European union – albania stabilisation and association committee 11 March 2015 table of contents political criteria 3

Albania has also the right to tax income of non-residents who own immovable property in Albania. These provisions apply also to income derived from the direct use, rent, or using the non-residents immovable property in any other form. (Article 6 "Income from immovable property").

Our proposals reflect compliance with certain attitudes that need to be improved in order to protect taxpayers not only in administrative aspect, but also in the tax collection process.

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  9 cases, for the criminal offenses for VAT fraudulent schemes, Article 144 / Penal Code;
  
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  35 cases, for Income Concealment as stipulated by Article 180 of the Criminal Code;
  
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  10 cases, for Tax Evasion (non payment of taxes) at stipulated by Article 181 /Criminal code;
  
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  60 cases, for offenses such as organizing illegal lotteries, Article 197 of the Criminal Code, illegal employment, Article 170 / Penal Code, etc.
  

For the period January-February 2015, were referred to the Prosecutor the cases as follows:

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  9 cases, for Income Concealment as stipulated by Article 180 of the Criminal Code
  
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  8 cases, for Tax Evasion (non payment of taxes) at stipulated by Article 181 /Criminal code;
  

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  16 employees for minor violations
  
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  6 employees for serious violations
  
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  25 employees to very serious violations.
  
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  For one employee, resulted conflict of interest and is referred to ILDKPKI.
  
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  16 employees were referred to the Prosecutor, for offenses that constitute elements of criminal acts.
  

On January-February 2015, there were registered 10 cases in IIDA and three employees were proposed for disciplinary measures. 13 cases were reported by the portal "Stop Corruption-on Taxes", and 2 cases were reported by the Prime Ministry (Department of Citizens Affairs).

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  The new system has created the possibility of exchanging with the National Registration Centre the taxpayer’s database, on-line through the exchanging information system for public institutions; the data are automatically loaded through the systems for both institutions.
  
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  It is therefore signed a new agreement and a new protocol for exchanging data information between GTD and NRC.
  
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  It has created the possibility of improving data reception for these processes, the online registration process, the definitions of the tax responsibilities and especially the taxpayers deregistration.
  

Regarding the filing

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  The electronic filing (the new e-filing) it is used only by taxpayers, and basic system (core system) is used only by employees of tax administration in the centre and regions.
  
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  With the implementation of the new system, 100 percent of taxes and liabilities in Albania will be self declared through the introduction of the tax statements.
  
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  100 percent of tax statements will be submitted in electronic way.
  
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  New Program E-filing has enabled the introduction of validation rules for all tax returns.
  
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  The reassessment procedures which it was used by the old system to correct errors in statements, it is no longer performed.
  
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  Taxpayers now have the opportunity to change their own tax statements whenever they consider it necessary under the conditions specified in the law, without the need of the tax inspectors.
  
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  With the implementation of the new IT system it is introduced for none declared taxpayers the automatic evaluation.
  
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  The new IT system sends reminding letter to non declared taxpayers (the deadline is 10 calendar days after the declaration legal deadline) and makes automatic evaluation from office (the system) to non declarations, within 10 calendar days from the issuance of the reminding letter.
  

Regarding the tax payment system

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  The new IT system operates as a concentrated system and not detached from each regional directorate.
  

The new IT system has new tax payment methods, with the following advantages:

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  The concentration of accounts in only one account for each branch has created the possibility for each taxpayer to pay in the tax account, wherever he is and not be forced to appear to pay in banks branches that belong only to the Regional Directorates of Taxes or tax agencies where he was registered as a taxpayer.
  
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  Limit the payments on the wrong tax accounts, since they are divided in regions and type of taxes and the report is done within the tax system.
  
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  The electronic payments, has decreased the voluminous paper work, since the banks now send electronically only the extract the account.
  
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  Acquisition of data only from the treasury system it is based on a process that currently banks have fully implemented.
  
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  The new IT system has enabled the implementation of an accounting system which manage the liabilities, credits, refunds, payments and automatic calculation of interest and penalties
  
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  Accounting system is based on dual registration (double party) realizing at the same time along with the registration account of the taxpayers, also the registration of the income taxes account.
  
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  Taxpayers now have a full picture of their tax situation (accounts) in the system, which in the old system was not possible to have it.
  

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  Taxpayers have the opportunity to receive automatically in e-filing system, all the necessary reports for each payment of tax liabilities.
  
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  Standard documents, such assessment notifications, are generated automatically by the system.
  
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  The Law "On tax procedures" has changed, and we are preparing the Guideline instruction, for the electronic communication between the tax administration and taxpayers.
  
