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The consumer

Consumer Profile
Per capita income in Albania has risen steadily for a decade, however the population still enjoys a low level of salaries by European standards. In 2019, the GDP per capita was USD 5,353 according to the World Bank (latest data available). Though accurate statistics for market-size are not generally available, the country has a growth rate of private consumption which is constantly rising (in constant prices).

The country remains a predominately cash economy and credit cards in Albania are used mainly in major grocery stores, restaurants, hotels and department stores. The use of debit cards has increased significantly in recent years, but it is still used more for withdrawing money rather than making payments.
Consumer Behaviour
For Albanian consumers price is a decisive, primordial factor in the purchasing process and they actively seek bargains. Prices are set by the market with a few exceptions, such as electricity, which is regulated.  The government also defines the margin of various entities in the distribution chain of pharmaceuticals.

Albanian consumers are sensitive to advertisement. All forms of media, including television, newspapers, magazines, radio, and outdoor billboards are used, however television remains the predominant medium. To a lesser extent, trade shows, sales promotion literature, and event sponsorship are also used to advertise goods and services. Trade events and fairs are effective promotion channels for industrial products.

Sales support and customer service are relatively undeveloped as marketing tools, nevertheless providing such services can determine a plus. E-commerce is in its infancy with only a limited number of domestic merchants offering this option in Albania.
Consumers Associations
Albanian Consumer Association
 

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Importing & Distributing

Import Procedures
Each product imported must bear a product description in Albanian for foodstuffs, and in Greek, Italian or English for non-food products. The General Directorate of Accreditation is in charge of granting and verifying certifications. Note also that since 1990, Albania has followed the rules of the European Union and the WTO.

The documentation to be presented is the following: a quality certificate, a certificate of analysis, a certificate of origin and the purchasing invoice and terms of delivery (the sales contract for the good is optional), transportation documents (CMR, BL, AWB), VAT number of the importer, import authorisation for certain goods.

When going through Customs, you must fill out a declaration of goods. The Customs agent controls the goods and calculates the Customs duty. Certain products require a license, including those associated with the military or other strategic sectors, radioactive material and drugs. You must apply to the Ministry of Defence or the Ministry of Health to obtain an import authorisation. It is obligatory to describe the sanitary characteristics of food or medical products. Drugs and medical equipment must be registered with the National Centre of Drugs and Medical Equipment to be imported into the country.

For more information, please visit the Albanian Customs website.

Distribution market players
Foreign companies wishing to enter the Albanian market and distribute goods can find a considerable number of merchants, agents, intermediaries, wholesalers and retailers in Albania. The country has a multitude of distribution channels and most major players have entered the Albanian market in recent years. The majority of the trade goes through the port of Durres, which handles more than 90% of the maritime trade. Albania also has two smaller ports: Vlore in the south and Shengjin in the north. Land-based trade can be cleared at border crossing points with Greece, Macedonia, Kosovo or Montenegro.

Smaller private shops, many of which offer Italian and Greek products, dominate the retail sector, although retail chains, including the Big Market, Spar and Conad supermarket chains, have proliferated in recent years. On the other hand, Inditex, which owns brands like Zara, Pull & Bear, Massimo Dutti, Bershka and Stradivarius, entered the Albanian market in 2014. Other major retailers include Megatek (DIY), GoTech, Globe and Neptune (electronics and appliances). The first shopping centre (QTU) opened in 2005, followed by the City Park shopping centre in 2009. Tirana East Gate (home to Spar and Inditex) opened in 2011, followed by Ring Shopping Mall in 2015. Toptani Shopping Mall opened in the centre of Tirana. Other shopping centres have opened in important urban areas in Albania outside of Tirana, including Durres, Fier and Elbasan.

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Operating a Business

Type of companies

Limited Liability Company or Sh.p.k. (Shoqëri me Përgjegjësi të Kufizuar)
Number of partners: Minimum one person.
Capital (max/min): ALL 100 (EUR 1).
Shareholders and liability: Capital must be totally paid up when the company is formed.
Public Limited Company or Sh.a: Shoqëri Anonime
Number of partners: No limit to holdings.
Capital (max/min): ALL 10 million with public participation. ALL 2 million without public participation.
Shareholders and liability: When the company is formed, 25% of the capital must be paid up.
General partnership
Number of partners: 2 persons or more.
Capital (max/min): No minimum capital required.
Shareholders and liability: All the partners are collectively liable for their company's losses.
Limited partnership
Number of partners: Two or more partners: "Limited" partners associated with "unlimited" partners.
Capital (max/min): No minimum capital required.
Shareholders and liability: "Limited" partners are only liable for the company's losses to the extent of their initial investment.
 
