Business Environment

flag Albania Albania: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The fiscal year in Albania is the calendar year.
Accounting Standards
Since 1 January 2006, a new law on accounting and financial statements has been adopted. Albania now uses the international financial standards (IAS and IFRS).
Accounting Regulation Bodies
Ministry of Finance
Accounting Reports
Accounting reports must be in Albanian and figures must be in Leks (ALL). The report must include the balance of payments, the assets and liabilities of the company, and an annex describing general accounting recommendations. For more information see Investment in Albania.
Publication Requirements
National Accounting Standards (NAS) and International Financial Reporting Standards (IFRS) apply for certain companies, effective January 1st, 2008. Financial Statements must be submitted annually. For more information see the National Center for Business Registration.
Professional Accountancy Bodies
IEKA , Instituti i Ekspertëve Kontabël të Autorizuar të Shqipërisë (Albanian Institute of chartered accountants and auditors)
IKM , Instituti i Kontabilisteve te Miratuar
Certification and Auditing
The audit of the annual financial statements by chartered individual auditors or auditing companies is mandatory for:
- Companies that apply the IFRS, irrespective of their legal form;
- Joint stock companies that apply the National Accounting Standards for financial reporting;
- Limited liability companies that apply the NAS at certain conditions.

For more information see Investment in Albania. You can also contact chartered individual auditors: Tonnuci and Partners, Wolftheiss, KPMG, Deloitte, Ernst & Young, Boga & Associates.
Accounting News

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Tax Rates

Consumption Taxes

Nature of the Tax
Tatimi mbi Vleren e Shtuar (TVSH) - Value-Added Tax (VAT)
Tax Rate
20%
Reduced Tax Rate
Exempt items include: hospital services and medical care; insurance and reinsurance services; supply and rent of land and buildings; financial services; postal services; education services; hydrocarbon exploration operations; printing and sale of publications; betting, lotteries and gambling; importation of machinery and equipment used for inward processing of goods or in the implementation of contracts of ALL 50 million or more; importation of production machinery for small business; import of raw materials used for the manufacture of medicines, with the exception of dual-use substances, carried out by holders of production authorization; agricultural machinery and inputs (i.e. fertilizers, pesticides, seeds and seedlings); veterinary services, except veterinary services for domestic animals; new vehicles with electric motor, zero km, that have not been previously registered for circulation in any other country; supply related to the construction/reconstruction process in the case of natural disasters upon receipt of the authorization by the General Tax Director; supply of services and goods directly to the constructor engaged with the building process in the case of natural disasters, when authorized by the General Tax Director.

Zero-rated items include: exports of goods; international transport; services relating to maritime activities; supplies under diplomatic arrangements; supply of gold to the Central Bank of Albania; intermediary services related to zero-rated supplies or services rendered abroad.

A 6% reduced rate applies to: accommodation services by the accommodation facilities; supplies made within five-star accommodation structures of an internationally known trademark; supplies of accommodation and restaurant services, excluding beverages, by the certified structures; agritourism; supplies of advertising services by audio-visual media; licensed public transport equipped with electric motors, with nine plus one places or more, by 31 December 2021 (the rate of VAT for such supplies will increase to 10% from 1 January 2022); books.

Other Consumption Taxes
Excise duties are levied on tobacco, alcoholic beverages, energy products (petroleum, gasoil, gas), fireworks, baked coffee, plastic, glass or mixed packaging.
Custom duties range from 0% to 15%, depending on the type of goods.

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Corporate Taxes

Company Tax
15%
Tax Rate For Foreign Companies
The Albanian state does not make any difference between foreign and Albanian companies. Nevertheless, non-resident companies are only taxed on their Albanian-sourced income, whereas resident entities are taxed on their worldwide income.
A legal entity is deemed to be resident in Albania if it has its head office or its place of effective management in Albania.
Capital Gains Taxation
Capital gains are considered taxable income and are taxed at the applicable corporate income tax rate of 0%, 5%, or 15%.
Gains on the sale of share are generally taxed at 15% of the difference between the sale price and the purchase price.
Main Allowable Deductions and Tax Credits
Amortisation of tangible and intangible assets (with the exception of land, among others) is tax-deductible. Amortisation rates vary between 5% and 25%. Amortisation of capital assets that exceed the allowable depreciation rates is not deductible.
Interest expenses (with rates that exceed the average 12-month credit interest rate applied in the Albanian banking system) are not deductible. Interest expenses that take 30% or more of EBITDA are also considered as non-deductible. Bad debts can be deducted if the following conditions are simultaneously met:

  1. the amount that corresponds to the bad debt was initially included in the income
  2. the doubtful debt is removed from the books of account taxpayer
  3. the company has taken all possible legal steps to recover its debt.


There is no tax regulation regarding donations to charities, fines and taxes paid; however, these are generally considered as non-deductible. Tax losses can be carried forward in full up to three years (five years for business projects valued above ALL 1 billion). The carryforward is not allowed if more than 50% of the direct or indirect ownership of the share capital or the voting rights were transferred during the fiscal year. The carryback of losses is not allowed. All costs that are not supported with fiscal invoices or expenses paid in cash of amounts exceeding ALL 150,000 are also considered non-deductible.

