The Ministry of Finance has submitted for public consultation a draft law that amends Law no. 25/2018 "On Accounting and Financial Statements."The changes affect how you maintain your accounting, what information you must present annually, and how long you must retain documents.
Some changes ease existing obligations. Some add new requirements. Others introduce entirely new duties, such as sustainability reporting and tax transparency for multinational groups. The draft law is not yet law, and we are awaiting its finalization by the Assembly.
This article analyzes the main changes, who is affected by each of them, and what you should do now.
Document Retention: from 10 years to 5 years
The current law requires accounting documents to be retained for 10 consecutive years after the close of the reporting period. The draft law proposes reducing this period to at least 5 years.
Five years is the common standard in most European Union countries and is better suited to the capacities of small and medium-sized enterprises. Physical storage of documents involves real costs in terms of space, time, and organization. This change reduces that burden.
However, "at least 5 years" does not mean you can discard documents after 5 years in every case. If other legal, tax, or commercial provisions require a longer period, those remain in force. Consult before making any decision regarding the disposal of documents.
Clarification of Criteria for Consolidated Financial Statements
The current law provides for the obligation to prepare consolidated financial statements but does not specify in detail when an economic entity is considered to control another. The draft law fills this gap with a new article, Article 12/1.
According to this article, the obligation to consolidate arises in four situations. First, when the parent entity holds the majority of voting rights in the other entity. Second, when it has the right to appoint or remove the majority of the members of the governing bodies. Third, when it exercises control through dominant influence, regardless of the legal form. Fourth, when it controls the majority of votes based on an agreement with other shareholders.
This clarification primarily affects owners who manage several companies simultaneously. If you own two or more businesses with ownership ties, it is important to assess whether the consolidation obligation now applies to you.
Additional Information in the Explanatory Notes
The draft law expands the information that must be presented in the explanatory notes of the financial statements. The changes operate on two different levels.
For medium, large, and public interest entities
Two new requirements are added. One concerns advances and loans granted to members of the management and supervisory bodies. Interest rates, main conditions, and repaid amounts must be specified. The other concerns long-term liabilities—those paid after more than five years—as well as guarantees provided by the economic entity itself.
Specifically, if the company administrator has taken a loan from the company, this must be clearly disclosed in the explanatory notes of the financial statements.
For all economic entities
The obligation to present revenue broken down by the main categories of economic activity is added. It is no longer sufficient to state only the total amount of revenue; it must be separated by type of activity.
For businesses with diverse activities, such as simultaneous sales and services, this requires more careful data organization throughout the year, not just at the time the statements are prepared.
Every time there is a tax or financial change that affects your business, we notify you directly by email with a practical explanation.
Send me free notificationsStatement of Responsibility for the Accountant
The draft law introduces a new obligation for the person responsible for preparing the financial statements. The authorized accountant or accounting firm will be required to prepare a statement of responsibility, which is published together with the annual financial statements.
The form and content of this statement will be approved by order of the Minister of Finance, upon the proposal of the National Accounting Council. The exact details are not yet known.
This change emphasizes the role of the accountant not just as a document drafter, but as a person with full professional responsibility toward the financial statements. If you work with an external economist, this change directly affects your relationship with them.
Sustainability Reporting
This is conceptually the largest change in the draft law, but with a very limited numerical impact on Albanian businesses. It involves the introduction of sustainability reporting, internationally known as ESG (Environmental, Social, Governance).
The draft law transposes the European Directive 2022/2464 (CSRD) and provides for two new standards. Sustainability Reporting Standards (SRS) will be mandatory for affected entities. Voluntary Sustainability Reporting Standards (VSRS) will be for entities wishing to report voluntarily.
Who is affected
Sustainability reporting obligations are limited to public interest entities that simultaneously exceed an annual average of 1,000 employees and 450 million euros in operating income.
Based on the Ministry of Finance's analysis, this affects a maximum of 2 to 3 economic entities in all of Albania.
For small and medium-sized businesses, this obligation does not apply. However, if you collaborate with large international groups, you may receive requests for data as part of their value chain. The draft law sets clear limits on these requests to protect small businesses from unnecessary pressure.
When it enters into force
Sustainability reporting obligations will be applicable starting from the 2028 reporting period. Until 2027, the obligated entities continue with the existing non-financial report. From 2028, non-financial reporting is fully replaced by sustainability reporting. Other businesses may apply it voluntarily starting from the same year.
Report on Income Tax
The draft law introduces a new chapter on reporting information on income tax, known internationally as Country-by-Country Reporting. This obligation aims for fiscal transparency of multinational corporations.
The obligation applies to top-level parent economic entities with consolidated revenues exceeding 750 million euros for the last two consecutive reporting periods. The report must present the number of employees, revenue, profit before tax, and tax paid, separated for each tax jurisdiction where the group operates.
This obligation has a very high threshold and does not affect ordinary Albanian businesses. Branches of international groups registered in Albania may have specific obligations if the parent group exceeds the thresholds.
Why it Matters
The draft law is currently in the public consultation phase. You can follow and provide comments on the public consultationwebsite. After this phase, it passes to the Council of Ministers and then to the Assembly. The exact date of entry into force is not yet known.
Meanwhile, you can take some practical steps now:
If your business has various activities, check if your current accounting system allows you to break down revenue by category. This obligation will apply to all entities, regardless of size.
If you have several ownership-linked companies, review the structure considering the new consolidation criteria provided by Article 12/1.
If you work with an external economist, discuss the new statement of responsibility and what changes in your contractual relationship.
Businesses and professionals who are prepared when the law is finalized will have the advantage of an early response, without being caught off guard by new obligations.
Every time there is a tax or financial change that affects your business, we notify you directly by email with a practical explanation.
Send me free notificationsFrequently asked questions
Does the deadline for submitting financial statements change?
No. The draft law does not propose changes to the submission deadline. The 7-month deadline after the reporting date remains unchanged.
Is my business affected if I am a micro-entity or small entity?
Yes, partially. The new obligation to break down revenue by economic activity category applies to all entities, regardless of size. The change in the document retention period helps you. Sustainability and international tax obligations do not affect you.
When is the draft law expected to be approved?
There is no exact date yet. The draft law is going through the public consultation phase. Afterward, it will proceed to the Council of Ministers and then to the Assembly. Entry into force will occur after publication in the Official Gazette.
When does sustainability reporting become mandatory and for whom?
It becomes mandatory starting from the 2028 reporting period. It applies only to public interest entities with over 1,000 employees and over 450 million euros in revenue. It is not mandatory for other businesses.
How does the new statement of responsibility affect the relationship with the external economist?
The authorized accountant or accounting firm will sign an additional document published with the financial statements. This increases transparency as well as the level of formal responsibility. The exact details of this statement will be issued by sub-legal act.
Why it matters to act in time
Legal changes in the field of accounting and financial reporting directly affect how your business is organized each year. Some of the proposed changes, such as the breakdown of revenue by category, require adjustments to your accounting system that are best made gradually, rather than at the end of the year when deadlines are looming.
Read below the consolidated version with the changes to the current law.