What are the fiscal incentives for investments in “tax havens” in Albania?

Albania has a supportive Foreign Direct Investments (FDI) legal framework, Free Trade Agreements with major regional markets and beyond, a competitive and young labor force, favorable tax and customs regime, fast improving business climate, increasing FDI rates and overall growing economy.

Based on the need for more foreign investments in volume and especially in quality, the offer from Government of Albania to invest in the Technical and Economic Development Areas (acr. TEDA) should be understood by investors that all the areas, from effects of this law onwards, will be treated with the same legal framework and the same fiscal regime.

The primary incentive provided by the specific law on these zones is the Stability Clause for investments. Every, responsible institution may enter into a binding commitment, on behalf of the state, which will have the effect of providing the suitable guarantees in favor of the investor, which will be protected against the financial consequences of the legislation, which comes into force after issuance of a license or permit to commence operations in the area.

But in what consist more specifically these incentives?

The experts of ALTAX have prepared the detailed elements that are included to be part of the fiscal incentives for the TEDAs.

Fiscal incentives

Further incentives provided by this law are the fiscal incentives for areas of technology and economic development. Benefits are outlined below:

1. a) The entry and exit of goods to / from the area, the formalities and procedures conducted under the provisions of the Code.
2. b) Developers and users are exempt from paying 50% of the normal profit tax amount due for the first 5 years from the start of their activity in the area.
3. c) Developers to invest in the area, within 3 years from the date of commencement of work, or users who invests in the area, within 3 years from the beginning of the economic activity of the area, is recognized as deductible expenses of tax period, 20% of annual capital expenditure, regardless of the amount of depreciation, under the law on income tax for a period of 2 years.
4. d) Supply of Albanian goods, intended to be placed in area, regarded as a supply for export with zero rate tax, in accordance with the provisions of the law on value added tax and customs legislation.
5. e) Project developers exempt from local tax of impact in infrastructure.
6. f) Construction made in this area, according to project of developers are exempt from real estate tax for a period of five years.
7. g) Developers or users of the area are exempt from taxes on transferring the right of ownership of immovable property.
8. h) Costs of wages and social and health contributions, which the employer pays for the employee, are recognized 150% of value during the first fiscal year of activity. In years following, additional costs for wages, compared to the previous year, for the purposes of calculating taxable profit, recognized as known expenses with 150% of their value.
9. i) Costs of employee training in areas of technology and economic development, for the purposes of calculating taxable profit are recognized as a known expense for the tax period with their double value, for a period of 10 years from the beginning of activity economic.
10. j) Expenses for research and development are recognized as known costs at twice the value, for period 10 years from the start of economic activity.

Restriction

The transfer of an existing activity in Albanian territory in the TEDA, is not allowed.

Accounting standards

The taxable profit for the tax period is determined on the basis of financial statements under national accounting law, income tax and definitions provided in these laws. Businesses that are subject to this law have the right to apply international accounting standards.