AREA OF APPLICATION

The following are subject to corporate income tax:

1. Legal entities and partnerships with incomes over 8,000,000 ALL per year;
2. Legal entities, as well as other partnerships of persons established or organized on the basis of a foreign law and operating in the territory of the Republic of Albania
3. Any other person, regardless of status or legal form of registration or recognition, when he is subject to value added tax, unless this person is subject to simplified income tax for small business.

OBLIGATION TO PAY INCOME TAX 

Resident taxpayers are subject to income tax, on profits realized from all sources inside and outside the territory of the Republic of Albania.

Non-resident taxpayers are subject to income tax, on profits realized from all income, with source in the Republic of Albania

INCOME TAX RATES ARE:

1. 0% for taxpayers with incomes up to 14,000,000 ALL per year.
2. 15% for taxpayers with incomes over 14,000,000 ALL per year.

REDUCED TAX RATE

• For legal entities, which operate on the sector of production / development of software, corporate income tax rate is 5%.
• For legal entities, which carry out economic activities according to law no. 38/2012, "On agricultural cooperation companies", corporate income tax rate is 5%.
• For entities, which carry out hosting activities certified as "agritourism", according to the legislation in force in the field of tourism, the corporate income tax rate is 5%. This is applied for a period of 10 years for legal entities that receive the status of "certified agritourism entity", until December 31, 2021.
• For legal entities, which exercise economic activity in the automotive industry, corporate income tax rate is 5%.

EXCEPTION

Accommodation structures "Hotel / Resort with four and five stars, special status", as defined in the legislation in the field of tourism and which are holders of an internationally registered trademark "brand name", are excluded from corporate income tax, for a 10-year period for those structures, which receive special status until December 2024. The effects of the exemption start at the moment of starting the economic activity of the accommodation structure, but not later than 3 years from receiving the special status.

Personal income tax rates are:

Personal income tax is calculated on the income of individuals.

1. Resident individuals are subject to personal income tax liability during tax period, for all sources of income.
2. Non-resident individuals are subject to personal income tax liability during tax period, for sources of income, realized in the territory of the Republic of Albania.

[1] The exchange rate used is 1 EURO = 111 ALL

Social security and health insurance contributions

The social security contribution is calculated on the gross monthly salary and varies from a minimum amount of ALL 40,000 to a maximum amount of ALL 176,416.

The health insurance contribution is calculated on the gross monthly salary.

Self-employed persons pay a 3.4% health insurance contribution of no less than twice the minimum wage, i.e. of ALL 80,000, as well as social security contributions of 23% of no less than the minimum wage ALL 40,000.

The Value Added Tax (VAT) is a general tax on consumption of goods and services, proportional to their price, which is charged at each phase of production and distribution process without tax price.

AREA OF APPLICATION

Value added tax is subject to:

1. all supplies of goods and services, performed against payment, within the territory of the Republic of Albania, by a taxable person acting as such;
2. all imports of goods in the territory of the Republic of Albania.

MINIMUM REGISTRATION LIMIT 

The minimum registration limit for value added tax is the turnover of 10 000 000 ALL in a calendar year. The taxable person has the right to choose to apply the normal VAT regime, if the annual turnover is greater than 5 000 000 ALL.

STANDARD RATE

The standard rate of value added tax on supplies of goods and services, which is applied as a percentage of the taxable value, is 20%. 

REDUCED RATE

The reduced rate of 6% VAT is applied:

• For the provision of accommodation service in accommodation structures, according to the categories defined in the legislation in the field of tourism.
• For each service supply offered within the accommodation structures "Hotel / Resort with five stars, special status", as defined in the legislation of the field of tourism and which are holders of a trademark registered and internationally recognized "brand name".
• For the structures, which carry out reception activities certified as "agritourism", according to the legislation in force in the field of tourism, for the provision of accommodation and restaurant services, with the exception of beverages.
• For the provision of advertising service by audiovisual media.
• For the supply of licensed public transport of passengers by bus with nine plus one seats or more, only with electric motor.
• For the supply of books of any kind.

The reduced rate of 10% VAT is applied:

• For the supply of agricultural inputs, including chemical fertilizers, pesticides, seeds and seedlings, with the exception of hormones classified in codes 2937 of the Combined Nomenclature of Goods.

0% rate:

The following are treated as zero VAT rate supplies:

• Exports
• Goods and services related to their international transport

EXCLUSIONS IN IMPORT

Import of machinery and equipment:

1. in function of the realization of investment contracts with equal value or greater than 500 million ALL. (4,166,667 €)
2. in order to implement investment contracts in the active processing and agribusiness sector, regardless of the value of the investment;

All residents in the Republic of Albania, local central government bodies, non-profit organizations and any other entity, recognized by the legislation in force, are obliged to withhold tax from the gross amount of the following payments, which arise from a source in the Republic of Albania, according to the following scales:

1. 15 percent for:

• interest and similar payments;
• payments for copyright and intellectual property;
• payments for technical services, management services, consulting services, financial and insurance services;
• payments for management and participation in the steering councils;
• payments for construction, installation, assembly or related supervision work;
• payments for rents;
• payments for performances of actors, musicians or athletes, including such payments to persons who employ artists or athletes or mediate their performances;
• income of individuals from gambling and casinos. 

2. 8 percent for:

• Dividends
• profit sharing

Excise is a tax that is applied on excise products, produced and imported, which are disposed of for consumption in the territory of the Republic of Albania.

Products subject to excise are:

1. energy products;
2. alcohol and alcoholic beverages;
3. tobacco and tobacco products;
4. other products (roasted coffee, fireworks, incandescent bulbs, used tires, etc.)

EXCISE DUTY

For excise goods, the excise duty arises at the moment of dumping the consumer goods in the territory.

In the case of import of excise goods, the excise duty arises at the moment of incurrence of the customs debt, according to the relevant provisions of the Customs Code.

DECLARATION

The excise declaration is made by:

1. the approved depositor;
2. the registered host;
3. the registered sender;
4. fiscal representative;
5. individual.