General overview of the construction industry in Albania
Construction is one of the most dynamic areas of the Albanian economy, with real growth of 14% for the recent period of 2008. The project is concentrated in major urban centers. State involvement in the construction industry is mainly focused on infrastructure and engineering projects. State funding for engineering structures generated 85% of total state-funded construction.
private sector construction is mainly focused on apartments and buildings for families, which account for 82% of the total financing private construction. The more people in the economy, the greater the demand for housing. it may require housing services, typically one home in each house. The size and demographic composition of households varies and not just external.
Construction Industry – Accounting and tax legislation
accounts between the owner / builder and subcontractors must be standardized GDT accounts and need to be up on a monthly basis. The accounts of all other suppliers’ obtained as and when stocks are taken, such as cement and steel rods are delivered. Other accounts, such as sales and purchase ledgers will be present along with stock inventory. The files will follow the normal pattern of accounting, however, accounts can be associated with one particular building. If a building contractor involved in more than one building and it is necessary for the accounts to reflect the cost for each site separately so as to be able to determine the final cost of employees. It is likely to be to build up an account, which all costs relating to this particular construction diagnosed
Taxation of construction supplies and repair work includes :.
2. Profit and Personal Income Tax
4. Dividend taxation
5. tax base and;
6. Job taxes
One of the changes in the Albanian Value Added Tax Act, includes the supply of buildings, but in the process of construction, is exempt from the supply and also the rental of buildings is exempt supply, except in cases a) lease for a period of not more than two months; b) accommodation in hotels or resort buildings.
Since 2005 various interpretations were given GTD to clarify confusion about the land and buildings. To understand the impact of VAT and buildings, some basic definitions to be clarified.
Land and building
He wanted to have a building constructed is the “construct” such building. Leasing of land or sites is excluded supply, except for the cases when land is used for parking of vehicles transport and other vehicles. Free transport and other portable vehicle VAT taxable. Services supply of construction, so the process of construction and maintenance of buildings, are taxable supplies. The rental of buildings, unless they are public property, the central authority is taxable. Rental of public buildings by state or local agencies should be considered exempt supply for VAT. The definition of “ground”, under this Act, includes unfinished area, unattended, undeveloped, containing no erections, but simple divisive walls or fences that determine the boundaries of these areas. Building includes a permanent structure on the ground, part of that structure (such as a room or apartment), which includes the ground she stands as well as the environment in the sales, but does not roulots or trailers.
Specialties VAT treatment
On the basis of VAT Albanian law on the minimum taxable buildings for dwelling purposes in process of construction based minimum fiscal prices and construction surface.
Minimum orient ting prices for fiscal purposes in the process of construction of buildings for dwelling purposes are defined by a decision of the Council of Ministers after consultation with the Builders Association of Albania.
Every month the constructor is obliged to introduce the ‘work in progress’ report needs to be checked by the auditor. Technical construction engineer belong GTD estimates the amount of work that has taken place in the month and accountant combines the program with the stock movement of goods. In addition, taking into account all other expenditure items, ie the cost of land, wages and social insurance payments, electricity, etc. When the engineer has completed his work as an accountant monitoring exercise stock to ensure figures reconcile with the amount of work is considered to have been completed
For overall food cost of work a month levy on between 6 -. 10% is added and the VAT is paid in total. VAT on purchases is allowed to be deducted in the normal way.
At the end of all construction reconciliation takes place between the VAT paid monthly and VAT due on final sale. The difference is said to be minimal!
The seller does not have to charge VAT on the possible sale of apartments, considering it to be an apartment block.
If the work is paid in advance, the taxable person to get an advanced payment is required to issue an invoice and record this account in the list of sales belong to the taxable period for advanced payment was made.
profit tax and personal income tax
In the construction and repair projects covering a calendar year, the final decision on the profits and losses shall each year, and where the project ends. Income calculated in the temporary approval is made are taxed under the legislation of the same year. Profit tax rate is 10%. Companies must file tax returns profits to March 31 next year and pay tax in place until the end of the month in which the application is submitted.
real estate, land and buildings should be taxed at 10% of realized capital gains. Such a requirement does not apply in cases where there is an exchange of right of ownership of the land with the right of ownership of the building constructed on this land.
