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After relieving the freelancers last year from the abolition of profit tax and raising the Value Added Tax threshold by treating them as small businesses, the government now acknowledges that the scheme has created differentiations and seeks to tax them the same as employees.
There are several variants that Finance is considering in the new draft that will be made public in June on the taxation of freelancers providing services.
One of them involves progressive taxation as it is for wages and another possible alternative is to impose a fixed tax.
“One form is progressiveness, and another form is lump-sam taxation, so the business will be able to choose between progressive taxation, or based on the category of turnover it generates to have a lump-sam taxation, which is an innovation that will to start with this law if it will be approved with all its elements. The ‘lump-sam’ form of taxation, which is expected to be part of this law, involves setting a fixed income tax rate that is very high, and this method is mainly used to simplify the administration of tax laws, as well as to avoid taxpayer complaints that the tax burden is heavy”.
But legal changes do not only target freelancers, as interventions are expected to be comprehensive and affect other categories as well.
“There are also important elements that relate to better detailing of personal income, whether for dividends or interest benefits from the banking system. There will be some elements added to the individual income declaration of DIVA “said Ibrahimaj.
For experts, interventions aimed at strengthening the law on Income Tax come at an inopportune moment and the chances of creating other paths of informality are high.
“The consequences that can occur from this are related to the chaos it will cause in the market as everyone will rethink their position, with the loss of business confidence in the government’s policy of facilities, the tendency to strengthen the capacity of corruption which revived in these empty spaces. Introduces discrimination to certain businesses that are not treated in the same way as other businesses that continue to be excluded“, Explains Eduart Gjokutaj, accounting expert.
The inclusion of self-employed professionals such as notaries, dentists, lawyers or pharmacists and other professionals in the Personal Income Tax scheme was a constant requirement of the International Monetary Fund which is assisting Finance in this regard as well as the World Bank.
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