Additions made to law “On income tax”

Official Bulletin no. 259, dated 6 January 2017

The Parliament of Albania, on 15.12.2016, approved law no.129/2-17, in accordance with several additions made to law no.8438, 28.12.1998. “On income tax”, as amended.

The first addition made to the new law is foreseen below point 3 of article 21, where by the addition of point 4, besides the definition given by point 2 and 3 of this article, it is extended that in case of loans, borrowings or relevant people financings, it is not considered as deductible expense of taxation term, the overage of net margin over 30 percent of taxable profit before the percentage, tax, depreciation and amortization (EBITDA). Taxable profit before the percentage, tax, depreciation and amortization, is defined in accordance with article 19 of this law. The use of term “overage of net margin” implies the excess difference of the percentage of cost and the percentage of revenue. Every percentage of cost, not deducted in accordance with this point, is beared to upcoming tax periods, besides only if 50 percent of the shares or suffrages in an enterprise are transferred. The definition of this paragraph is not applied on banks, non bank financial institutions of loan, insurance companies and leasing companies.

Rules regarding this paragraph implementation are defined by the instruction of the Minister of Finance.

Moreover, a paragraph is added by the end of article 25 of this law, according to which bank expenses regarding annual and exceptional contributions, in accordance with law “On the recovery and exceptional intervention on banks on the Republic of Albania”, are recognized expenses of taxable profit.