Last Updated January 2000
A L BA N I A 1
ALBANIA
(Country Code 355)
TIRANA
Romeo Mitri
Fiscal and Financial Consulting*
Rruga “Dibres” P. 312/1, Ap. 19
Tirana
Albania
GMT +1
(42) 29500
Fax: (42) 29500
* Technical Assistance firm
International Tax/Expatriate Tax
Romeo Mitri
(42) 29500
Mobile: (38) 20-27-473
Because of frequent changes to the tax law and the rapidly changing economic situation in Albania, readers should obtain updated information
before engaging in transactions. The information in this chapter has not
been updated since 1 January 2000.
A. At a Glance
Corporate Profits Tax Rate (%)
Capital Gains Tax Rate (%)
Branch Tax Rate (%)
Withholding Tax (%)
Dividends
Interest
Royalties from Patents, Know-how, etc.
Rental Income from Leases
Branch Remittance Tax
Net Operating Losses (Years)
Carryback
Carryforward
30/40/50 (a)
30/40/50 (a)
30/40/50 (a)
10/15
10/15
15
10
0
(b)
(b)
(c)
(c)
0
3
(a) The 30% rate is the standard rate. For details concerning the other rates, see
Section B.
(b) The 10% rate applies to payments to residents; the 15% rate applies to payments to nonresidents.
(c) This tax applies to both residents and nonresidents.
B. Taxes on Corporate Income and Gains
Corporate Income Tax. Resident companies are subject to tax on
their worldwide income. Nonresident companies are subject to
tax on their Albanian-source income only.
Rates of Corporate Tax. The standard rate of profits tax is 30%.
A 40% rate applies to companies engaged in tourism activities,
except for companies exempt from tax for six years under Law
No. 7665 of 21 January 1992. This law provides for the development of “priority touristic zones” in accordance with licenses
issued by the Ministry of Tourism.
Companies with foreign participation engaged in the exploration
and exploitation of oil and gas offshore are subject to tax at a rate
of 50%.
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A L BA N I A 2
Capital Gains. Capital gains are included in the ordinary income
of companies and are subject to profits tax at the regular rates.
Administration. The tax year is the calendar year.
An annual tax return must be filed by 31 March of the year
follow-ing the tax year. Tax assessments with respect to irregularities or violations contained in the return are issued within 15
days after the filing of the return.
Companies must pay profits tax in monthly installments during
the tax year. The installments are due on the 15th day following
the end of the month for which tax is due. Any balance of tax due
shown on the annual tax return must be paid at the time of filing
the tax return.
Dividends. Dividends paid are subject to withholding tax at a rate
of 10% for payments to residents and 15% for payments to nonresidents.
Remittances of branch profits are not subject to withholding tax.
Companies must include dividends received from Albanian and
foreign companies in taxable income.
Foreign Tax Relief. Under its tax treaties, Albania usually agrees to
exempt foreign-source income from tax. Foreign taxes are creditable against Albanian tax only as provided in tax treaties.
C. Determination of Trading Income
General. Taxable income is based on the annual profit reported in
financial statements prepared in accordance with the accounting
law and regulations issued by the Minister of Finance. Taxable
income does not necessarily equal the profit shown in the financial statements, however, because certain specified adjustments
are required for tax purposes.
All necessary and reasonable expenses incurred in carrying out
business activities are deductible except for the following:
• Costs of purchasing or improving land;
• Costs of purchasing, improving, renewing or reconstructing
fixed assets;
• Depreciation or other expenses in excess of rates set by law or
the Ministry of Finance (see Tax Depreciation below);
• Fines and penalties paid for the violation of laws or contractual provisions;
• Interest paid on loans in excess of the rates of the Bank of
Albania; and
• Interest paid on late payments to the government.
Inventories. The inventory valuation rules provided in the accounting law also apply for tax purposes. Inventory is valued at historical cost, which is determined by using the weighted-average,
first-in, first-out (FIFO) or other specified methods. The local tax
authorities must approve a change in the adopted method.
Provisions. Companies may not deduct provisions.
Tax Depreciation. Depreciation of tangible and intangible assets
must be computed using the straight-line method. The following
are some of the applicable rates.
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A L BA N I A 3
Asset
Buildings and structures
Computers, information systems and software
Other fixed assets
Intangible assets
Rate (%)
5
25
20
10
Assets that may not be depreciated include land, artistic works,
jewelry and precious metals.
Relief for Losses. Tax losses may be carried forward for three
years. Loss carrybacks are not allowed.
Groups of Companies. The tax law does not contain any clear provisions for filing consolidated returns or relieving losses within a
group. As a result, consolidated returns are not allowed.
D. Other Significant Taxes
The following table summarizes other significant taxes.
Nature of Tax
Value-added tax; exempt supplies
include leases of land and buildings
and financial services
Standard rate
Exports, services rendered outside
Albania for Albanian recipients by
Albanian residents and supplies of
goods and services relating to
international transportation
Excise duties on specified goods
Tobacco
Alcoholic drinks
Soft drinks
Benzene Super
Oil
Social security contributions, on monthly
salary; paid by
Employer
Employee
Rate (%)
20
0
60
50
5
90
50
34.2
11.7
E. Foreign-Exchange Controls
The Albanian currency is the leke (no symbol is provided for the
leke). In Albania, the currency market is a free market and the
leke is fully convertible internally.
Residents and nonresidents may open foreign-currency accounts
in Albanian banks or foreign banks authorized to operate in
Albania. Residents may open accounts in banks located abroad
only if they obtain the prior approval of the Bank of Albania (the
central bank). No limits are imposed on the amount of foreign
currency that may be brought into Albania. Hard-currency earnings may be repatriated, and no tax is imposed on the repatriation
of such earnings.
F. Treaty Withholding Tax Rates
The rates of withholding tax in Albania’s tax treaties are described
in the following table.
Last Updated January 2000
A L BA N I A 4
Dividends
%
Croatia (c)
Czech Republic
Greece (c)
Hungary
Italy
Malaysia
Malta (d)
Poland
Romania
Russian Federation (c)
Switzerland (d)
Turkey (c)
Nontreaty countries
10
5/15
5
5/10
10
5/15
5/15
5/10
10/15
10
5/15
5/15
15
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
Interest
%
Royalties
%
10
5
5
0
5 (b)
10
5
10
10 (b)
10
5
10 (b)
15
10
10
5
5
5
10
5
5
15
10
5
10
15
(a) The lower rate applies if the beneficial owner of the dividends is a company
that holds at least 25% of the capital of the payer; the higher rate applies to
other dividends.
(b) Interest on government and central bank loans is exempt from withholding
tax.
(c) These treaties have been ratified by the Albanian parliament but not by the
parliaments of the other countries.
(d) These treaties have been negotiated, but not signed.
Albania is negotiating tax treaties with several other countries.