Albania 1 Euro

The government is about to launch a wide-ranging scheme of incentives for foreign investors. Known as the ‘Albania 1 Euro’ scheme, it aims to accelerate the uptake of FDI in the country by prioritising foreign investors’ market entry plans.

VAT credit on machinery imports

Importers of machinery and equipment can take advantage of a 100% VAT credit if the machinery and equipment are used solely as part of their taxable economic activity.

Facon producers’ VAT exemption

Facon producers are not subject to VAT on services provided to their contractors providing that products under the scheme are re-exported.

Subsidised leases of state-owned premises

Investors are eligible to lease state-owned property such as land or buildings at rents below market rates. In the case of production activities, the level of rent reduction will be made accordingly to the level of investment made and of new jobs created.

Tourism development incentives

Incentives in the tourism sector were introduced in 1993 as part of the law “For Development of Tourism Zones”. They are built around a special status created for tourism sector investors – designated as “promoted persons” – which are award by the Ministry of Tourism, Culture, Youth & Sports.

Investors holding this status can:
• be exempted from the custom duties and excise taxes on imported goods.
• be exempted from profit tax for 5 years from the time of the completion of the development phase of the investment. This is a 10-year tax incentive as the final five- year period profit tax is levied at only half of the normal rate.
• benefit from a reduction of profit tax up to 40%, if profits are reinvested in Albania.

The principal activities that are covered are construction, reconstruction, improvements, and the extension of existing facilities as well as the operation of hotels, motels and tourist villages. Structures that complement tourist complexes such as restaurants, shops, thermal baths, and sport equipment is also covered.

Energy Sector Incentives

There are some fiscal incentives designed to encourage new means of generating electricity. Investors establishing new, or rehabilitating existing, power generation plants with an installed power capacity of more than 5 MW using liquid or solid combustibles, are entitled to an exemption of custom duties on imported machinery and equipment used in the capital investment. They can also be reimbursed for the custom and excise duties paid on the import of liquid or solid combustibles used in the production of electric energy

The government is in the process of defining the local application of the EU’s rules on state aid. The Ministry of Economy, Trade and Energy is expected to announce a Law “On State Aid” covering regional aid and enterprise assistance in the near future.

The government has several initiatives to assist the development of local SMEs, specifically their marketing and exporting capabilities.

The government is also investigating future policies on business incubators, industrial parks and R&D centres.

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