The tax year is the calendar year.
The final CIT return is due by 31 March of the year following the tax year.
Payment of tax
Predetermined advance payments of CIT are due either by the 15th day of each month or by the end of each quarter.
According to the tax laws, CIT is paid during the year on a prepayment basis. The amount of monthly CIT prepayments is determined as follows:
- For each of the following months: January, February, and March of the following fiscal period, the income tax amount of the fiscal period two years prior to the current period, divided by 12.
- For each of the next nine months of the following fiscal period, the income tax amount of the previous fiscal period divided by 12.
The final due date for the payment of the final CIT for a fiscal year is 31 March of the following year. Note that this payment is calculated as the total amount of CIT self-assessed from the taxpayer for that particular fiscal year less total CIT instalments paid related to that year.
Penalties for non-compliance with CIT prepayment deadlines are 10% of the unpaid liability.
Companies have the obligation to pay the non-resident WHT on dividends to the tax authorities no later than 20 August of the year the financial results are approved, regardless of the fact of whether the dividend has been distributed or not to the shareholders.
Tax audit process
Generally, the Albanian tax system is based on self-assessment, which is under continuous audit by the tax authorities. Such audits include all types of taxes that the business is subject to. If any discrepancies result from the tax audit, the tax authorities issue an assessment notice, which the taxpayer might appeal within 30 calendar days.
Taxpayers may submit a corrected declaration within 36 months from the submission of the initial declaration, provided that this declaration has not been previously inspected by the tax authorities.
Statute of limitations
With regard to Albania's tax administration practices, the statute of limitations of a tax audit is five years. However, the statute of limitations can be extended by 30 calendar days in cases where:
- a new assessment is made as a result of an appeal against a previous tax assessment
- a tax assessment is made as a result of a tax audit or investigation of the taxpayer by the tax administration, or
- the taxpayer is subject to a penal case related to one's tax liabilities.
The right of the taxpayer to submit a reimbursement request is limited to five years from the moment that the credit position is confirmed.
Topics of focus for tax authorities
During a tax audit, the main focus of the tax authorities is on areas related to transfer pricing, which is becoming an increasing area of focus; WHT; and aspects affecting CIT, such as expense deductibility.
If a taxpayer’s financial statements and tax declarations are certified as compliant with the tax legislation by certified auditing companies, the tax administration will include this as a parameter in the taxpayer risk analysis for tax inspection purposes.