BlogLegal ResourcesApril 2022: The Minimum Wage and Tax Rates Are Going to Change

March 18, 20220

In January, the phrase “Salary is going to increase” rented free in everyone’s head.

Also at the beginning of this year, here at Legit we wrote that “Starting from July 2022 the tax base will change”, implying thus a dedicated post to July changes in the basic minimum wage and tax rate.

Only that the Council of Ministers changed the plans for all of us: Legit’s team – with this post, yours – as the reader, employees’ and employers’ – as stakeholders, and Jani’s – the character we used as an example in the previous blog post.

 

What decisions did the Council of Ministers make?

 

On March 12, 2022 the basic minimum wage and tax rates were changed. The approved changes will extend their financial effects starting from April 1, 2022.

So, the salary increased? Yes, starting from next month.

 

Changes in the Minimum Wage

 

The Council of Ministers approved with Decision no. 158, dated 12.3.2022 “On Determining the Minimum Wage in the Country” the following:

  • The basic minimum monthly salary for employees nationwide, which is mandatory to be applied by any person, legal or natura;, local or foreign is going to be 32,000 (thirty two thousand) ALL.
  • The basic minimum monthly wage is given for 174 (one hundred and seventy four) working hours per month, performed during normal working hours.
  • The basic minimum hourly wage should be 183.9 (one hundred eighty three commas nine) ALL.

 

Changes in the Tax Base

 

The Council of Ministers with Normative Act no. 4, dated 12.3.2022 “On an Amendment to Law no. 113/2021, “On an Amendment to Law no. 8438, Dated 28.12.1998, “On Income Tax”, as amended ” decided:

  • Taxpayers with incomes up to 40,000 ALL will not pay income tax.
  • Taxpayers with incomes from 40,001 to 50,000 will pay income tax only on the amount over 30,001 ALL, which will be calculated 50% * 13% of the amount over 30 000 ALL.
  • Taxpayers with incomes more than 50,001 ALL will not be taxed on income up to 30,000 ALL.
  • The tax rate of 13% will be calculated only on the band 30,001 ALL – 200,000, while for incomes over 20,001, the tax rate will be calculated 22,100 ALL + 23% of the amount over 200,000 ALL.

In other words, the tax rate of 13% has been nominated for taxpayers with incomes from 40,001 ALL / month to 50,000 ALL / month. While the tax rate of 23% will be applied on salaries over 200,000 ALL / month.

The table below reflects the tax base changes which will take effect starting from April 1, 2022.

Monthly income from salary Taxable monthly income Percentage tax rate / month
From To
From To
0 40 000
40 001 50 000

50 001

More

0 40 000
0

30 001

30 000

50 000 

0

30 001

200 001

30 000

200 000

More

0%
0 %

50%*13% of the amount over 30,000 ALL

0%
13% of the amount over 30,000 ALL
22,100 ALL + 23% of the amount over 200 000 lekë

Table for personal income tax from employment

We will get in touch in another post, when Jani, with an increased salary and different tax base, will be asked to work on an official holiday.

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