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The investment that Albanian individuals have made in offshore financial centers in recent years seems to be bearing fruit.
According to Eurostat, in the data on personal transfers to Albania for 2020, the amount sent by offshore financial centers to individuals in Albania was 3.8 million euros. This amount was almost four times higher than a year ago and the highest level since 2017, when transfers from offshore financial centers to Albania began to be identified.
By global definition, an offshore financial center, otherwise known as OFC, is defined as a country or jurisdiction that makes financial services available to nonresidents in order to bypass aspects of the country or non – resident jurisdiction. These financial centers are generally used as locations for asset holding companies to carry out tax evasion. “Very often, they are used illegally for tax evasion.”
Eurostat lists the following countries as offshore financial centers: “Andorra, Antigua and Barbuda, Anguilla, Aruba, Barbados, Bahrain, Bermuda, Bahamas, Belize, Cook Islands, Curaçao, Cayman Islands, Dominica, Grenada, Guernsey, Gibraltar, Hong Kong, Isle of Man, Jersey, St Kitts and Nevis, Lebanon, Saint Lucia, Liechtenstein, Liberia, Marshall Islands, Montserrat, Mauritius, Nauru, Niue, Panama, Philippines, Seychelles, Singapore, Sint Maarten, Turks and Caicos Islands, Saint Vincent and the Grenadines, Virgin Islands (British), Virgin Islands (US), Vanuatu, Samoa ”.
The amount of transfers to persons sent from these offshore financial centers is higher than that sent by countries such as the Netherlands (3.2 million euros), Norway (2.3 million euros), Bulgaria (1.2 million euros), etc., where in the latter also include remittances.
Owners of offshore companies have begun to go public
In July last year, the Albanian Parliament approved the law “On the Register of Beneficiary Owners”. The law in question aimed to enable transparency over the control of businesses in Albania, in particular those related to shell companies registered abroad, especially in jurisdictions known as tax havens. Control over companies with offshore registered shareholders has caused great controversy in recent years, especially for those entities that have benefited from concession or Public-Private Partnership contracts.
The first issue was the principle of transparency over ownership. Entering into contracts with companies that did not know to whom they belonged posed the moral problem that a country could not pay them public money without knowing who their ultimate beneficiary was.
This practice added to the suspicions that many of the companies benefiting from the concessions were registered offshore, precisely to hide the real beneficiaries, who have often been rumored to be Albanian entrepreneurs with dubious connections to politicians. Also, registering in offshore jurisdictions usually poses added risks, related to tax evasion, money laundering or other financial crimes.
The establishment of the Register of Beneficiary Owners, according to the new law, has partly helped to make transparency regarding the ownership, at least officially, of some of the concession companies operating in our country. The law requires each company to declare shareholders who, directly or indirectly, own more than 25% of the shares in them.
Due to implementation problems, the deadline for declaration of beneficial owners has been postponed until April next year. However, a large number of companies have already declared beneficial owners.
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