Albania ratifies the Convention on Mutual Administrative Assistance in Tax Matters

Albania/November 2013

On March 1 2013, Albania signed the Convention on Mutual Administrative Assistance in Tax Matters. This agreement was ratified according to the Albanian legislation on August 8 2013, and entered in force on December 1 2013.

This convention is adopted in the framework of OECD and the Council of Europe. Albania is the 43rd country to sign this multilateral convention. Its purpose is to develop wide ranging administrative co-operation and assistance on tax issues. Assistance provided in by the Convention includes, the exchange of information that can be accomplished in several ways: on request, spontaneous and automatic; simultaneous tax examinations; tax examinations abroad; assistance in recovery and measures of conservancy and also services on documents, whether by post or other forms. Another objective of the Convention is to facilitate joint audits and criminal responsibility on tax issues. The agreement strives to achieve its objectives by guaranteeing very high confidentiality standards and protection of personal data.

This enhanced mutual assistance is intended to help combat tax evasion, and is accompanied by safeguards measures for protecting tax-payers, whether individual or corporate, and national economies. The practical implementation of the mutual assistance can be established through an administrative agreement between the competent authorities of the Parties willing to provide each other information. Each signatory country nominates the competent authority, which is notified to all the other Member States. In Albania the competent authority, required by the Convention for the implementation of the Agreement and its enforcement, will be the Ministry of Finance: General Tax Directory.

The agreement includes several taxes with exception for customs duties. According to the annex deposited with the instrument of ratification for Albania, the convention will be applied for the following taxes: personal income tax; corporate income tax; local tax on small business; social security contributions; value added tax; excise duties; annual tax on used motor vehicles; local tax on real estate.

Exercising its legal right to make reserves, provided by the convention, the Republic of Albania has restricted the acceptance of the convention by making a reservation, which is deposited together with the instrument of ratification. “Pursuant to Article 30, paragraph 1.a, of the convention, the Republic of Albania reserves the right not to provide any form of assistance in relation to the taxes of other parties included in any of the following categories:

iii. Taxes in other categories, except customs duties, imposed on behalf of a Party, namely:

A. Estate, inheritance or gift taxes,

B. Taxes on immovable property,

F. Taxes on the use or ownership of movable property other than motor vehicles.”

iv. Taxes in categories referred to in sub-paragraph iii above which are imposed on behalf of political subdivisions or local authorities of a Party.

The Republic of Albania reserves the right not to provide assistance in the recovery of any tax claim, service of documents, or in the recovery of an administrative fine, for taxes described in article 2, paragraph 1.b, of the convention.

The Convention is approved by some of the countries with which Albania has the most frequent trade relations, like Greece and Italy, but also by Croatia, Poland, Slovenia and Turkey. This will create wider opportunities for the implementation of the convention and will facilitate the achievement of the objective and purposes of the accession to this convention for Albania.

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