Albania: Tax Update 2018

27. February 2018 | Reading Time: 2 Min

Tax incentives for the tourism industry

The Albanian Parliament has approved new changes in the Law on Tourism whereby new tax incentives have been created for selected categories of investors. In order to obtain the special status, investors in four-star and five-star hotels have to fulfill certain conditions as stipulated specifically in the Law on Tourism. In order to qualify as a four-star and five-star hotel holder of a special status, the investment value has to be at least EUR 8 million and EUR 15 million respectively.

Starting from 1st January 2018, all services offered by the above mentioned four-star and five-star hotels, that have a special status as well as being holders of a trade registered mark or brand of hotel as defined in the Law on Tourism, are subject to a reduced VAT rate of 6 %. Currently, any company offering services in tourism, regardless of the hotel category, is only allowed to grant the reduced rate of 6 % for accommodation services.

In addition, four-star and five-star hotels are exempt from corporate income tax (CIT) for a period of 10 years provided they have met the criteria for obtaining the special status no later than December 2024. A decision of the Council of Ministers will determine the terms, conditions and procedures for implementing this provision.

Four-star and five-star hotels holding the special status are exempt from real estate and infrastructure tax.

Tax incentives for IT companies

Starting from 1st January 2018, the CIT rate for entities operating in the Information Technology (IT) sector and dealing with software development is reduced from 15 % to
5 %. This incentive is expected to attract new and/or international software development companies to register in Albania. In addition, reduced customs duty rates will apply on the import of equipment and devices used in the course of IT business activity. Activities to be considered as related to the software development will be determined separately in a decision by the Council of Ministers.

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