The transfer of the tax has been enshrined in Law No. 42/2014 on certain additions and amendments to Law No. 8438 of December 28, 1998, “On Income Tax,” as amended.
The purpose of transfer pricing for the tax administration is to preserve the taxable base for transactions between companies considered related parties, and for the taxpayer it is to avoid double taxation.
The Transfer Pricing highlights the transactions carried out by multinational companies involving parts of their business activities in Albania (in the form of a subsidiary or branch).
If a taxpayer subject to tax profit participates in one or more controlled transactions, he must determine the taxable profit in a manner consistent with the arm's length principle.
The arm's-length principle compliance of a controlled transaction will be determined by applying the most appropriate transfer pricing method.
The Transfer Pricing Law and Guidance stipulates that taxpayers prepare and submit sufficient information and analysis to verify that the terms of their controlled transactions comply with the arm's-length principle.
The Transfer Pricing Guidance stipulates that only a taxpayer who, during the reporting period, has total controlled transactions (including loan surpluses) exceeding 50,000,000 lekë is required to complete this form. In determining a taxpayer's total controlled transactions for the reporting period, absolute values must be used.
The deadline for submitting the “Annual Notification of Controlled Transactions” is the date set for filing the “Profit Tax Declaration and Payment Form.” In the event of failure to timely submit the “Annual Notification of Controlled Transactions,” in accordance with the relevant provisions of the Minister of Finance's Directive “On the Transfer of Price,” the taxpayer is subject to a fixed penalty of 10,000 (ten thousand) lek, for each month of delay.
The price transfer legal package is located at the bottom of this page.
International institutions that assisted in building the sector and implementing the legislative package.
- World Bank Group – IFC experts
- OECD, in cooperation with the Italian Revenue Agency – through the “Borderless Tax Inspectors” program.
Source: General Directorate of Taxes.