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The law on free professions, the Constitutional Court examines the three lawsuits on June 18

2024-04-30 09:29:31Biznes SHKRUAR NGA REDAKSIA VOX

The law on free professions, the Constitutional Court examines the three

The Constitutional Court will examine in the session scheduled for June 18, 2024, together with the three lawsuits filed for the repeal of the law "On income tax" that began to be implemented with the free professions from January 1.

The first lawsuit in the Constitutional Court was filed in February 2024 by 37 deputies of the DP parliamentary group. Then in March, another request was sent to the Constitutional Court for the repeal of the law by the Institute of Certified Accountants (IKM) and the Institute of Certified Accounting Experts (IEKA).

The initiative of the lawyer Lulzim Alushaj for the non-enforcement of the law as unconstitutional, in a third lawsuit on April 19 filed in the Constitutional Court, was massively joined by 400 professionals, such as: lawyers, translators, financiers, property sales agents, etc., also business associations.

According to the announcement of the Constitutional Court, the requests of no less than 1/5 of the deputies of the Assembly of Albania, the Association "Institute of Certified Accountants" (IKM), the Association "Institute of Authorized Accounting Experts" (IEKA), the Chamber of Advocacy of Albania, will take place in a public plenary session on June 18.

"Partial repeal of Article 3, point 5, Article 12, point 1, letter "ç", Article 24, point 2 and Article 69, point 1, letter "dh", second sentence, of Law no. 29/2023, dated 30.03.2023 "On income tax", amended, regarding the profession of accountant/accounting expert/legal auditor, and the profession of lawyer as incompatible with the Constitution of the Republic of Albania. Repeal of Article 4, point 1 and analytical table no. 2, of VKM no. 753, dated 20.12.2023, which refers to subsection 69, for the profession of accountant/accounting expert/legal auditor and the profession of lawyer, as incompatible with the Constitution of the Republic of Albania. Suspension of the implementation of Article 3, point 5, Article 12, point 1, letter "ç", Article 24, point 2 and Article 69, point 1, letter "dh", second sentence, of law no. 29/2023, dated 30.03.2023 "On income tax", amended, as well as article 4, point 1 and analytical table no. 2, subdivision 69, of VKM no. 753, dated 20.12.2023, for the part that refers to the profession of accountant/accounting expert/legal auditor, and the profession of lawyer until the final decision of the Constitutional Court enters into force", it is quoted in the object of the lawsuits.

What does the law provide?

The Law "On Income Tax" was approved in March 2023 by the Parliament. In the month of December, the decision approved by the Council of Ministers was published in the Official Gazette with the list of free professions services that will be included in the new taxation, including 26 types of activities starting from IT service, accounting, lawyers, education, doctors, real estate, news agencies, employment agencies, sports, tour operators, etc.

The law provides that net taxable income (taxable profit) from business for commercial individuals and the self-employed with an annual turnover of up to ALL 14,000,000 is taxed at the tax rate of 15% and for businesses with an annual turnover over ALL 14,000,000 the tax rate is 23%.

The law provides for the selection of a special 30% a priori expense deduction regime for commercial and self-employed individuals with an annual turnover of up to ALL 10,000,000 or the option of choosing to declare deductible expenses based on the respective documentation and invoices for each expense.

While businesses with an annual turnover above ALL 10,000,000 to ALL 14,000,000 are taxed at the rate of 15%, but have the obligation to document the expenses through invoices.

Even the other category of businesses that are included in the annual income over ALL 14 million have the obligation to declare the annual expenses based on the respective documentation and invoices for each expense, but unlike the first band, the profit of this category will be taxed at the tax rate of 23% .

How was the law implemented?

At the end of December 2023, many days before the start of the implementation of the law, the government approved the Normative Act for its amendment, which provided for its implementation through the old forms, since it was not possible to prepare the new income declaration form. As a result, the declaration of income will be made according to the model of the old forms, i.e. the existing ones, but they will be taxed according to the new tax rates that start implementation from January 1, 2024 with the self-employed of free professions.

In the month of April, taxes sent to businesses the notices for the calculation of the tax prepayment based on the declared income and expenses for the year 2023. In most cases, the calculated prepayment installments reached high values, such as: 700, 800 or 1,000 euros . So in no case does it result that the recognition of fixed expenses at the rate of 30% has been implemented for the self-employed of free professions with a turnover of up to 10 million ALL per year, as defined in the new law "On income tax" and the accompanying instruction for implementation.

The calculations of the installments (9 installments) of the prepayment according to the accountants were carried out on the actual income and expenses declared for 2023, when the expenses declared by the entities are low, due to the nature of the work of professional services and the lack of tax liability to declared complete.

The tax calculations by the experts were also assessed as incorrect from the legal content of the implementation of the law, where in some cases the taxes were referred to the law on local taxes or the repealed law on income tax. While the economists claimed that they were informed that the deduction of fixed expenses that could not be declared through the old declaration forms, due to the impossibility of the model, would be applied as a deduction by the tax administration.

For the recognition of expenses, 30% taxes have clarified that they will be applied in the declarations of 2024, which are made on March 31, 2025, after completing the form for the selection of the special regime that is expected to be distributed at the end of the year.


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