In April, freelancers in Albania were issued tax prepayment forms for "preliminary taxation on personal income from business".
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Although these prepayments were in line with the new income tax law - which came into effect on January 1st and imposed a 15% tax rate on freelance professions earning up to 14 million lek and 23% above this threshold, Monitor reports.
However, the announcement of these prepayments, as expected and as announced, was met with numerous reactions. Debates arose mainly due to the partial implementation of the law and the lack of prior information from the relevant state institutions.
Firstly, there was ambiguity in the terms used, forcing the administration to remove the assessment notification from the system.
Secondly, income declaration was made according to the old form model, i.e., the existing ones, but according to the new tax norms that start implementation from January 1, 2024, for self-employed and freelance professions.
Thirdly, the period for the calculated and published prepayment by the tax authorities was unclear, and the 12-month payment was condensed into 9 months.
Fourthly, in the calculations for the simplified tax prepayment by the tax administration, the 30% deduction for expenses (as provided by the law for entities with turnover up to 10 million lek) was not taken into account, but only the expenses declared by the business, making the prepayments higher compared to the previous business calculations based on the logic of the law. Tax authorities said the deduction would be made at the beginning of next year, as the new forms were not achieved.
Amidst this regulatory chaos, those who suffered were the professionals who will be forced to pay amounts that most of them considered unfairly high or did not reserve because they followed the logic of the law.
The law has already been sent to the Constitutional Court by some interest parties. The reasons for sending the law to the Constitutional Court are, violation of equality among taxpayers, the principles of the rule of law, and infringement of competition among businesses with the effect of artificially increasing tariffs for services offered by freelancers.
At the height of this debate, during the period from April 23-30, "Monitor" conducted a targeted online survey for freelancers, through the platform aimed at measuring citizen response ECR (Engaged Citizens Reporting). The survey included a combination of quantitative and qualitative questions.
The response was high. The survey was completed by 613 freelancers, 35% of whom were female. Of these, 71% were from Tirana.
The survey results clearly showed a negative perception of the implementation of the new income tax law.
96% of respondents answered that the application of progressive taxation would have a negative impact on their activity. Only 3% said it would have no impact, while the choice for a positive effect or no impact was less than 1%.