VAT implementation clarified: 10% compensation for farmers will be calculated on the value of vehicle invoices

2025-11-21 07:23:15, Ekonomi CNA

VAT implementation clarified: 10% compensation for farmers will be calculated on

Following the confusion created among farmers and processors regarding the implementation of the VAT compensation scheme provided for in the fiscal package, Monitor clarified with fiscal institutions how they envisage the practical implementation of the scheme and on which invoices the compensation will be calculated.

According to them, for example, if a farmer equipped with a NIPT sells agricultural products worth 1,000 euros, and for this sale the collector or processor issues the relevant invoice, then the farmer will receive a compensation of 10%, i.e. 100 euros.

Therefore, the 10% VAT compensation paid for agricultural inputs will not be calculated directly on the farmer's purchases of chemical fertilizers, seedlings or seeds, but on the value of the invoices issued by the collector for the agricultural products that the farmer will sell to them. According to the VAT law, farmers equipped with a NIPT do not issue sales invoices if they sell their agricultural products to taxable persons, but it is the latter who issue the invoice for the farmer.

The purpose of the new compensation scheme is to cover the 10% VAT that the farmer has paid for the purchase of agricultural inputs, such as chemical fertilizers, seedlings and seeds, but the compensation calculations will be made on the value of the invoices issued to each farmer by the processor or collector.

Based on tax administration data, it appears that in 2024, there were about 9,875 farmers who sold their products to 659 buyers.

Why was this mechanism chosen? According to fiscal expert Artur Papajani, the scheme to compensate farmers with 10% VAT follows the same model that is implemented in European Union countries. According to him, the main purpose of this scheme is to compensate for the VAT that farmers pay on their agricultural purchases, as inputs.

Since direct VAT reimbursement to farmers is technically impossible, the most practical and legally enforceable solution is for compensation to be realized through the value of sales invoices, which are issued by collectors, processors or certified agritourisms.

"Farmers, for the needs of their activity, make various purchases throughout the year (agricultural inputs, fuel, agricultural mechanical equipment, etc.), also paying VAT for them.

In reality, the inclusion of farmers in the VAT scheme presents difficulties to the point of impossibility, depriving them of the right to deduct or even refund VAT arising from their purchases.

But a way of compensating for them must be found and has been found. To understand this procedure simply and clearly, one must: first, understand the purpose of the scheme and second, the way found for its implementation.

The purpose of the compensation scheme is to recover to a certain extent from farmers the purchases they make, these purchases, in function of their economic activity. This means purchases for which the VAT related to them is technically and legally impossible to be returned to them directly as is the case with the usual refund.

As a means or way to achieve the goal, compensation for farmers from the state budget has been found, at a rate of 10%, applied to the value of invoices issued to farmers by taxable persons, collectors and processors.

How will the scheme be implemented in practice?

In the first year of implementation of the VAT compensation scheme, the financial effects are estimated at 1.5 billion lek or about 15 million euros.

Fiscal institutions have learned that in practice the scheme will operate on a database where invoices issued by the collector will be reflected, but in order to benefit from compensation, invoices must be confirmed online by the farmer.

So, initially the farmer must submit the request for compensation to e-Albania. In addition to submitting the request, the farmer must confirm online each invoice issued by the collector on his behalf, in order to avoid fraud and achieve traceability of the goods in cases of food safety violations.

The request for compensation will be made twice a year and the compensation will be calculated on the value of the invoices issued for the period January-June and July-December.

The compensation will be received within 30 days of submitting the application. The farmer must also declare the bank account number where the compensation money will be deposited.

The beneficiaries of the scheme will be those farmers who are not subject to VAT and as such, neither charge VAT to buyers of their agricultural products, nor do they have the right to deduct the VAT paid on purchases. /Monitor