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When will the recognition of 30% a priori expenses for the free professions be implemented

2024-05-07 11:49:00, Ekonomi CNA

When will the recognition of 30% a priori expenses for the free professions be

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The Income Tax Law was approved in March 2023 by the Parliament.

In 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, teachers, doctors, real estate, news agencies, employment agencies, sports agencies, tourist operators, etc.

The law provides that the 15% tax for the self-employed with an annual income of up to ALL 10,000,000 per year is calculated on the profit, after deducting the fixed expenses not declared in the accounting in the amount of 30%, including the income from the minimum wage, to the total annual income. The law provides for the selection of the special regime of deduction of 30% expenses from the business or the option of choosing their declaration by accounting.

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

Accountants and various businesses estimated that in the calculations of the prepayment installment, according to the assessment notices of the Regional Directorate of Taxes sent to the self-employed from April 11, it turns out that in no case was the recognition of fixed expenses in the amount of 30% 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.

Economists also claimed that they were informed that the deduction of fixed expenses, which 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.

The head of the General Directorate of Taxes, Ceno Klosi, clarified on social networks that the a priori expenses of 30% will be applied, after being selected as an option by businesses, for the profit declarations of 2024, which are made on March 31, 2025.

"We emphasize that the a priori recognition of expenses in the amount of 30% for taxpayers, who exercise an activity as 'Professional Service', which is optional, is applied according to the new Law only in the declaration of profit for the year 2024, which is carried out by March 31, 2025 This does not mean that in the calculation of the preliminary installments for the year 2024, the expenses incurred by the taxpayers were not recognized, as long as the calculation is based on the self-declared profit of the year 2023 and the profit is calculated as a result of the actual income and expenses.

Accounting experts and lawyers also assessed that the legal form and content of the implementation of the law is not correct at all. According to them, the notification-assessments for prepayments are with wrong legal references, as is the case when citing the law on local taxes and the repealed law on income tax.

In total, according to the Ministry of Finance and Economy, up to 29 thousand self-employed businesses will be included in the new tax regime. MFE calculates that up to 90% of the total businesses (divided according to 3 categories, such as: self-employed, natural persons and traders) are included in the band of annual income up to 14 million ALL per year that will be taxed at a rate of 15% . /Monitor