Foreign-funded projects are exempt from VAT - Finance Instruction/Unique Code. How will the scheme work?
Various public projects financed by foreign donations or grants will be exempt from Value Added Tax.
The Ministry of Finance's instruction details the procedure for import exemption and treatment as a supply similar to exports for donation/grant agreements.
Referring to the instruction published in the Official Gazette, "the supply of goods/services intended for the implementation of projects financed with funds received on the basis of a donation/grant agreement concluded between the Council of Ministers of the Republic of Albania/the Republic of Albania and foreign donors is treated as a supply similar to exports, if the agreement provides that the funds received will not be used to pay taxes in Albania."
In this case, the project registration by the implementer or beneficiary will be done at the State Agency for Strategic Programming and Aid Coordination (Agency). The Agency evaluates the request and issues the Project Registration Certificate within 10 working days.
There will be only one Unique Project Identification Code for each project, regardless of the number of implementers/beneficiaries of this project.
The agency sends a copy of the certificate to the tax and customs authorities.
The implementer/beneficiary, when purchasing goods/services necessary for the implementation of the project, presents to their supplier (seller) the certificate issued by the DRT, in order for these purchases not to be charged with VAT.
The supplier, in the invoices issued to the implementer/beneficiary, must indicate that this supply will be treated as a supply similar to exports, with a zero percent VAT tax rate. Also, these invoices must reflect the Unique Project Identification Code, determined in the certificate issued by the Agency and the number of the relevant certificate issued by the DRT.
For all goods/services intended for the implementation of projects subject to this article, for which VAT was paid before the Project Registration Certificate was issued, reimbursement procedures will be carried out.
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