Albania: Changes to tax legislation impacting hydrocarbon operations

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Albania: Changes to tax legislation impacting hydrocarbon operations

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Erion Lena

A new tax legislation impacting companies operating in the hydrocarbons sector came into effect at the beginning of January 2014. Previously, Law no.7746 on Hydrocarbons, dated July 28 1993 defined VAT-exempt supplies in the hydrocarbon operations to include services supplied by contractors and subcontractors, certified as such by the National Agency of Natural Resources, relating to performance in the stages of both exploration and development of petroleum operations.

With the recent changes introduced with Law No. 182/2013, VAT-exempt supply is now set to include services provided by contractors and subcontractors, certified as such by the National Agency of Natural Resources, related to performance in the stages of the exploration only. The Minister of Finance and the Minister of Energy will jointly define the list of goods and services related with the exploration, and the excluding procedures.

Additionally, the law amendments stipulate that the import of goods or services relating to the performance of exploration and development phases of petroleum operations, carried out by contractors or subcontractors active in these operations – which were previously VAT-exempt – are no longer considered to be exempted.

Regarding the introduction of these services in the VAT scheme, the Ministry of Finance explains the reasoning by stating that the previously-applicable exemption had proven to be abused and should thus be removed. The tax administration will reimburse exporting oil companies for VAT paid on purchases.

Erion Lena (erion.lena@eurofast.eu)

Eurofast Global, Tirana Office

Tel: +355 69 533 7456

Website: www.eurofast.eu

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