Investment Incentives in Albania

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Tax incentives are one of the most important stimuli for increasing the inflow of capital in the form of domestic and foreign direct investment (FDI) into a host country. Besides investment promotion incentives are the element that boos the ability of a given economy to attract FDI.
The information below aims to provide potential investors with details on the environment in which they plan to conduct their business. However, if you plan to make a specific decision, please feel free to ask for more detailed information.

Based on the comparative matrix of incentives for investments in the Western Balkans, WB6 drafted and published by Albania Investment Council these are the tax incentives by sector:

FISCAL BURDEN
Corporate profit tax: 15 percent
Income tax on interest: 15 percent

Personal income tax:
Lek 0 to 30,000 – 0 percent
Lek 30,001 to 150,000 – 13 percent of the amount over Lek 30,000
Over Lek 150,000 – 23 percent of the amount over Lek 150,000 + Lek 15,600

The social contribution of the employer: 16.7 percent
The social contribution of the employee: 11.2 percent

Value Added Tax (VAT): 20 percent, 6 percent in the tourism sector

Tax Loss Carry Forward: Carried forward for 3 consecutive years

VAT reimbursement: Immediate or from 30 – 60 days.

INCENTIVES

Fiscal

VAT exempt when imported:
1. Agricultural machinery and equipment, for inward processing regime and agribusiness;
2. Machinery for investment ≥ €360,000
Import of machinery and equipment:
a) To perform investment contracts of equal or greater value more than Lek 50 million;
b) To perform investment contracts in the active processing sector and agribusiness, whatever the value of the investment; and
c) The importation of production machinery by the subjects of the simplified profit tax.
Exempt from customs duties on imports of raw materials and semi-finished goods intended for export. (Suspension of import duty and VAT on goods imported under the inward-processing procedure)

Economic Zones (Technical and Economic Development Areas, TEDAS)
Two zones in the process but not active (Spitalla and Kopliku)

Fiscal incentives within Economic Zones

1. 50 percent reduction of profit tax for the first 5 years.
2. Entry and exit of goods according to the provisions of the Customs Code.
3. Deductible expenses 20 percent of the annual capital for the first three years.
4. The supply of Albanian goods in the zone is considered as export supply at zero VAT rate.
5. The developer is exempted from the tax on infrastructure effect
6. Buildings are exempted from immovable property tax for 5 years.
7. The developer and user are exempted from the property transfer tax

Non-fiscal incentives within Economic Zones

1. Expenses for salaries and social contributions of the employer are recognized at 150 percent of their value during the first fiscal year. Additional expenses for salaries in the following years are recognized as expenses at 150 percent of their value.
2. Training costs are considered as deductible expenses at twice their value for 10 years.
3. Research development costs are considered deductible expenses at twice their value for 10 years.

Non-fiscal incentives

The assisted procedure by AIDA as per sectors and value of the investment:
1. Energy and mining, transport, infrastructure, electronic communications, urban waste, for investments ≥ € 30 million;
2. Tourism at least 80 new jobs, TEDA ≥ € 5 million;
3. Agriculture and fisheries ≥ € 3 million and at least 50 new jobs;
4. Priority Development Areas ≥ € 1 million at least 150 jobs.
Special approval procedure by the Government and expropriation for:
1. Investments ≥ € 50 million for the above sectors;
2. for investments ≥ € 10 million and 600 jobs in the PDAs.
3. for every investment ≥ € 100 million
Specific:
Rental of state property with 1 Euro

Sectoral incentives

Agriculture
Tax on profits 5 percent for Legal Entities – Agricultural Cooperation Companies

Tourism
6 percent VAT on Accommodation Structures (Bed + Breakfast);
6 percent VAT on Any Supply Within “Hotel/Resort 5*, Special Status”
Structures (Brand Name)
Exemption from Building Tax and Impact Tax on Infrastructure
Hotel/Resort 5*, Special Status” (Brand Name)
Exemption from Profit Tax, for 10 years for those Structures, “Hotel / Resort 4 * and 5*, Special Status” Eligible for Special Status until December 2024.
6 percent VAT for Certified Entities in agrotourism (Sleeping + Restaurant (Non-Drinking))
Infrastructure Impact Tax Exemption for Agro-Tour Operators Who Will Invest in this area.
From January 1, 2018, For Certified Entities In agro-tourism Profit Tax decreased from 15 percent to 5 percent.

ICT
5 percent tax on profit on software production/development

Source: Albania Investment Council