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Albania/June 2014

Transfer pricing rules have been present for more than a decade in Albanian Corporate Income Tax (CIT) Law, but specific and detailed regulations on the application of these rules have been published in the Official Journal No 70, dated 20.05.2014. The recent changes have totally transformed Article 36 of the Law on Income Tax ( No. 8438, dated 28.12.1998) by adding 7 more articles related to specific Transfer Pricing rules.

Developing countries need to create a compliance regime and Albania under that concept is trying to fully harmonize its legislation according to the OECD Guidelines on “Transfer pricing”.

Another important change is made also in the Law “On Tax Procedures” (No. 9920, dated 19.05.2008), penalties related to the Transfer Pricing are added (art.115/1) while previously there were no relative provisions.

Transfer pricing is the most important tax issue on the Agenda of Tax Authorities worldwide. Albanian Tax Authorities will be focus on effective tax compliance, meaning that companies need to have effective processes in place to manage their transfer pricing risk.

Transfer pricing documentation is to be submitted to the Tax Authorities in Albania on an annual basis by filling a “controlled transaction report”, timeframe shall be determined by the Ministry of Finance.

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