Released 13 September 2026, this briefing covers the Tax Administration’s intensified scrutiny of business splitting arrangements designed to keep each entity below the 14,000,000 LEK annual turnover threshold that qualifies for the 0% profit tax regime (Law No. 29/2023, Article 69, valid until 31 December 2029). The General Directorate of Taxes now applies a substance‑over‑form test: common ownership, shared premises, integrated management, and inter‑company pricing are indicators of a single economic unit. If proven, the turnovers are aggregated, the 0% regime is lost retroactively, and the 15% corporate tax (23% for sole proprietorships on excess) applies to the combined profit. Penalties include 0.06% daily late‑payment interest plus 10% cash‑transaction fines for any concealed revenue flows (Law No. 9920/2008, Articles 114, 120).
Key Takeaways
- Substance‑Over‑Form Test: Shared branding, centralized bookkeeping, and cross‑guarantees trigger mandatory aggregation of turnover across related entities.
- Retroactive Tax Assessment: Once aggregation is determined, the 0% benefit is revoked for all prior years within the 24‑month amendment window (Law No. 9920/2008, Article 67), generating immediate tax liabilities.
- Safe‑Harbor Documentation: Groups operating legitimately distinct lines (e.g., manufacturing vs. retail) must maintain transfer‑pricing documentation, separate boards, and independent banking to withstand audit challenges.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement