All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Albania: Albanian government reduces VAT rate for tourist accommodation services

intl-updates

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.

Ndreka

Dorina Asllani Ndreka

Dorina Asllani Ndreka (tirana@eurofast.eu)

Eurofast

Tel: +355 (0) 42 248 548

Website: www.eurofast.eu

more across site & bottom lb ros

More from across our site

Corporations risk creating administrative obstacles if the pillar two rule is implemented too soon, sources say.
Important dates for the Women in Business Law Awards 2023
The Italian government published plans to levy capital gains tax on cryptocurrency transactions, while Brazil and the UK signed a new tax treaty.
Multinational companies fear the scrutiny of aggressive tax audits may be overstepping the mark on transfer pricing methodology.
Standardisation and outsourcing are two possible solutions amid increasing regulations and scrutiny on transfer pricing, say sources.
Inaugural awards announces winners
The UN’s decision to seek a leadership role in global tax policy could be a crucial turning point but won’t be the end of the OECD, say tax experts.
The UN may be set to assume a global role in tax policy that would rival the OECD, while automakers lobby the US to change its tax rules on Chinese materials.
Companies including Valentino and EveryMatrix say the early adoption of EU public CbCR rules could boost transparency of local and foreign MNEs, despite the short notice.
ITR invites tax firms, in-house teams, and tax professionals to make submissions for the 2023 ITR Tax Awards in Asia-Pacific, Europe Middle East & Africa, and the Americas.