Adoption of Country-by-country reporting legislation

Albania has recently implemented provisions regarding the Country-by-Country reporting following the amendments made to the Law no. 9920 “On Tax Procedures in the Republic of Albania”. The Council of Ministers have issued on 01.08.2024 the decision no. 513 "On determining the procedures and detailed information contained in the Country-by-Country report related to MNE Groups".

These provisions contain detailed rules and procedures that should be followed by Ultimate Parent Entities and Constituent Entities of an MNE Group when preparing the country-by-country report and notification to tax administration in order to be compliant with the Law on Tax Procedures and its by-laws.

Each Ultimate Parent Entity of an MNE Group that is resident in Albania for tax purposes shall prepare and submit to the Albanian tax authorities a (CbC) country-by-country report in accordance with the requirements of the Law. MNE Groups having total consolidated group revenue of less than ALL 105 billion during the fiscal year preceding the reporting fiscal year as reported in its consolidated Financial Statement are not required to prepare and submit a country-by-country (CbC) report.

The CbC report should be prepared in accordance with the content and format of the template provided in Appendix 1 of the DCM. The CbC report template is structured in three parts as follows:

1. Table 1 contains information regarding the amount of income, profit (loss) before income tax, income tax paid, estimated income tax, declared capital, accumulated profits, number of employees and tangible assets, other than cash or its equivalents, for each jurisdiction in which the group of multinational companies operates;
2. Table 2 provides identification of each Constituent Entity of the MNE Group setting out the jurisdiction of tax residence of such Constituent Entity, and where different from such jurisdiction of tax residence, the jurisdiction under the laws of which such Constituent Entity is organized, the tax identification number and the nature of the main business activity or activities of such Constituent Entity.
3. Table 3 shall provide any additional information or explanation that may be considered as necessary or makes the information provided in the CbC report easier to understand.

Filing instructions

The CbC report is filed by the reporting entity using the XML schema in accordance with the taxpayer’s manual for CbC reporting approved by the General Directorate of Taxes, which is prepared referring the OECD’s XML schema and User Guide for CbC reporting.

The taxpayer's manual for CbC reporting shall contain the information required to be included in each data element of the CbC report, as well as instructions on how to make corrections to data items within a file, that can be processed automatically.

Penalties

The country-by-country report shall be filed no later than 12 months after the last day of the reporting fiscal year of the MNE Group. Failure to file the CbC report within the deadline is subject to a penalty of ALL 10,000 for each month of delay up to 12 months after the deadline. If the report is still not filed after 24 months from the deadline, the taxpayer is subject to a penalty of ALL 200,000. In case the taxpayer provides incorrect or incomplete information through the CbC report, it is subject to a penalty of ALL 50,000.

Any constituent entity of an MNE Group that is resident for tax purposes in Albania, shall notify the tax administration:

Thments:

1. whether it is the Ultimate Parent Entity; or
2. where the constituent entity it is not the Ultimate Parent Entity , it shall notify the tax administration of the identity and tax residence of the reporting entity of the MNE Group

For each of the above cases, the entity is required to prepare and submit a notification to the tax administration in accordance with the templates provided in the Annex 2 of the DCM. The notification shall be submitted to tax administration no later than the last day of the reporting fiscal year of the MNE Group (i.e. the Ultimate Parent Entity).

Following the initial submission, a constituent entity is required to submit a notification to the tax administration in case of any change in the previously provided information and shall again be made no later than the last day of the reporting fiscal year of the MNE Group. If there are no changes in circumstances or information since the initial submission of the notification to the tax administration, the constituent entity is exempt from submitting the notification form for subsequent periods.

In cases where many constituent entities of the same MNE Group are tax resident in Albania, the MNE Group may appoint one of the entities to submit a single notification, which includes all constituent entities tax resident in Albania. In such cases, the notification shall comprehensively list all constituent entities tax resident in Albania.

Alba Paparisto, ACCA
Managing Director, Tax
Tel: +355 (4) 2274 524

Endri Lito 
Manager, Tax
Tel: +355 (4) 2274 524