra working hours per week when the employee has effectuated already 48 hours of work per week.

The duration of the annual vacations is no less than 4 calendar weeks during the year in progress. The annual vacations do not include the days of the official holidays.

The annual vacations aren’t replaceable with additional salary, except the cases when the work relation has terminated and the employer hasn’t effectuated the vacations. 

Also, the woman during the pregnancy period, in agreement with the employer has the right to take paid breaks during the working hours when its necessary to effectuate medical examinations. The employer pays the employees equally, for a similar task or of an equal value, without discriminating for any of the reasons mentioned in the Labor Code.

Another novelty of the abovementioned Law is the provision of the unpaid parental leave of not less than 4 moths, given to the employee which has been working for more than one uninterrupted year at the same employer, until the period when the dependent children has reached the age of 6 years.

Concerning the deadlines for the notice of the termination of the work relation, after the test period, for the indefinite term contract, the parties must respect a deadline of two weeks notice, in case the work relation has lasted up to six months, of one month in case the work relation has lasted from six months up to two years, of two months in case the work relation has lasted from two years up to five years, and of three months in case of a work relation superior to five years.

During the period of notice, in case when the work relation is terminated by the employer, the employee has the right of at least 20 break hours per week in ordrer to search for a new job. 

At the written notice, the employer determines the reasons of the termination of the work contract, related to the ability, the behaviour of the employee or the operational requests of the company.

The employer which does not respect the procedure is obliged to pay to the employee an indemnity equal to the wage amount of two months, in addition to the other possible indemnities. 

Concerning the collective dismissal from work, it is considered as such, the termination of the work relation from the employer, for reasons not related to the employees, in case when the number of the dismissals is for the period of 90 days, at least of 10 employees in the companies of 100 employees; 15, in the companies of more than 100 up to 200 employees; and 20, for the companies with more than 200 employees.

For the employees of the public administration, in case of a definitive court decision deciding that the employee must return to the previous work position, the employer is obliged to apply this decision.

If the work contract is terminated without justified reasons, the employer has the right to present a claim against the employer at the competent court, within 180 days from the day of the termination of the work relation. 

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ISSUE 12/14 | DECEMBER | 2014 - FISCAL PACKAGE 2015

This newsletter intends to inform You on the last amendments related to tax and duties, after the approval of the Fiscal Package 2015 by the Parliament, on the 27 November 2014.

The 2015 Fiscal Package will enter into force on the 1st of January 2015.

We inform you that the most relevant amendments related to your business activity in Albania are divided as below:

I. REGARDING THE INCOME TAX:

The new law no. 156/2014 “On Some Changes to

Law no. 8438/1998 “On Income Tax” introduces the following amendments:

The following categories shall be exempted from the Income Tax:

1) contributions made by the employer or any other contributing person in relation to the voluntary pension fund;

2) Return of Investment, including incomes from capitals from investments carried out with the assets of the pension fund.

Therefore, the contributions paid by employers on behalf of employees are considered as deductable expenses for the income tax to the extent as provided by law no.10197/2009 on voluntary pension.

  • Increase of the income tax % from 10% to 15% for:
    • Dividends, incomes from shareholder/partner income, interests on loans, deposits or similar contracts;
    • Transfer of property rights on immovable properties.
  • Increase of Whithholding Tax % from 10% to 15 %.
  • The following are not considered as deductable expenses for individuals:
    • Voluntary contributions for pension, life or healthcare paid by the individual himself.
    • Building tax.
  • The Voluntary Pension fund is exempted from the income tax.
  • Regarding the depreciation, the following shall be considered as fullydeductible expense of the tax period:
    • Buildings, constructions and machineries in case the remaining value of the assets at the beginning of the tax period is lower than 3% of the historical cost of the said asset.
  • The other assets, if the remaining value of at the beginning of the tax period is lower than 10% of the historical cost of the said assets.

Until April 2015. The CM shall be in charge of issuing a regulation setting the rules for expected losses, losses, damages and waste during production, warehouse and transport for tax purposes.

