Taxation in Albania
Updated on Thursday 03rd May 2018
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1. What is the corporate tax in Albania?
Albania has a corporate tax of 10% that has to be paid for businesses with a turnover of 2 to 5 million ALL per year. If the annual turnover is below 2 million ALL, the tax is considered individual income tax. However, this tax is among the lowest in Europe.
2. What is the VAT in Albania?
In Albania, the Value Added Tax (VAT) is 20%. Only the physical persons and corporate bodies with an annual turnover above 5 million ALL and the entities that import goods must enroll for paying VAT. The medical supplies are charged with a reduced rate of 10% and the exports are exempted from VAT.
3. How can the VAT be refunded in Albania?
In order not to pay the VAT more than once, it might be refunded at the end of each year according to invoices kept from the last 12 months and declared to the tax authorities. Anyhow, the authorities do not refund VAT for all business sectors.
4. What is the dividend tax in Albania?
Unless there is a tax treaty, the dividends have a tax rate of 10%. While domestic business might be subject of exemption from dividend tax, foreign investors do not benefit from any exemption, unless there is a double tax treaty signed between Albania and the foreign country where the dividends are paid.
5. What is the tax rates applied on other payments?
Besides the 10% withholding tax on dividends, the interests and royalties are subject to a 10% withholding tax, unless there is a valid agreement of avoiding the double taxation between Albania and the foreign country and exemption or lowering are offered.
A 10% withholding tax is also charged for the gross amount of technical service fees and the gross amount of rental payment on the entertainment activities performed by non-residents.
6. Are there any incentives for foreign investors in Albania?
The tax system in Albania is considered a powerful incentive for foreign investment. The law does not make differences between domestic business and foreign business, neither in a positive or a negative way, but the taxes are among the lowest across Europe. Probably the most stimulating incentives are in the exportation area, where no VAT is required. Other incentives are offered by the Double Tax treaty which provides exemption from paying the corporate taxes, withholding taxes on dividends, interests, royalties or the decrease of these taxes.