Withholding (taxation task-in -progress)
According to the Income Tax Act, both work progress and advancement of the invoice amounts paid to those performing the work, ie contractors or subcontractors, are subject to withholding tax at a rate of 10%.
In construction, the final decision of profits and losses shall be made each year; Profits from the project are distributed later.
According to current regulations, in Albania, the dividend withholding tax rate is 10% if the dividend is distributed to foreign entities and individuals residing. Dividend payments to domestic companies are exempt from withholding tax. However, bilateral agreements taxes, which may set lower tax rates, should also be considered.
Tax treatment of construction supplies and repair work performed outside Albania
Earnings from construction and repair and technical services performed outside Albania, which are added to the income generated in Albania, are exempt from income tax if such profits are transported to Albania or not.
On the other hand, should these kinds of profits distributed to shareholders, they are taxed as dividends.
special tax audits if amalgamation, merger or splitting of construction companies
Integration involves more than all the fixed assets and liabilities of the merging UCITS business with a company that takes over. The rights and obligations of the merging fund company go to the company that takes over. The decision to review the integration code of the Company are issued in the name and identification number of the company that takes over. Authorized to represent the merged entity has already been transferred through a merger with a company that takes over. The decision to review the company that has been routed through integration includes only time the moment combined. If the review must be achieved in the time after the merger, it is necessary to request a second review of the order for the company which has taken over the former company. If the merger of the review is ongoing, the parties automatically change, in other words, all communication is done by a company that is taking over.
merged company is subject to tax until the moment merge is executed. Companies that receives is believed to have been working on the operations of the merged company from the beginning of the last fiscal year of the merged company; If the review focuses on the review of the operation time before or after the merger fund today, it is necessary to prepare review notes, one for each company. The merger, one or more companies can transfer their heritage to the existing company or a new company established by them, or provisionally been “cooperative”. With the split, the company can also transfer his inheritance to some existing companies or some new business.
Such opportunities are open to companies in the process of liquidation, provided that the distribution of its assets among the partners has not been the subject of implementation. Partners companies transfer their inheritance within the framework of the above actions, benefit shares or initial capital stock of good company or companies. Sometimes they can benefit compensation in cash, the value of which can not exceed 10% of the nominal value of the capital shares or stock.
If the operation involves the creation of new companies, each of them shall be established according to the rules governing the form of the company to be formed. Merger or change causes dissolution without liquidation of the mineralized companies and their legacy is completely transferred to the benefit of companies, in the condition that it is at the moment the operation proceeded.
However, no action is taken to exchange initial capital shares or stock of the benefits of the company / companies with capital stock or the stock of the merged or split company / companies if these items are owned by
– The good organization or person acting on its behalf or for the benefit of this company.
– merged or split company or an entity on its behalf or for the benefit of this company
merger or change goes into effect :.
– When one or some new companies are created, on the day when the last newly created company is registered in the commercial register.
– In other cases, the date of the last session, approved the operation, except for cases when the contract expected that the operation will enter into force on the second day, which should be no later than the final day of running fiscal interests of the company / business and not until the final day of closed financial year of the company / companies are moving their legacy.
partner companies can agree to re-split the company, in order to free it. It often happens that there is a real danger. We can talk about the real risk when members of a company take over part of the company’s operations and run them as separate companies.
What next? … Influence compliance behavior with tax experts …
freedom to deal with taxpayers through their agents substantially reduce the cost of tax administration. Think about what life was like for the tax authorities if there were no tax experts. Some who work for tax administration could say that life would be much easier without them. Yes, it might not be so great tax planning, or challenges to tax, and taxpayers might be willing to agree to review the tax authority is. This could make life easier for tax officials. But given the complexity of the tax system for them as it is not part of the tax administration, despite all efforts at simplification, think about what defects might be?
Instead of funneling corporate communication and business with tax experts, it was necessary to communicate directly with an additional two-three thousand subcontractors and supply companies and over one hundred VIP building taxpayers. This would have major cost implications for tax administration, as more workers would have to serve the substantial additional revenues contacts and inquiries that would ensue.
It would also be infinitely more difficult for tax authorities to ensure that all taxpayers understand their obligations and this would adversely affect voluntary compliance.
For these reasons, tax structures recently are trying to make it as easy as possible for tax professionals to meet in accordance with its customers and we offer a variety of support services and measures to support and achieve compliance customer.