II. REGARDING NATIONAL TAXES:

Law no. 157/2014 introduces, inter alia, the following amendments to the law no. 9975, dated 28.07.2008 “On National Taxes”:

  • The circulation tax on gasoline and gasoil is increased from Leke 17/liter to Leke 27/liter for gasoline and gasoil.
  • Percentage of mineral royalties for the metallic mineral content in the mineral product is 2/3 of the royalties rate set based on the Appendix of the first group (metallic minerals).

Local government is granted 5% of the mineral royalties’ incomes.

A new tax is imposed on insurance premiums, at the rate of 3% of the premium amount. The said tax is not applicable on life insurance premiums, travel health and green card insuranceproducts.

Fishing boats are exempted from the payment fo the circulation tax and carbon tax.

III. REGARDING EXCISES:

Law no.158/2014, “On amendments to law no.61/2012 “On Excise in the Republic of Albania”, as amended” introduces the following amendments:

Amendment to the Appendix setting the tax level.

Addition as taxable good of energy drinks which shall be taxed 30 lekë/liter.

IV. REGARDINGCUSTOMTARIFFS:

Upon law no. 159/2014 “On Some Changes to Law no. 9981, dated 08.09.2008 “On Approval of Customs Tariffs Levels” the following was amended:

  • Makes 0 the custom tariff for items with the following nomenclature code: 2709 00 90; 0511 10 00; 1001 99 00; 1101 00 11; 1101 00 15; 0103 91 10 100; 0102 29 29 100; 0102 29 29 200; 2309 90 31; 0407 11 00; 0407 19 11; 0407 19 19; 0105 11 11; 0105 11 19.
  • The custom tariff for new pneumatic tires of rubber is reduced from 15% to 10%.

Lately on December 4, 2014, was approved law no. 164/2014 “on several amendmentsand additions to law no. 9920, date 19.05.2008 “On the tax procedures in the Republic of Albania” as amended””, which brought amendments in the tax procedures relevant to your business activity as follows:

  • The Tax Appeal Directorate shall issue its decision within 60 days (instead of 90 days) from the submission of a tax appeal.
  • The bank guarantee issued to secure payment of the tax obligations in course of an appeal process should have a minimum validity period of 6 months, but in any case not less than the time period until the decision shall become final/enforceable.
  • Introduction of a statute of limitation related to the right of the taxpayer to request the reimbursement of the taxes paid in excess. The taxpayer’s right to request a tax reimbursement expires 5 years after the respective tax return is filed.
  • The penalty for late payment of tax obligations is fixed at the rate of 0.06 percent of the unpaid tax obligation for each day of delay applicable for a limited period of 365 days (instead of 5% every month or part of a month but not more than 25% of the tax obligation).
  • The penalty for incorrect tax declaration is fixed at the rate of 0.06 percent of the undeclared tax obligation for each day of delay until payment is performed, not exceeding however a period of 365 days (instead of 5% every month or part of themonth but not more than 25% of the tax obligation). The same penalty shall also be applicable in case of reduction of a tax credit.
  • Tax related court decisions are to be published in the General Tax Directorate website.
  • A taxpayer that is in the passive status/register may not perform any commercial activity; otherwise a penalty applies.
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ISSUE 04/14 | APRIL | 2014 - TAX LEGISLATION

Annual Personal Income Tax Return

According to the amendments from the year 2012, the deadline for submission of the annual personal income tax return and the payment of the tax for the fiscal year 2013 is 30 April 2014.

Applicable tax rate on taxable income of the taxpayer, who declares the annual statement of income, is 10 percent.

This amount is deducted from the tax paid during the reporting year, documented by the holder at their source.

TAX DECLARATION REQUIREMENTS

  • Albanian tax residents generating income within and outside the territory of Albania for a value of at least ALL 2 million per year;
  • Non-Albanian tax residents for the income generated within the territory of Albania, with an annual income of at least ALL 2 million per year.

Albanian tax resident individuals generating an annual income up to ALL 1,050,000 have the option to complete their annual personal tax return and benefit from the tax deductible expenses as provided by the Law.

DEDUCTIBLE EXPENSES

Deductible expenses are as follows:

  • Voluntary pension contributions, according to the law on voluntary pension funds;
  • Amount of interests of bank loans for education, for themselves or for children and persons in custody;
  • Part of the cost for medical treatment for themselves or for children and persons in custody, not covered by mandatory health insurance;
  • Taxes on buildings. 
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