Albania: Albania approves changes to accounting standards; introduces IFRS 15

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Albania: Albania approves changes to accounting standards; introduces IFRS 15

intl-updates-small.jpg

The Albanian legislative act which defines the general principles and rules for the preparation of accounting standards, financial statements and accounting records is the Law on Accounting and Financial Statements (Law No. 9228, dated April 29 2004).

According to Article 3 of this Law, 'accounting standards' are the general principles or rules for the normalisation of accounting, defined by the law, which serve as a basis for the selection of accounting tools and methods that are applied for the preparation and presentation of financial statements. Typically, the National Accounting Council of Albania translates the standards brought forward by the International Accounting Standards Board. The standards are then decreed as valid and effective by the Ministry of Finance. The latest decree issued by the Ministry of Finance on the topic of accounting standards was Decree No. 120, approved on November 6 2017, and subsequently published in the Official Gazette in the same month.

Decree No. 120 issued by the Minister of Finance reflects the changes that have occurred in the accounting standards, which include among other things:

  • IFRS 4 (insurance contracts);

  • IFRS 2 (payments based on shares);

  • IFRS 15 (revenues from contracts with customers); and

  • IAS 40 (long-term investment property).

The changes to the standards entered into force and were applicable from January 1 2018. Below we discuss specific details affecting companies.

IFRS 4: The latest changes include the possibility for entities providing insurance contracts to be excluded from the application of IFRS 9. The changes also attempt to address several concerns about the difficulties that may arise due to IFRS 9. Entities that choose to proceed with this exclusion are obliged to provide an explanatory note.

IFRS 2: For share-based payment transactions, in which goods or services are received as part of a share-based payment arrangement, the latest changes include some modalities of financial declarations as regards the methods and tools that will be used for the cash-settled share-based payments. The aim is to introduce guidance for the accounting requirements for cash-settled share-based payments that follows the same approach as used for equity-settled share-based payments.

IFRS 15: The changes introduce the single, principles-based five-step model to be applied to all contracts with customers, regarding revenue recognition, with uniformity for all transactions and for all companies, without differentiating between contracts. Based on the use of the five-step model, the moment of revenue recognition may change. Customer contract revenues, which were previously recognised throughout the term of the contract, in future may be recognised only once and as a whole, at the end of the contract and vice versa. The basic principle of IFRS 15 is that the revenue will be recognised at the moment the products and/or services are transferred into the control of the customer. In order to realise a proper and efficient implementation of the latest changes, it is necessary to increase the importance of valuations, so that each product and/or service part of the contract is recognised at its real value.

IAS 40: This standard provides the possibility for an entity to transfer an asset to, or from, a long-term invested property, but only when there is a change in use. A change in use occurs when a property meets or ceases to fulfill criteria making it an investment property, and there is evidence to support this change in use.

Eurofast advises Albanian companies to examine thoroughly the impact these new standards will have on their operations, particularly as regards IFRS 15. We expect that a number of industries (such as those involved in the supply of contracted long-term services or the sale of licences) will be affected and may need to seek tax advice to ensure tax compliance.

Asllani-Ndreka-Dorina

Dorina Asllani Ndreka

Dorina Asllani Ndreka (tirana@eurofast.eu)

Eurofast Global

Tel: + 355 (0) 42 248 548

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

It should be easy for advisers to be transparent about costs, Brown Rudnick partner Matthew Sharp said in response to exclusive ITR in-house data
The sprawling legislation phases out Joe Biden-era green tax incentives for businesses; in other news, the UK will reportedly maintain its DST despite US pressure
New French legislation should create a more consistent legal environment for taxing gains from management packages, say Bruno Knadjian and Sylvain Piémont of Herbert Smith Freehills Kramer
The South Africa vs SC ruling may embolden the tax authority to take a more aggressive approach to TP assessments, an adviser tells ITR
Indirect tax professionals now rate compliance as a bigger obstacle than technology and automation; in other news, Italy approved a VAT cut on art sales
AI-powered tax agents are likely to be the next big development in tax technology, says Russell Gammon of Tax Systems
FTI Consulting’s EMEA head of employment tax and reward tells ITR about celebrating diversity in the profession, his love of musicals, and what makes tax cool
Canadian Prime Minister Mark Carney and US President Donald Trump have agreed that the countries will look to conclude a deal by July 21, 2025
The firm’s lack of transparency regarding its tax leaks scandal should see the ban extended beyond June 30, senators Deborah O’Neill and Barbara Pocock tell ITR
Despite posing significant administrative hurdles, digital services taxes remain ‘the best way forward’ for emerging economies, says Neil Kelley, COO of Ascoria
Gift this article