Tax Incentives for IT Sector, Income Tax Rate at 5% for 8 Categories of Tech Companies

TIRANA, December 13

An income tax exempt for software development companies aims to increase Albania’s attraction rate as a destination for IT outsourcing. Albanian authorities decided to adopt tax exemption benefits for software development and IT-enabled services. The incentive will help to attract investment from foreign investors and companies looking for outsourcing in new advantageous areas.
Eight categories of tech companies that are involved in software development will benefit a 5 percent rate income tax. The decision was adopted during the latest meeting of the Council of Ministers held on Wednesday. According to the decision, all the juridical persons that operate a tech company that falls under one of the eight categories listed below will be subject to a 5 percent income tax.
Referring to Article No. 100 of the Albanian Constitution and to point No 2 of Article 28 of the Law on Income Tax the Council of Ministers decides that the following activities related to software development/production benefit a five percent income tax rate.

1. Software design. This is the process of envisioning and defining software solutions, analysis, and architectural patterns.
2. Software architecture system design development and maintenance. This consists of system programming, coding, installation, component integration, documentation, finding and fixing software bugs, modification, components maintenance, and system support
3. Software testing. This includes testing of functionality, workload, performance, acceptance, availability, and security of the software system.
4. Communication system design and development. This includes analysis, planning, design, implementation, deployment, and maintenance of computer networking systems (LAN / WAN / WLAN / MAN / SAN / CAN).
5. CISO related responsibilities. This includes analysis of customer security requirements, the design of the architecture, installations and component configurations, security testing and related maintenance.
6. System migration development. This includes transferring relevant data and infrastructure from old technology to a new technology.
7. Improvement/upgrade of information systems
8. Operating, managing, support for use, training and technical / IT audit for software systems.

Moreover, the decision highlights that companies have to fulfill certain conditions. The company should exercise activities only in the IT sector. It should hand over the relevant documents to the Tax office to prove the activity throughout the year, the cost of working, the labor cost, etc. For more details click HERE.

News Source: PM’s Office

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