Albania
Corporate taxes and other direct taxes
A new income tax was introduced with effect from January 1, 2024. Resident companies are subject to corporate income tax on their worldwide income, while non-resident companies are taxed only on income that is derived from sources in Albania.
The standard Corporate Income Tax is assessed on a current-year basis at the rate of 15%:
A Reduced Corporate Income Tax Rate is applicable for certain specific industries:
- 5% for entities dealing with software and IT development, up to December 31, 2025;
- 5% for entities operating in the automotive industry, up to December 31, 2029;
- 5% for entities performing their activities in accordance with the Law on Entities of Agriculture Collaboration, up to December 31, 2029;
- 5% for entities operating in the agritourism industry, up to December 2029;
- Any entity which operates a 4- or 5-star hotel and that acquires the status of special investor by December 2024 will be exempt from CIT for the first 10 years of their operation.
The assessment of CIT is based on the FS prepared in accordance with the National Accounting Standards or IFRS, subject to certain adjustments for tax purposes as specified in the Corporate Income Tax Law and other supplementary legal acts. Fiscal losses may be carried forward for up to five consecutive years. The law does not provide for consolidated tax returns. Each company forming part of a group must file a separate tax return.
The gross amounts of interest, royalties, dividends, and shares of partnerships’ profits paid to non-resident companies are subject to a withholding tax of 15%, unless a double taxation treaty (DTT) provides for a lower rate. Albania has established agreements with 43 countries for the avoidance of double taxation. 41 of these have been ratified and are currently in force.
Tax on dividends is 8%.
The customs duty rates range between 0% and 15%, depending on the type of goods and the country of the origin.
Local taxes consist of different categories of taxes.
Level of attention paid by Tax Authority:
VAT and other indirect taxes
Any person (entity or individual) that makes supplies in the course of an independent economic activity is required to pay VAT. For domestic supplies and for services subject to the reverse-charge mechanism, the Albanian taxable person will always be liable to account for VAT. The obligation to register for VAT purposes and charge VAT is triggered when annual turnover exceeds ALL 10 million (approx. EUR 95,240).
Persons involved in import or export activities and taxpayers supplying professional services must register for VAT regardless of the amount of turnover. The applicable VAT regimes are: 0%, 6% and 20%.
Customs duty in the Republic of Albania is applied by the customs authorities on the import of goods. The liability to pay duty always falls on the importer of the goods, but it is added to the cost of goods and in this way, it is finally transferred to the consumer. Starting from 15/01/2020 credit obligations or surpluses, such as tax and customs, may be offset between them. This will be possible in the special cases specified in the Ministry of Finance directive. The customs duty rates range between 0% and 15%, depending on the type of goods and the country of the origin.
Personal income tax / Social security system
Employed persons are subject to income tax on remuneration and all benefits received from employment. Those who receive above ALL 2,000,000, should file an annual tax return. Employees employed by more than one employer are obliged to file the aforementioned return, irrespective of the amount of their annual income. Entities are required to withhold personal income tax from the gross salaries of their employees. In Albania, a progressive rate is applicable; no tax is applied monthly salaries of up to ALL 40,000; 6.5% for salaries up to ALL 50,000 for the amount over ALL 30,000; 13% for salaries up to ALL 200,000 for the amount over ALL 30,000. Above that level, ALL 22,100 plus 23% of the amount above ALL 200,000 is payable.
Mandatory social security and health insurance contributions are due on employment income. The social security contribution is calculated on a monthly gross salary, from a minimum amount of ALL 34,000 (approximately EUR 295) to a maximum amount of ALL 149,954 (approximately EUR 1,304). The social contribution payable by the employer is 15%, while the rate payable by the employee is 9.5%. The health insurance contribution rate is 1.7% for both the employer and the employee.
Wage related taxes
in Albania |
Minimum wage
|
Average wage
in private sector |
| Exchange rate ALL/EUR |
in EUR |
in ALL |
in EUR |
in ALL |
| 161 |
293 |
34,000 |
517 |
60,000 |
| Total wage cost |
342 |
116.70% |
604 |
116.70% |
| Vocational training contribution |
- |
- |
- |
- |
| Social Contribution tax |
44 |
15.00% |
78 |
15.00% |
| Health Insurance Contribution |
5 |
1.70% |
9 |
1.70% |
| Gross salary |
293 |
100.00% |
517 |
100.00% |
| Personal income tax* |
- |
0.00% |
34 |
13.00% |
| Employees' Social contributions |
28 |
9.50% |
49 |
9.50% |
| Employees' Health contributions |
5 |
1.70% |
9 |
1.70% |
| Net salary |
260 |
88.80% |
426 |
82.30% |
*Salary 0 - 40,000 ALL PIT rate 0%.
Salary 40,001 - 50,000 ALL PIT rate 6.5% of the amount over 30,000 ALL.
Salary 50,001 - 200,000 ALL PIT rate 15% of the amount over 30,000 ALL.
Salary over 200,000 ALL PIT 22,100 All + 23% of the amount over 200,000 ALL.