Insights On Corporate Tax Issues 2016


Types of corporate tax work

Albania was awarded candidate status by the EU in June 2014 and is now in the process of implementing reforms with a view to membership, under the assistance of EU as part of the Instrument for Pre-accession Assistance (IPA II) for the period 2014-2020.

In this context, Albania has undertaken and already partially implemented significant tax changes in the last one to two years, by replacing existing laws and introducing new ones aligned to EU legislation and best practice.

A new Law on VAT is effective as of 1 January 2015, which has been significantly harmonised with the corresponding EU Directive 2006/112/EC and has brought significant changes to the main VAT principles and rules in Albania.

A new Customs Code has been conceived and structured in line with the Union Customs Code (UCC), which was adopted as Regulation (EU) no. 952/2013 of the European Parliament and of the Council. This new Customs Code, published in 2014, is gradually replacing the existing one with the intention of a complete replacement by 1 June 2017.

With the assistance of the International Finance Corporation, an elaborated Transfer Pricing regulation has been drafted in accordance with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration (2010), and has been published in 2014 by introducing Transfer Pricing documentation and reporting requirements for 2014 and onwards. The Transfer Pricing regulation was subsequently extended in 2015 with a detailed instruction on Advance Pricing Agreements.

A new draft Law on Income Tax (covering corporate income tax, personal income tax and withholding tax) has been drafted by making reference to EU countries' legislation and best practice and has been circulated for comments amongst groups of interest during 2015 (please see below). It is expected to become final and enter into force by 1 January 2017.

During 2015, as a first phase under a general programme of actions against fiscal informality, the Albanian government introduced in the Law on Tax Procedures a number of significant measures (please see below). As a second phase of actions, the role of the fiscal administration is being restructured during 2016 through a new strategy, focusing on simplifying tax procedures and compliance and increasing efficiency in tax collection.

As regards the corporate income tax, Albania applies a progressive scheme, which has...

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