Albania published Law no. 83 of 2022 in the Official Gazette on 21 December 2022, which contains amendments to the Law on Tax Procedures. The law entered into force on 1 January 2023.

One of the main amendments is the introduction of new rules on the use of alternative assessment methods in cases of tax avoidance and abuses of tax law principles. This includes that, in calculating taxable income and profit, the tax administration may ignore an arrangement, or a series of arrangements concluded between taxpayers that have the obtaining of a tax advantage/benefit as their main purpose or one of their main purposes. Such arrangements for tax purposes will be treated with reference to their economic substance.

To determine whether an arrangement or a series of arrangements lacks economic substance, the tax administration examines whether one or more of the following situations exist:

• the legal substance of the individual steps that make up an agreement is not in accordance with the legal substance of the agreement as a whole;
• the arrangement or a series of arrangements is implemented in a way that is not in accordance with regular business conduct;
• the arrangement or a series of arrangements includes elements that have the effect of compensating or canceling each other;
• related transactions are of a circulating nature;
• the arrangement or a series of arrangements leads to a significant tax benefit, but this is not reflected in the taxpayer's business risks or cash flow; and
• the estimated margin before tax is significant compared to the amount of the estimated tax benefit.

To determine whether an arrangement or a series of arrangements has obtained a tax benefit, the tax administration compares the amount of tax that a taxpayer is obliged to pay, taking into account the arrangement, with the amount that the same taxpayer would be bound to pay under the same circumstances in the absence of such an arrangement. For the purpose of the new anti-avoidance rule, the burden of proof rests with the tax administration.

Other important measures include the amendment of certain tax penalties, which are set as follows:

Non-payment of tax installments

Failure to pay the advance installments of corporate profit tax and personal income tax from business and self-employment is punishable by a fine of 10% percent of the amount of the installment to be paid plus the late interest calculated for the delayed days, but not more than 365 days.

Failure to maintain accurate books, records, and documentation

Taxpayers that fail to maintain accurate books, records, and documentation as required by the law are subject to a fine of ALL 10,000 for each violation if a natural person, and ALL 50,000 if a legal person.

Goods not accompanied by tax documents

Taxpayers who keep in storage, use, or transport goods not accompanied by tax documents are penalized as follows:

• taxpayers registered for personal income tax from business or self-employment, who are not registered for VAT and other taxpayers are punished with a fine of ALL 25,000;
• taxpayers registered for personal income tax from business or self-employment and for VAT are punished with a fine of ALL 50,000, but not less than the value of missing VAT;
• taxpayers registered for corporate profit tax are punished with a fine of ALL 750,000, but not less than the value of missing VAT; and
• persons carrying out unregistered commercial economic activity are punished with a fine of ALL 50,000.

Failing to issue invoices

Taxpayers that fail to issue invoices for the second time in a year are subject to a fine of ALL 50,000 for natural persons, ALL 100,000 for natural persons registered for VAT, and ALL 500,000 for corporate taxpayers.

Obstruction of a tax audit or investigation

A taxpayer that directly or indirectly obstructs a tax audit or investigation by the tax administration is subject to a fine of ALL 100,000 for taxpayers classified as commercial or self-employed natural persons, and ALL 1,000,000 for legal entities and high-asset individuals.

Failing to correctly declare salary

Employers that fail to correctly declare the salary of their employees are subject to a fine equal to 200% of the undeclared amount if a legal entity, and 100% of the undeclared amount for other taxpayers.