, ,

Albania’s New Tax Reform: Fiscalization

Joanna Hysi
May 21, 2020

Following the trailblazing efforts by countries such as Italy, Hungary and Spain, this past year has seen an increase in European countries announcing digital tax control reforms. Earlier this year, Albania joined the ranks of France and Poland by announcing the introduction of a continuous transaction controls (CTC) system, called fiscalization. This scheme requires clearance of invoices by the tax authority prior to their issuance.

Fiscalization in a nutshell

Taxpayers must use certified software to transmit e-invoices to a centralized invoicing platform in real-time. They can either exchange invoices electronically or in paper form.

There are two types of certified software, so-called fiscalization systems, which will be used.

  1. For cash transactions (e.g. point-of-sale), invoices should be issued using approved fiscal devices with printing capabilities.
  2. For non-cash transactions, invoices should be issued through an approved software solution which is capable of performing certain functions, including digital signing.

The e-invoice process

The supplier creates the invoice containing the defined mandatory content requirements and a signature based on a certificate issued by the Albanian National Agency for Information Society (NAIS). The tax authority, after clearing the invoice, generates a unique identifying number (NIVF) before returning the invoice to the supplier. The supplier adds the NIVF to the invoice and then issues it to the buyer.

Like, for example, the tax control regime introduced in India this year, the Albanian framework doesn’t regulate how invoices are exchanged between the parties, which can be electronic or in paper form.

The fiscalization procedure also covers supporting documents, such as transport documents. In this case, a QR code of the accompanying invoice should be printed and sent with the goods.

Data from the invoices sent to the government’s central platform will, on a monthly basis, automatically populate the taxpayer’s VAT ledgers.  These are maintained on the central platform. It will also populate the monthly VAT returns.

The fiscalization scheme introduces reporting requirements for the Albanian payment services providers. They should record and report, on a daily basis, payments of e-invoices in respect to non-cash transactions.

Implementation deadlines

The CTC system applies to all taxpayers subject to VAT and income tax in Albania, with minor exceptions. It will be rolled-out in a phased manner starting from 1 September 2020, as follows:

From September 2020: All cash transactions by taxpayers subject to VAT and corporate income tax (CIT) with an annual turnover exceeding 8 million lek.

From January 2021:

  • Cash transactions by taxpayers subject to VAT and simplified CIT with an annual turnover between 2 million and 8 million lek
  • Cash transactions by taxpayers subject to simplified CIT with an annual turnover not exceeding 2 million lek
  • Non-cash B2G transactions.

From July 2021: non-cash B2B transactions.

Impressive development

The fiscalization law is in line with the EU VAT Directive and Directive 2014/55 on e-invoicing in public procurement, and consequently brings the Albanian law in line with the EU approach to e-invoicing. While additional legislation is needed before the fiscalization law can be implemented, Albania has proven to be serious about implementing clearance tax controls to help combat VAT fraud.

Its efforts to introduce a robust CTC system have not only continued during the turbulence and economic challenges of 2020, but, perhaps more importantly, significant progress has been made. In April, the first Ministerial Guidance was published, which regulates the requirements for the software solutions that will be used.  All in all, this is an impressive development in the fight against fraud for this small country.

Take Action

To find out more about what we believe the future holds, download Trends: Continuous Global VAT Compliance and follow us on LinkedIn and Twitter to keep up-to-date with regulatory news and other updates.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Joanna Hysi

Joanna is a Senior Regulatory Counsel at Sovos. Based in Stockholm and originally from Greece, Joanna’s background is in commercial and corporate law with research focus on EU law and financial innovation. Joanna earned her degree in Law in Greece and her masters in Commercial and Corporate from London School of Economics and Political Science (LSE) in London.
Share This Post

North America Tax Information Reporting
June 7, 2023
4 Ways to Elevate Your Direct State Reporting Process

Direct state reporting obligations have gotten increasingly difficult for some businesses over the past few years. With more states requiring direct reporting of form series 1099, more companies are subject to penalties if they do not comply with those obligations. As state reporting evolves, ensuring your process is efficient is critical. Strengthening your reporting process […]

EMEA VAT & Fiscal Reporting
June 7, 2023
The Value of SAP S/4HANA Add-On Software Certification

Many companies utilise SAP for their tax processes, but limitations in native software functionality add a layer of complexity. Custom coding is often required for businesses to achieve their desired results, producing the need for ongoing customisation and optimisation – this creates a hefty burden for companies, in addition to their tax compliance obligations. SAP-certified […]

North America Sales & Use Tax
June 5, 2023
Sovos Onboarding: 6 Departments Dedicated to Customer Success

If you are evaluating Sovos, we want you to understand expectations for the customer experience and what teams are there to support you. At Sovos, we have a range of teams ready to support you from the day you sign a contract. Whether it be a customer success representative to review the value you are […]

North America Sales & Use Tax
June 1, 2023
3 Things to Remember if You Get a Sales Tax Notice

Have you ever received a sales tax notice from a state department of revenue? Whether you answered yes or no, there are important things to keep top of mind to help keep your business prepared. Finding out that you have failed to comply with one or more of your sales tax obligations can be startling. […]

EMEA VAT & Fiscal Reporting
May 31, 2023
Bizkaia: What is Batuz LROE?

The Ledger of Economic Operations (Libro Registro de Operaciones Económicas), also known as LROE, is a main compliance element of the Batuz tax control system. This system is under implementation in the province of Bizkaia, located in the autonomous Basque community in Spain. Taxpayers under the Batuz mandate must comply with both TicketBAI and LROE […]