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  Many processes currently are done automatically by employees of tax administration or by taxpayers, in order to ensure fair treatment, transparent and equitable to all taxpayers.
  

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  Is built a reporting system in real time directly from the database, which is available to all tax administration in all its levels.
  
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  Reports are available to the tax administration in real time.
  

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  The system implementation of has detected a substantive reviewing for all agreements that GTD has with institutions such as the General Directorate of Customs, the National Registration Centre, General Directorate of Treasury, the Social Insurance Institute, the Civil Service, etc.
  
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  The aim is to move from the exchanging information on paper or in the best case in the CD, in exchanging on automatic on-line data, which facilitates and improves mutually work of these institutions, but also reduces administrative burden for taxpayers.
  
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  The new system offers the possibility of extending and expanding mutual exchange of data in many other institutions. Such institutions will be INSTAT, Health Insurance Fund, the Central Inspectorate, Property Registration Office, etc.
  

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  The new IT system provides an improved platform of risk analysis, where all economic sectors and businesses are subject for the risk measurement and are ranked according to the taxes with risky levels.
  
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  The new IT system offers the opportunity to build better risk profiles for entire industries or for anyone who uses specific methods to avoid taxes. The tax administration will be able to focus on the risky sectors, which can be identified by applying specific rules that indicate frauds. This method encourages business, puts in focus the tax evasion and fraud, proves the integrity of the tax system and facilitates taxpayer’s audits.
  
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  Has reviewed the structure for the risk analysis, by merging the various components of the compliance administration in a new risk management directorate and creating a new strategic sector within the department, which will explore systematically the risks that arise in the Albanian economy.
  

E-filing data for the year 2014: 1,131,180 declarations, approximately 5.5% more compared to the year 2013.

1. 
   Assistance on the tax legislation as well as the understanding the tax responsibilities;
   
2. 
   Assistance on the electronic declaration (VAT forms, Social and Health Insurance, PIT, Annual Personal Declaration, sales and purchase books, payrolls, form on the change in the number of employees, passwords);
   
3. 
   Printing of paying orders;
   
4. 
   Information of the financial situation;
   
5. 
   Attestation based on requests of taxpayers or unregistered individuals;
   
6. 
   Registration / de-registration of NGOs, outpatients, state entities;
   
7. 
   Changing the registration data;
   
8. 
   Changing the tax responsibilities;
   
9. 
   Trainings for taxpayers, etc.
   

We are developing ongoing trainings to educate and inform all taxpayers and individuals with the new system E-Taxation, with the innovations, the new methodology and treatment of tax declarations, minimizing errors arising from ignorance of legislative changes.

On July, 2014 GDT is informed by DG TAXUD that ‘Albania Fiscalis’ will start in 2015. The International Agreement Fiscalis 2020 was prepared and signed by the European Commission on August 2014, and it was ratified by the Albanian Parliament in January, 2015.

Timeline of project: This project had a time extension from March 2013 – March 2015

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  Law no. 42/2014 “ For some changes in law no. 8438, date 28.12.1998 “ On Income Taxes”, as amended, approved on date 24.04.2014, is Published in the Official Journal, dated 20.05.2014
  
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  Instruction no. 16, dated 18.06.2014, “On Transfer Pricing”
  
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  In Law 9920, dated 19.05.2008, "On tax procedures in Republic of Albania", as amended, is added the Article 115/1, "Sentences related the transfer price."
  

In the frame of the project, there are continuously conducted various trainings on the simplification of tax procedures and reducing costs for compliance of tax obligations, as well as trainings on transfer pricing.

The Albanian General Taxation Directorate and Italian Revenue Agency, through an agreement, have agreed to engage in a Tax Inspectors without Borders programme.

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  Support on Harmonization of Legislation, Procedures and Practices in order to fully comply with EU legislation;
  
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  Support on IT Department.
  

IPA 2014 for Albania was approved by the European Commission on 17 December 2014, and the Agreement is expected to be signed on March 2015.

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  On 27-31 October 2014, at the premises of the Directorate General of Taxation, TAIEX mission assisted our experts on drafting the VAT Law, harmonized with Council Directive 2006/112/EC “On the common system of Value Added Tax”. The Aim of the Assistance is to support the beneficiaries’ countries like Albania, in drafting instructions for Implementation of the VAT Law.
  
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  On 26-28 January in Lisbon Portugal, was organized a study visit on “Implementation of the fiscal receipt lottery and E-Invoice, the new reporting system for the fiscal devices and electronic invoices”. The mission will serve to adapt technically a new way of reporting of fiscal receipt, bills and conducting the draw. This will require technical changes in the current system in fiscal devices, but also a change to the current legislation for fiscal devices and on-line reporting under the legislation of the European Council Directive 2010/45/EU of 13 July 2010.
  

