Albania Government approved a new law aiming to ban money transfers between related companies in order to collect more corporate profit tax, and to fight tax avoidance from big corporations. The law, designed by International Financial Corporation, was approved by the government this week.
Transfer pricing is used by companies to transfer their profits from countries with high profit tax to countries with low or no profit tax. The scheme works also to transfer profits from one profitable company to a loss-making company within one corporation.
Currently there is anecdotal evidence that several companies in telecommunication, energy and mining use these schemes to avoid paying taxes in Albania.
Mostly such avoidance occurs in mining sector when extraction companies in Albania sell their minerals (mostly chromium and copper) to their parent companies outside Albania or through intermediaries enlisted in fiscal paradises.
Corporate profit tax in Albania is currently 15 per cent.