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The Regulation on the Core Management Principles of Banks and Branches of Foreign Banks and the Criteria on the Approval of their Administrators entered into force in Summer 2009. The Bank of Albania has established that the key function of the Steering Council and the directorate is to ensure that banks and foreign branches have sufficiently robust internal structures to manage liquidity risk.
Parliament recently approved a law making Albania a party to the International Convention on Maritime Liens and Mortgages. The adoption of the convention will give Albanian banks and credit institutions greater guarantees for the recognition and enforcement of their security interests (ie, mortgages, hypotheques and charges) over seagoing vessels.
The Supervisory Council of the Bank of Albania has approved a new regulation on electronic payment instruments. The regulation aims to improve the framework for the issue and use of electronic payment instruments, as part of the bank's implementation of a function to create and supervise the secure and efficient operation of Albania's payments system.
Parliament has approved an amendment to the existing Value-Added Tax (VAT) Law abolishing the legal provisions related to the export of services. The recent amendment provides that services performed from Albania by Albanian taxpayers are considered to be international services and are therefore VAT exempt. However, Albanian taxpayers no longer have legal grounds to charge 0% VAT on the value of exported services.
A draft amendment to the Income Tax Law has been approved by the government. Among other things, with regard to the taxation of cash capital increases, the amendment adds a further source of personal income to the remit of personal income tax. Other changes pose the problem of double taxation of small businesses' income.
Albanian fiscal legislation is in the process of being harmonized with EU standards. However, the European Commission Progress Report 2009 recently identified several aspects that remain to be improved. According to the report, the objectives are to improve the legal framework to reduce the informal economy and strengthen tax administration to increase the tax collection rate.
Recent media reports have stated that some Albanian companies may be subject to bankruptcy proceedings initiated by the tax authorities. This update clarifies some of the procedural aspects and legal consequences for companies that may be subject to such proceedings.
A recent amendment to the Income Tax Law, which also regulates corporate tax, allows companies' taxable incomes to be reduced for the purposes of corporate tax. Albanian companies that hold shares in other companies benefit from this recent amendment in comparison to the tax obligations under the previous law.
Projects & Procurement
The Law on Public Procurement 2006 has recently been amended. The new legislation affords greater flexibility to contracting authorities when conducting public procurement procedures. It introduces new institutions, definitions and special contracts, new elements to administration procedures and new exemptions from the application of public procurement procedures.
The Concessions (Amendment) Law has brought about several key changes to the Concessions Law. The Public Procurement Agency will no longer cover concessions - this role will now be performed by the newly established Concessions Agency. The agency will report directly to the prime minister and its organization will be determined by the Council of Ministers.
The Council of Ministers has established that all public procurement procedures shall be carried out in electronic form from the end of January 2009. The new system creates flexibility, reduces the cost and time involved in the preparation of documents and increases efficiency, transparency and confidentiality of data.
Concessions have become an increasingly important form of public-private partnership in Albania, being particularly utilized in projects for the construction or rehabilitation of hydropower plants. Several amendments were introduced late last year to the existing Concessions Law, including consolidation of the lender step-in right and changes to the way contracts are approved.
White Collar Crime
The new Law on Prevention of Money Laundering and Financing of Terrorism aims to tackle money laundering and the products that derive from such criminal actions, as well as preventing the financing of terrorism. It meets international standards and creates a framework not only of protection against money laundering, but also for securing, discovering and preventing such activity.