Tax on reduction of shares of capital in Albania

The taxation of reduction of value of capital is treated based in the income tax law in Albania.

The article 33/1 of the Albanian law On income taxes, No.8438, dated 28.12.1998, and the point 5.7 of the Instruction of Minister of Finance, No.5, dated 30.01.2006, explain the procedure regarding to the reduction of capital from commercial companies.

As a first step,

the Company XYZ should take in consideration that Capital allowances, contributions in cash or in kind to the shareholders, and the reduction of capital should be made in accordance with the rules and procedures of Law No. 9901, dated 14.04.2008 ‘On traders and commercial companies

This explanation of Instruction of Law On Income taxes means that every transaction should follow the legal procedures in the articles 72 to 75 of the Law No. 9901, dated 14.04.2008 ‘On traders and commercial companies.

In this regard, the procedures are the same as before this note from us.

As a second step,

regarding the tax law about the capital reduction, the Company XYZ Albania has no obligation to pay withholding tax in the case of transaction of capital reduction, since this sum of capital is derived by contributions in cash or in-kind owners.