Transfer pricing documentation requirements in Albania

1. In your jurisdiction, are taxpayers obliged to maintain transfer pricing documentation? Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?

Albanian tax legislation, specifically article 36 of law 8438 of 28 December 1998, concerning tax on profits, regulates transfer pricing issues between connected/related parties. The law does not make any distinction between individuals and legal entities, or on the basis of turnover.

The law refers to transfer pricing documentation but there is no express obligation to maintain such documentation. However, it is advisable to do so in case of a tax audit.

The condition sine qua non for tax authorities to recalculate income (and consequently profit) is that the tax administration has verified that there is a substantial discrepancy between the income declared by the connected/related parties and market prices at the time of the transaction.

2. What is the content of the documentation that must be prepared?

Albania is a member state of the OECD and its Ministry of Finance has issued two important regulations governing the procedure for reassessment of transfer prices. Ministry of Finance regulation 1 of 11 February 2002, concerning transfer prices, makes provision as to the methods that can be used to recalculate the taxpayer’s income. The content of the documentation exactly follows the current OECD recommendations.

a) Which transactions must be documented (all transactions with associated enterprises, or only those which exceed a particular threshold)?

The documentation should cover all transactions with related parties.

b) What is the definition of “associated enterprises” for the purposes of this requirement?

Article 2 c) of law 8438 of 28 November 1998 concerning tax on profits contains a definition of “associated parties”, which can be translated as follows: “persons are considered to be associated where one of them acts or is empowered to act in accordance with the directives, suggestions or will of the other, or where both act in accordance with the directives, suggestions or will of a third person, regardless of whether these matters have been reported”. In particular, the following parties are considered to be associated:

  • Spouses, parents and their children;
  • A company and another company or person directly or indirectly holding 50% or more of its shares (by value or number) or voting power;
  • Two or more companies linked by virtue of the fact that a third party directly or indirectly holds 50% or more of their shares (by value or number) or voting power.

c) For EU countries, is the content of the documentation similar to that described in the EU Code of Conduct on transfer pricing documentation for associated enterprises (“EU TPD”)? If not, are taxpayers entitled to choose between the local requirements and the EU TPD?

Albania is not yet a member of the European Union, although it has an Association Agreement with the EU.

d) Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request? Can your tax authorities require the taxpayer in your jurisdiction to provide information which is located in another state?

Albania has signed various agreements to avoid double taxation with European and non-European countries. Under those agreements the competent tax authorities may request information from the tax authorities of the relevant country.

e) If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?

We are not aware of cases where the tax authorities have accepted regional benchmark studies.

f) What language(s) are to be used by taxpayers in submitting the transfer pricing documentation?

The documents that are used for transactions with Albania should preferably be in the Albanian language.

3. What is the deadline or timescale for providing transfer pricing documentation to the tax authorities (is it to be provided for example upon filing of the tax returns, at the beginning of a tax audit, or on the specific request of the tax authorities)?

In the absence of any clear obligation to maintain transfer pricing documentation, there is no specific deadline for providing it to the tax authorities.

Where the documentation required by the tax authority is not filed within the prescribed period, there are no documentation-related penalties.

4. Does the absence or incompleteness of documentation reverse the burden of the proof as regards the arm’s length character of the transactions?


Since there is no documentation-related penalty, this is not applicable.

Picture of Lulzim Alushaj
Lulzim Alushaj
Senior Associate