TIRANA, Sept. 12 – Foreign companies operating in Albania increased transfer of profits to their parent companies in the first half of this year rather than reinvesting them in Albania. The hike in transfers came at a time when the country also faced a slight decline in foreign direct investment amid political and general election uncertainties ahead of the June 25 general elections.
Central bank data shows the transfer of profits climbed to €163 million in the first half of this year, up from €108 million during the same period last year, registering a 51 percent increase.
The sharp hike reflects uncertainties over a prolonged political deadlock ahead of the general elections and lack of tax incentives to reinvest profits.
Since 2014, when Albania abandoned its 10 percent flat tax regime, the corporate income tax and the withholding tax on dividends, rents and capital gains have increased by 5 percent to 15 percent, making the tax burden in the country one of the region’s highest.
In its new 2017-2021 electoral program, the Socialist Party has promised to cut the dividend tax to 6 percent, down from a current 15 percent in a bid to promote dividend reinvestment.
The transfer of profits slightly dropped to about €215 million in 2016, but remained at almost the same annual outflow for the past three years, according to revised central bank data.
Since the onset of the global financial crisis, foreign companies operating in Albania have considerably increased the transfer of profits to their parent companies.
The transfer of profits hit a record high of €401 million in 2009 at the onset of the global financial crisis compared to a pre-crisis decade of €19 million to €57 million annually, according to the Bank of Albania.
Transfer of profits H1 2017
Q1 = €82 mln
Q2 = €81 mln
Total H1 = €163 mln
Transfer of profits H1 2016
Q1 = €47 mln
Q2 = €61 mln
Total H1 = €108 mln
Transfer of profits 2013-2016
2016 = €215 mln
2015 = €227 mln
2014 = €214 mln
2013 = €78 mln
