TIRANA, June 27- Foreign companies took abroad 102 million euros during the first quarter of this year in the form of profit and interest payments transferring. According to the Bank of Albania data, in the balance of payments for January-March, outflow is presented in the form of dividend payments and reinvested earnings amounting to 78 million euros, as well as interest payments amounting to 23 million euros.
This is the highest amount transferred in the form of profits in at least a decade since the first quarter of 2008 when the Bank of Albania reports the data. The transfer of profits was high in the period 2008-2010, as a result of the good performance of mobile phone companies, which at that time operated in an oligopoly market and had a profit rate of over 50 percent. Then the profits fell due to the increasing competition, impacting on the reduction of profits transfer which was at its minimum of 10 million euros in 2013 for the period January to March. Subsequently, this indicator increased again as a result of the positive performance of foreign capital banks and the emergence of concession companies, with the record being held by the Tirana International Airport concessionaire in Rinas.
A change in the fiscal package of 2019 aims to reduce dividend taxation to 8 percent from 15 percent, with a retroactive effect even for previous years. According to a special Income Tax Ordinance on retained earnings realized in 2018 before, including capitalized gains and losses, the 8 percent tax rate applies subject to the condition that the profit-sharing income undistributed in 2017 and earlier must be paid by Sept. 30, 2019, and the dividend payout for 2018 must be paid by August 20. Thus, both domestic and foreign companies are forced to distribute profits by the end of September.
The eight largest foreign companies, -Telekom Albania, Vodafone, Raiffeisen Bank, Intesa San Paolo, BKT (National Commercial Bank), Tirana International Airport, Spiecapag Albania and Transadriatica,- had retained retained earnings of 94 billion lek (772 million euros) and reserves of 29 billion lek (238 million euros), 86 percent of which is owned by Telekom Albania.
If this amount was to be converted from Lek to Euro, according to experts it would exert pressure on euro appreciation. One of the reasons why the common currency strengthened starting in 2009, was precisely because of the high demand for foreign currency by mobile phone operators that transferred profits from previous years. The euro rose sharply from around 125 Lek in 2007 to 140 Lek in 2010. The Euro stood at the balance of 138-140 lek until mid-2016, where the common currency experienced a steady decline, currently floating to about 122 Lek, due to the increased supply of foreign currency from informal activities, inflows boosted by tourism and revitalization of the migrant flows cycle.
But Telekom Albania which is the second mobile telephony operator in the country, received the decision to distribute 50 billion lek (410 million euros) as a dividend to Cosmote Mobile Telecommunication shareholders at the end of April. The decision was made a few days before the final transfer of Telekom Albania shares by Greek Cosmote to the Albania Telecom Invest AD, which was finalized on May 7.
According to the minutes of the meeting, Cosmote Mobile Telecommunication representative Dimitrios Paschos, stated that the company has retained earnings in the form of reserves from 2001 to 2010, that will now be distributed in the form of dividends to shareholders. Paschos explained that the amount to be distributed to the shareholders in the form of dividends is in the value of around 50 billion lek.
Tirana International Airport which is the most lucrative concessionaire in the country, decided in April to approve from the 2018 profit a sum of 8 million euros as dividend distribution, while leaving a profit of about 15 million euros. In the 2018 balance sheet, the company also has 3.1 billion leks (25 million euros) of retained earnings. As for the National Commercial Bank (BKT), it was decided at the end of March that 35 million dollars of retained earnings for 2018 will be distributed as a dividend to BKT’s sole shareholder, à‡alık Finansal Hizmetler, according to the Assembly’s decision deposited at the National Business Center.
