In November 2017, before the approval of the budget for the
2018 fiscal year, the government of Albania approved the
Decision of the Council of Ministers (DCM) no. 652, dated
November 10 2017, which made several changes to DCM no.
953/2014 as regards the implementing provisions of the Value
Added Tax Law.
Some of the major changes under the new bylaw include the
lowering of the relevant annual turnover for inclusion in the
VAT scheme; a reduction in the VAT rate for tourist
accommodation services; and several changes involving
exemptions on VAT on imports of machinery. Below, we discuss
the most important amendment which concerns VAT on tourist
accommodation services.
The standard VAT rate in Albania is 20%, except for cases
where a reduced VAT rate is applicable as per Article 49 of the
VAT Law. One of the most important changes resulting from the
new DCM relates specifically to Article 49 and stipulates that
the reduced VAT rate to be applied to the supply of tourist
accommodation services will be 6%.
According to the new DCM, the provision of accommodation
services includes the supplying of lodging services by
accommodation operators. Tourism legislation provides accurate
definitions of the subjects, facilities and entities that are
classified as suitable as regards the offering of accommodation
services.
The provision of food supplies or any other kind of services
or goods offered by the relevant accommodation operators will
not benefit from the reduced VAT rate. The reduced VAT rate
will be applied for the provision of food/breakfast in cases
where these are included in the price of the lodging service.
The accommodation service benefiting from the reduced VAT rate
of six percent must be shown separately on the VAT invoice.
Only taxpayers operating in the field of tourism will
benefit from the reduced VAT rate. In cases where tourist
accommodation operators also perform other kinds of activities,
they must separate their commercial operations, creating a new
entity to deal exclusively with the tourism accommodation side
of their business. The application of the reduced VAT rate does
not limit the right of the taxpayer to deduct VAT.
By lowering the VAT rate for accommodation services, the
Albanian government aims to reduce prices in the tourism sector
while also lowering the costs of the commercial operators in
this sector. The DCM also included an important amendment to
the VAT scheme. The DCM lowered the annual turnover threshold
for the mandatory participation of taxpayers in the VAT scheme
from ALL 5 million ($45,100) to ALL 2 million per calendar
year.
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| Dorina Asllani Ndreka |
Dorina Asllani Ndreka (tirana@eurofast.eu)
Eurofast
Tel: +355 (0) 42 248 548
Website: www.eurofast.eu