Albania: Transfer pricing: A step forward for Albania

Anastasia Sagianni		Erion Lena

The Albanian Ministry of Finance issued informative administrative guidelines for taxpayers related to the new transfer pricing legislation. According to the "Instruction on transfer pricing" published in June 2014, the Ministry of Finance sheds light on notorious issues as far as taxpayer compliance obligations are concerned.

Apart from the Transfer Pricing File, taxpayers in the Republic of Albania are obliged to complete the Controlled Transaction Notice as described in Appendix 2 of the June Instruction.

Transfer pricing documentation must be updated annually. Taxpayers are obliged to submit the TP study within 30 days from the request of the tax authorities, while the declaration of intra-group transactions accompanied with the TP method applied for each instance must be completed annually and submitted concurrently with the income tax return in the form of a Controlled Transaction Notice.

The threshold amount was set to ALL 50,000,000 ($450,000 / €357,000). Pursuant to Article 36/5, paragraph 2, of the Income Tax Law (no. 8438), taxpayers engaging in controlled transactions (including loan balances), which in aggregate, within the reporting period, exceed ALL 50,000,000 are required to complete and submit the Annual Controlled Transactions Notice.

The same amount of ALL 50,000,000 defines the taxpayer's obligation related to yearly updates of the comparable set. In line with the above, in the case of a benchmarking analysis using external comparables, the set of external comparable uncontrolled transactions is updated only every third reporting period provided there have been no material changes to the controlled transactions, the external comparable uncontrolled transactions or the relevant economic circumstances.

Transfer pricing documentation may be submitted in Albanian or English language. However, if documents are submitted in English, the tax authority has the right to request the translation of English documents into Albanian. By accepting the English language in the documentation, the Albanian tax authorities have already made a great first step towards harmonisation with the suggestions released on September 16 2014 in the Guidance on Transfer Pricing Documentation and Country-by-Country Reporting, (D.6, Chapter V, Action 13, BEPS).

According to paragraph 2 of the recently introduced administrative guidelines by the Albanian Ministry of Finance, though it is clarified that Albanian Law follows OECD Guidelines (OECD TPG 2010), in case of differences or conflicts between the OECD TPG 2010 and Albanian Income Tax Law and Instructions, the Albanian Income Tax Law and Instructions will prevail.

Anastasia Sagianni (anastasia.sagianni@eurofast.eu) and Erion Lena (erion.lena@eurofast.eu)
Eurofast Global, Tirana Office
Tel: +355 69 533 7456
Website: www.eurofast.eu

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