In April, freelancers had their declarations for “preliminary tax on personal income from business” published in the system.
Although these declarations were in line with the new income tax law – which came into force on January 1st and imposed a tax on freelance professions of 15% for incomes up to 14 million lek and 23% above this threshold.
But the announcement of the taxes, as expected and as was announced, was accompanied by numerous reactions. Debates arose mainly due to the partial implementation of the law and the lack of prior information from the relevant state institutions.
Firstly, there was ambiguity in the terms used, forcing the administration to remove the valuation notification from the system.
Secondly, income declaration was made according to the old form model, i.e., those existing, but according to the new tax regulations that start from January 1, 2024, with the self-employed and freelance professions.
Thirdly, the period of calculated and published taxes was unclear, and the 12-month payment was condensed into 9 months.
Fourthly, in the calculations for the prepayment of simplified tax by the tax administration, the 30% expense deduction (provided by the law for entities with turnover up to 10 million lek) was not taken into account, but only the declared business expenses, making the taxes appear higher compared to the business’s previous calculations, based on the law’s logic. The tax authorities said that the deduction would be made at the beginning of next year, as the new forms could not be realized.
In this regulatory chaos, those who suffered were the professionals who will be forced to pay amounts that most of them considered unfairly high or have not budgeted for because they have followed the logic of the law.
The law has already been sent to the Constitutional Court by some interested parties. The reasons for sending the law to the Constitutional Court are the undermining of equality among taxpayers, the principles of the rule of law, and the violation of competition among businesses with the artificial increase in tariffs for services offered by freelance professionals.
At the height of this debate, during the period of April 23-30, “Monitor” conducted a targeted online survey for freelance professionals through the platform aiming at measuring citizen engagement, ECR (Engaged Citizens Reporting). The survey included a combination of quantitative and qualitative questions.
The response was high. The survey was completed by 613 freelance professionals, 35% of whom were female. Of these, 71% were from Tirana.
The survey results clearly showed the negative perception of the implementation of the new income tax law.
96% of respondents answered that the application of progressive taxation would have a negative impact on their activity. Only 3% said it would not have an impact, while the choice for a positive effect or no impact was less than 1%.
Source: Monitor Magazine