Administrative Instruction No. 02/2017 introduces new requirements and procedures for implementing the transfer pricing provisions of Law No. 05/L-029. These rules generally are based on the Transfer Pricing Guidelines of the Organisation for Economic Cooperation and Development (OECD).
The transfer pricing rules emphasize that the arm’s length principle is the standard to be applied for intra-group transactions or controlled transactions. “Controlled transactions” for transfer pricing purposes are considered to be transactions between parties that have a special relationship that may materially affect the economic results of the transactions between them (e.g., if one entity holds or controls 50% or more of the shares or voting rights in the other entity, or if both entities are directly or indirectly controlled by a third entity).
Under the transfer pricing rules, the open market value is determined by the comparable uncontrolled price method. However, in situations when this method is not applicable, the following methods may be applied as the most appropriate method:
Taxpayers with controlled transactions with a value greater than €300,000 within a calendar year must submit to the tax authorities an annual controlled transactions form (ACTF) by 31 March of the following year. Taxpayers must also prepare and present to the tax authorities within 30 days upon request, the necessary documents and analysis in order to prove that the controlled transactions are in compliance with the arm’s length principle. This documentation must include the following:
Read a July 2017 report prepared by the KPMG member firm in Albania
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