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  Albania will provide written information on the number of cases sent to the prosecution for customs-related offences. The EU delegation encouraged Albania to develop indicators to measure the success of anti-fraud operations in customs and excise, inter alia in the area of cigarette smuggling.
  

Number of Cases sent to Prosecution Office 75

Value of Customs Debt 866,000 Euro

Values of Penalties 4,208,000 Euro

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  Albania will provide information about any adaptation sought of the civil service rules to be applied to personnel employed by the customs administration.
  

Decision of Council of Ministers No 921 of 29.12.2014 “On Implementing Provision on Civil Status for Customs Personnel” was approved and published on 13 January 2015.

• VAT refund

The refund of VAT arrears, including amounts claimed, refunded and outstanding is shown in the table below:

“Within 60 days of the presentation of the taxpayer’s claim and within 30 days of the presentation of the exporter taxpayer’s claim, the regional tax directorate verifies the taxpayer’s tax situation and conducts control, based on risk analysis and approves credit balance as reimbursable. Payment of the balance refundable credit is performed within 5 days of the approval, through the treasury system. The Director General of Taxation, on reasonable grounds, with the request of the Director of Regional Tax Directorate, has the right to postpone the deadline of the audit and approval of the surplus credit for a taxpayer for 60 days”.

Article 62, Persons who may be summoned to provide information:

1. 
   The following persons may be served with written summons for the necessary information to calculate tax liabilities:
   

1. 
   Legal entities in respect of:
   

1. 
   Dividends paid to shareholders or partners;
   
2. 
   Persons with whom they are carrying out or have carried out financial or business transactions;
   
3. 
   Payments made to sub-contractors, or to those in the position of a sub-contractor;
   
4. 
   Debtors and creditors;
   

2. 
   Banks and financial institutions in respect of:
   

1. 
   Interest payments;
   
2. 
   Deposits and liabilities at the end of the year;
   
3. 
   Other bank transactions;
   
4. 
   Electronic bank account statement of taxpayers, including the commercial name and personal identification number;
   

3. 
   Brokerage firms or mutual investment funds, in respect of securities transactions;
   
4. 
   Real estate agents, in respect of transactions of their clients;
   
5. 
   Buyers or sellers of real estate, in respect to the description and price of the real estate;
   
6. 
   Notaries for notarizing actions of selling and buying real estate or movable property, or service contracts;
   
7. 
   Resident and non-resident legal entities, in respect of payments made to non resident persons;
   
8. 
   Government institutions and employees of government administration;
   
9. 
   Other contractors of a taxpayer;
   
10. 
    Donors, international agencies, non-profit organizations, domestic or foreign, in respect of payments made to taxpayers for the supply of goods and services.
    

• Customs valuation

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  Albania will provide written information on its compliance with the WTO rules on valuation. In particular, it will inform of the number and typology of cases in which methods other than the transaction value method, are used.
  

Imports from Individuals and used cars are excluded.

1. 
   Valuation method on the basis of transaction value,
   
2. 
   Valuation method on the basis of transaction value of identical goods;
   
3. 
   Valuation method on the basis of transaction value of similar goods,
   
4. 
   Valuation method on the basis of discounted value,
   
5. 
   Valuation method on the basis of estimated value of the goods,                      
   
6. 
   Valuation method on the basis of available data
   

Values and products in “available data file " are dynamically improved based on the stock exchange prices, statistics and other reliable sources to eliminate arbitrariness. They are transparent and serve as a referral system where previous methods could not be applied, case by case.

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  Lack of customs documentation;
  
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  Declarations of lower values compared to the values of available data;
  
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  Previous problems of the importer;
  
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  Imports from countries we do not have the possibility of cooperation
  

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  It will also inform about the use of reference prices for risk evaluation purposes, identify the areas in which they are used and the methods used to determine the reference prices.
  

Areas in which reference prices are used for EU origin imports

Import of cigarettes is between the branches of the same company for example, this is the reason why number of cases that transaction price is not accepted is high.

Terminology “References prices” is not correct. According article 36 of Customs Code and in line with GATT agreement this information is known as National Database.

According, procedures of customs control on value declared, values from this national database are used as risk indicators. In case that value declares is more than 20% lower or the price of processed product is lower than raw material used custom authority ask the declaring to provide additional documents related with transaction as payment transfer, contract or Export declaration. If the declaring fails to deliver the documents of transaction, the declared value will be corrected through application of alternative methods of valuation.

Today Customs Administration has the capacity to switch from the “use of data available prices as valuation method" to "the use of these data as a database for risk assessment".

• Inter-institutional coordination on trade policy issues