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From January 1, progressive taxation starts, how much tax will the freelancers pay?

2023-12-30 09:27:14Biznes SHKRUAR NGA REDAKSIA VOX

From January 1, progressive taxation starts, how much tax will the freelancers

From January 1, the implementation of the progressive tax will begin with the tax rates of 15% and 23% for the self-employed, natural persons and traders of services of free professions.

The 15% tax for the first tier of businesses with annual income up to 14,000,000 ALL per year according to the Ministry of Finance and Economy will be calculated on the profit, after deducting expenses and minimum wage income from the total annual income.

For the free professions defined according to the list of the decision "On the implementing provisions of the law no. 29/2023, "On income tax" with annual income up to 14 million ALL per year, the deductible fixed expenses not declared in accounting are recognized at the value of 30%.

For example. If a business providing freelance services with an annual income of 10,000,000 ALL - 30% expenses - 40,000 ALL income from the minimum wage will have 6,960,000 ALL declared profit.

The profit to be declared after deducting expenses and minimum wage income will be taxed at 15%. In total, the annual income tax liability for the business with an annual income of 10,000,000 ALL is 1,044,000 ALL.

The other category of businesses that are included in the annual income over ALL 14 million have the obligation to declare their annual expenses to the tax administration, unlike the first category, which are recognized as fixed or unaccounted expenses at the rate of 30%. After deducting the expenses declared in the tax administration, the profit of this category will be taxed at the tax rate of 23%.

The Ministry of Finance and Economy calculates that 70-80 to 90% of all businesses (including their 3 categories of self-employed, natural persons and traders) have an annual income of up to 14 million ALL per year.

Finances: They will pay up to 50% less tax than employees

The Ministry of Finance and Economy calculates that the tax liability of free professions, after deducting expenses and income from the minimum wage, is 50% less than the income tax paid by employees.

If for annual income 1,000,000 ALL an employee pays 8.3% tax, a self-employed business will pay 5.1% according to the Ministry of Finance. For the annual income of 2,000,000 ALL, an employed person is taxed at 10.6%, while the free professions will be taxed at 7.8%.

For the annual income of ALL 3,000,000, an employee is taxed at 13.44%, while the free professions will be taxed at 8.7%. For the annual income of 4,000,000 ALL, an employed person is taxed at 16%, while the self-employed will be taxed at 9.1%.

For the annual income of 5,000,000 ALL, an employed person is taxed at 17.3%, while the free professions will be taxed at 9.4%. For the annual income of ALL 6,000,000, an employee is taxed at 18.2%, while the free professions will be taxed at 9.6%.

For the annual income of ALL 7,000,000, an employee is taxed at 18.9%, while the free professions will be taxed at 9.7%. For the annual income of ALL 8,000,000, an employee is taxed at 19.4%, while the free professions will be taxed at 9.8%. For the annual income of ALL 9,000,000, an employed person is taxed at 19.4%, while free professions will be taxed at 9.9%.

For the annual income of 10,000,000 ALL, an employed person is taxed at 20.1%, while free professions will be taxed 10% or 50% less than an employed person.

Examples

How will the 23% tax be calculated for freelancers with an annual income of up to 14 million ALL

The 15% tax for the first tier of businesses with annual income up to 14,000,000 ALL per year according to the Ministry of Finance and Economy will be calculated on the profit, after deducting expenses and minimum wage income from the total annual income.

For the free professions defined according to the list of the decision "On the implementing provisions of the law no. 29/2023, "On income tax" with annual income up to 14 million ALL per year, the deductible fixed expenses not declared in accounting are recognized at the value of 30%.

For example. If a business providing freelance services with an annual income of 1,000,000 ALL - 30% expenses - 40,000 ALL income from the minimum wage will have 660,000 ALL declared profit per year.

The profit to be declared after deducting expenses and minimum wage income will be taxed at 15%. In total, the annual income tax liability for the business with an annual income of 1,000,000 ALL is 99,000 ALL.

If a business providing freelance services with an annual income of 8,000,000 ALL - 30% expenses - 40,000 ALL income from the minimum wage will have 5,560,000 ALL declared profit. The profit to be declared after deducting expenses and minimum wage income will be taxed at 15%. In total, the annual income tax liability for the business with an annual income of 8,000,000 ALL is 834,000 ALL.

If a business providing freelance services with an annual income of 10,000,000 ALL - 30% expenses - 40,000 ALL income from the minimum wage will have 6,960,000 ALL declared profit.

The profit to be declared after deducting expenses and minimum wage income will be taxed at 15%. In total, the annual income tax liability for the business with an annual income of 10,000,000 ALL is 1,044,000 ALL.

How will the 23% tax be calculated for freelancers with an annual income of over 14 million ALL

The other category of businesses that are included in the annual income over ALL 14 million have the obligation to declare their annual expenses to the tax administration, unlike the first category, which are recognized as fixed or unaccounted expenses at the rate of 30%.

After deducting the expenses declared in the tax administration, the profit of this category will be taxed at the tax rate of 23%.


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