Other Corporate Taxes
The real estate tax on new construction projects ranges between 4% and 8% of the sale price per square meter on constructions for residential and/or commercial purposes. The rate ranges from 2% to 4% of the investment value in Tirana, from 1% to 3% in other cities for buildings that will be used for tourism purposes or for industry and agriculture. Four or five-star hotels with special status and agro-tourism entities are exempt from the real estate tax on construction projects.
A property tax is levied on real estate by municipal authorities at variable rates. The property tax is calculated on the market value of real estate at variable rates depending on the type of building. The rate is 0.05% for residential properties and 0.2% for commercial properties. The tax is levied at 30% of the rate applicable on properties under construction. The property tax on agricultural and urban land is calculated according to the area of ​​the land (from ALL 700 to ALL 5,600 per hectare on agricultural land, from ALL 120,000 to ALL 200,000 per hectare on urban land).

Social security contributions payable by the employer amount to 16.7% of salary (15% for social security, 1.7% for health insurance). For 2021, the gross salary base for calculating social security contributions ranges from ALL 30,000 to ALL 132,312.

Stamp duties are levied in the form of notary fees that apply to all transactions involving movable and immovable property (levied up to ALL 1,000). Notary fees vary between 0.23% and 0.35% of the transaction value for real estate and between 0.23% and 0.3% for movable property.
Property transfer taxes vary between ALL 100 and ALL 2,000 per square metre for commercial property and amount to 2% of the sale price for any other property.
The fee for the registration of a business entity is ALL 120 (waived if made online).

Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Albania Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 35.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 252.0 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 36.6 36.5 36.6 48.8

Source: Doing Business - Latest available data.

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Individual Taxes

Tax Rate

Income tax (Employment income) Progressive rate
From ALL 0 to 30,000 0%
From 30,001 to 150,000 13% (of the gross amount over ALL 30,000)
Over ALL 150,001 ALL 15,600 plus 23% of the amount above ALL 150,000
Income other than from employment 15% (8% for dividends)
Allowable Deductions and Tax Credits
The minimum taxable income is ALL 30,000. Social and health contributions (SHC) and voluntary pension contributions are deductible from taxable income. Medical expenses, up to ALL 8,532 per year, that are not covered by national insurance are also deductible (the limit is extended to ALL 32,000 if one person submits one personal income declaration as the head of the family). Interest expenses for educational purposes (both self-education and education of children or persons under care) are deductible.
Special Expatriate Tax Regime
Resident natural persons are subject to tax on all income earned both in Albania and abroad. Non-resident persons are subject to income tax, only on Albanian-sourced income, unless a bilateral fiscal convention with the foreign national's country provides otherwise.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the tax treaties signed by Albania
Withholding Taxes
Dividends: 0 (resident companies)/8% (non-resident companies; individuals); Interests: 0 (resident companies)/15% (non-resident companies; individuals); Royalties: 0 (resident companies)/15% (non-resident companies; individuals).

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Intellectual Property

National Organisations
The General Directorate of Industrial Property (DPPI).
Regional Organisations
Albania has an agreement with the European Union on patents.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Law N°7819 of 27 April 1994
20 years Patent Cooperation Treaty (PCT)
Trademark
 
Law n°7819
10 years, renewable once. Trademark Law Treaty
Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Law n°7819
5 years, renewable every 5 years for a total duration of 15 years.  
Copyright
 
Law n°7564
70 years after the death of the author. Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
 
Law n°7819
10 years  

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Legal Framework

Independence of Justice
The constitution provides for an independent judiciary. However, the judiciary, along with law enforcement agencies, remains inefficient and prone to political influence.
Equal Treatment of Nationals and Foreigners
The judiciary cannot guarantee an impartial trial for foreign nationals.
The Language of Justice
The judicial language is Albanian.
Recourse to an Interpreter
An interpreter can be arranged.
Sources of the Law and Legal Similarities
The main source of the law is the constitution adopted by popular referendum in November 1998. Albania's legal system is similar to that of other European countries. The Supreme Court is the highest appeal authority in the country. Albania has not accepted the obligatory jurisdiction of the ICJ.
Checking National Laws Online
Library of Congress
World News Report

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Standards

National Standards Organisations
DPS, General Directorate of Standardization
Integration in the International Standards Network
The General Directorate of Standardization (DPS) is a member of:
ISO: the International Organization for Standardization
IEC: the International Electrotechnical Commission

The DPS is affiliated to:
CEN: the European Committee for Standardization
CENELEC: the European Committee for Electrotechnical Standardization
Classification of Standards
The DPS: the General Directorate for Standardization is an institution associated with the Ministry of the Economy, Trade and Energy. Except in the telecommunications sector, the DPS is the official organization for standardization. The standards listed by this institution are: EN, ISO, IEC, ECE, CODEX and JET.
Online Consultation of Standards
Consult the list of the standards.
Certification Organisations
DPS General Directorate for Standardization

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Business Practices

General Information
Guide to doing business in Albania
Culture crossing guide for Albania
Opening Hours and Days
Most Albanian stores are open from Monday to Friday, from 8 am to 5 pm and occasionally open on Saturday morning.
Administrations are usually open from Monday to Thursday, from 8 am to 5 pm, and on Friday from 8 am to 2 pm. There is no law defining the opening times of stores, and many will therefore stay open all weekend.
 

Public Holidays

New Year 1 January
New Year 2 January
Nevruz festival (Spring festival) 22 March
Catholic Easter 12 April
Orthodox Easter 19 April
Labor Day 1 May
Fitër Bajrami (end of Ramadan) Varies
Beatification of Mother Teresa 19 October
Kurban Bajrami (Aid al-Adha) Varies
Independence Day 28 November
National Liberation Day 30 November
Christmas Day 25 December
 
Holiday Compensation
Generally, when a public holiday falls on a week end, either the Friday or the Monday is taken in compensation.
 

Periods When Companies Usually Close

Christmas period Between 24 December and 3 January
 

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Latest Update: April 2022