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Free professions, towards sinking from the legal ambiguities to tax them

2024-04-21 08:23:00, Ekonomi CNA
Free professions, towards sinking from the legal ambiguities to tax them
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About 1,000 euros per month in tax for a 9-month period will be prepaid by the EC, psychologists at the district courts, according to the calculations of the tax administration for the implementation of the law "On income tax", which began implementation with the free professions from 1 January 2024.

According to the calculations of the tax administration, this business will prepay 9 installments of the tax, each with a value of ALL 95,593 per month. The total liability amount of ALL 859.5 thousand was calculated from taxes based on the income declared for 2023 in the amount of ALL 5.6 million and deductible expenses declared in the amount of ALL 4,300.

"Prepayment at these high values ??and for a period of 9 months is almost unaffordable for the small business", claimed one of the economists who keeps the balance sheets for some small businesses.

The obligation to pay the tax in advance is considered high even by GJ.K, a lawyer by profession. This self-employed person will prepay 102,059 Lek per month in tax or total liability for 9 installments worth 918.5 thousand Lek for the annual income declared for 2023, worth 6.3 million Lek and deductible expenses declared in the value of 197 thousand lek.

For another lawyer, the monthly tax payments are calculated at 37,000 ALL per income declaration, about 2.2 million ALL.

"Monitor" visually consulted the documents for the declaration of income and expenses of 2023 and the notices with the calculations for the prepayment of the Regional Directorate of Taxes to some self-employed persons and it turns out that in no case has the recognition of fixed expenses in the amount of 30% for the self-employed been implemented 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.

If the special regime for recognition of expenses in the amount of 30%, the monthly tax liability of the psychologist would be about 67 thousand ALL and of the lawyer about 74 thousand ALL. In any case, the calculations for the prepayment of the tax are based on the expenses declared by the subjects when in the case of these professions they remain low because the nature of their work is rather intellectual.

"They have calculated the tax profit for the actual income and expenses declared for 2023. The law has not been applied correctly.

The 30% deduction of fixed expenses has not been taken into consideration. Many businesses have low overheads due to their profession and are almost taxed on declared income. This situation will create a flood of complaints from businesses to the tax administration", claims accountant Sotiraq Dhamo.

On the other hand, accounting experts estimate that the legal form and content of the implementation of the law is not correct at all. According to them, the estimates for prepayments are not only with wrong legal references, but in most cases they are also calculated incorrectly.

Specifically, the tax administration in the assessment notices sent to some businesses for the prepayment installment has described it as simplified taxation and the description of personal income calculated in 2023. For the calculation of the prepayment installment, taxes refer to Article 63 "Prepayment", point 2, of law no. 29/2023 "On income tax" as amended, as well as Instruction no. 26 dated 09.08.2023.

"Calculations with a law that does not apply to this category (there is no simplified tax profit for this category) of businesses and the naming and classification of the tax with the new law that begins in 2024. Even the references to Prepayments Article 63, law no. No. 29/2023 "On income tax" and Instruction no. 26, do not apply in any case", experts clarify.

In some other cases, in the calculation of the prepayment installment, taxes refer to the examination of the data we have in support of Article 15 "Prepayments" point 1,2,3,4 and Article 16 "Declaration" of Law No. 9632, dated 30.10.2006, "On the Local Tax System" as amended.

Experts claim that even in this case, the legal basis used, when referring to the law "On local taxes", is wrong.

"Since the first year of the implementation of the law, there is a legal vacuum, legal ambiguity and deficiencies in its implementation, which harm commercial entities or self-employed freelancers", assesses one of the heads of accounting studios in the country.

For the recognition of expenses, a priori will be applied by businesses at the end of the year, while the implementation starts from March 2025

In January of this year, after it was not possible to prepare the new income declaration form, the government approved a normative act in the new law "On Income Tax", which determines that the income declaration will be according to the model of the old forms, i.e. the existing ones, but according to the new tax rates that start implementation from January 1, 2024 with the self-employed of free professions.

As a result, the declaration of income will be made according to the model of the old forms, i.e. the existing ones, but according to the new tax rates that start implementation from January 1, 2024 with the self-employed of free professions.

Business accountants claim that they were informed that the fixed expense deduction would not be applied through the old declaration forms that are completed online, since the online declaration model itself allows for the declaration of expenses by accounting and does not offer the selection of fixed cost option.

They claim that they were surprised that this legal provision was not implemented by the tax administration and prepayment of the tax was decided, contrary to what was foreseen in the law and orientations through the trainings developed.

The declaration of income and expenses for the calculation of prepayment of tax for the year 2024 by businesses is made according to the model of the existing forms. The existing forms do not include the selection of a special regime for recognizing expenses a priori in the amount of 30%.

Sources from the General Directorate of Taxes clarified for "Monitor" that their discount will be based on the applications of self-employed businesses at the end of 2024, after completing the form for choosing the special regime.

"For the self-employed without VAT with an annual turnover of up to 10 million ALL who will choose the special regime of recognition of fixed expenses 30% (which includes the annual income from the minimum wage, rent, electricity, water, etc.) will have to fill in the form at the end of the year that they have chosen the special regime of recognition of expenses.

On March 31, 2025, businesses will declare through new forms the statement of income and expenses for the year 2024. Based on the profit that will be released for the year 2024, compared to the advances it has paid during the year, if it is more, the state compensate you or recognize it as paid profit. If the profit is less than the prepaid amount, the business will pay the remaining amount.

In the meantime, it remains unclear that in case a subject decides to close the activity in 2025, how will it be compensated for the tax it has paid excessively as a result of not deducting the expenses.

Accountants and businesses warned earlier that the legal changes will not only confuse businesses, but will burden them with an unaffordable tax burden./Monitor

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