Albania has completed ratification of the STTR MLI, a key Pillar Two instrument designed to ensure a minimum 9% tax rate on specified categories of cross-border income.
Albania has ratified the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule (STTR MLI) through Law No. 45/2026, published in the Official Gazette on 20 May 2026.
The law gives effect to Albania’s commitment under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) to implement the Subject to Tax Rule (STTR) through its bilateral tax treaty network. Albania signed the STTR MLI on 23 September 2025.
The Convention, adopted in Paris on 15 September 2023, provides a framework for incorporating the STTR into existing bilateral tax treaties, referred to as Covered Tax Agreements. The measure is intended to address tax challenges linked to the digitalisation of the economy while helping to ensure a minimum level of taxation on certain cross-border payments.
Under the STTR, a source jurisdiction is permitted to impose additional tax on defined categories of covered income when that income is subject to a nominal tax rate below the minimum STTR rate of 9% in the recipient jurisdiction. The source jurisdiction may levy tax equal to the difference between the 9% minimum rate and the effective rate applied to the income.
Covered income includes interest, royalties, payments for the use of distribution rights, insurance premiums, financial guarantee fees and service fees. The rule generally applies where total covered income paid between connected parties exceeds EUR 1 million during a fiscal year. A reduced threshold of EUR 250,000 applies where one of the jurisdictions involved has a GDP of less than EUR 40 billion.
The Convention also provides exclusions for certain entities, including individuals, pension funds, non-profit organisations, central banks and international organisations.
In addition to the core STTR provisions contained in Annex I, the Convention includes optional technical provisions in Annexes II to V. These cover taxes calculated on an alternative basis, taxes imposed at the point of profit distribution, definitions relating to recognised pension funds and a circuit-breaker mechanism that suspends the STTR where a jurisdiction qualifies as a high-income economy for five consecutive years.
As part of the ratification process, Albania identified 21 bilateral tax treaties that it intends to bring within the scope of the Convention. These include treaties with Belgium, Czechia, Egypt, Estonia, Hungary, Israel, Kuwait, Latvia, Malaysia, Malta, the Netherlands, Poland, Qatar, Romania, Saudi Arabia, Serbia, Singapore, Spain, Switzerland, Turkey and the United Arab Emirates.
The legislation was approved by the Albanian Parliament on 23 April 2026 and subsequently decreed by President Bajram Begaj on 14 May 2026.
The law will enter into force 15 days after its publication in the Official Gazette.