Setting Up a Company Albania Eastern Europe & Central Asia
Procedures (number) 5.0 5.3
Time (days) 4.5 11.8

Source: Doing Business - Latest available data.

 

Cost of Labour

Minimum Wage
In 2019, the minimum wage was ALL 26,000 per month according to the International Labour Organization (latest available data).
Average Wage
The gross monthly average wage was ALL 52,380 in 2019 according to the National Institute of Statistics (latest available data).
Social Contributions
Social Security Contributions Paid By Employers: 16.7% of salaries
Social Security Contributions Paid By Employees: 11.2% of the gross wage
 

Intellectual Property

National Organisations
The General Directorate of Industrial Property (DPPI).
Regional Organisations
Albania has an agreement with the European Union on patents.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

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Tax Rates

Consumption Taxes

Nature of the Tax
Tatimi mbi Vleren e Shtuar (TVSH) - Value-Added Tax (VAT)
Tax Rate
20%
Reduced Tax Rate
Exempt items include: hospital services and medical care; insurance and reinsurance services; supply and rent of land and buildings; financial services; postal services; education services; hydrocarbon exploration operations; printing and sale of publications; betting, lotteries and gambling; importation of machinery and equipment used for inward processing of goods or in the implementation of contracts of ALL 50 million or more; importation of production machinery for small business; import of raw materials used for the manufacture of medicines, with the exception of dual-use substances, carried out by holders of production authorization; agricultural machinery and inputs (i.e. fertilizers, pesticides, seeds and seedlings); veterinary services, except veterinary services for domestic animals; new vehicles with electric motor, zero km, that have not been previously registered for circulation in any other country; supply related to the construction/reconstruction process in the case of natural disasters upon receipt of the authorization by the General Tax Director; supply of services and goods directly to the constructor engaged with the building process in the case of natural disasters, when authorized by the General Tax Director.

Zero-rated items include: exports of goods; international transport; services relating to maritime activities; supplies under diplomatic arrangements; supply of gold to the Central Bank of Albania; intermediary services related to zero-rated supplies or services rendered abroad.

A 6% reduced rate applies to: accommodation services by the accommodation facilities; supplies made within five-star accommodation structures of an internationally known trademark; supplies of accommodation and restaurant services, excluding beverages, by the certified structures; agritourism; supplies of advertising services by audio-visual media; licensed public transport equipped with electric motors, with nine plus one places or more, by 31 December 2021 (the rate of VAT for such supplies will increase to 10% from 1 January 2022); books.

Other Consumption Taxes
Excise duties are levied on tobacco, alcoholic beverages, energy products (petroleum, gasoil, gas), fireworks, baked coffee, plastic, glass or mixed packaging.
Custom duties range from 0% to 15%, depending on the type of goods.
 

Corporate Taxes

Company Tax
15%
Tax Rate For Foreign Companies
The Albanian tax regime differentiates between residents and non-residents. Residents are taxed on all their income. Non-residents are only taxed on their Albanian income.
Capital Gains Taxation
Capital gains are considered taxable income and are taxed at the applicable corporate income tax rate of 0%, 5%, or 15%.
Gains on the sale of share are generally taxed at 15% of the difference between the sale price and the purchase price.
Main Allowable Deductions and Tax Credits
Amortisation of tangible and intangible assets (with the exception of land, among others) is tax-deductible. Amortisation rates vary between 5% and 25%. Amortisation of capital assets that exceed the allowable depreciation rates is not deductible.
Interest expenses (with rates that exceed the average 12-month credit interest rate applied in the Albanian banking system) are not deductible. Interest expenses that take 30% or more of EBITDA are also considered as non-deductible. Bad debts can be deducted if the following conditions are simultaneously met:

  1. the amount that corresponds to the bad debt was initially included in the income
  2. the doubtful debt is removed from the books of account taxpayer
  3. the company has taken all possible legal steps to recover its debt.


There is no tax regulation regarding donations to charities, fines and taxes paid; however, these are generally considered as non-deductible. Tax losses can be carried forward in full up to three years (five years for business projects valued above ALL 1 billion). The carryforward is not allowed if more than 50% of the direct or indirect ownership of the share capital or the voting rights were transferred during the fiscal year. The carryback of losses is not allowed. All costs that are not supported with fiscal invoices or expenses paid in cash of amounts exceeding ALL 150,000 are also considered non-deductible.

Other Corporate Taxes
The real estate tax on new construction projects ranges between 4% and 8% of the sale price per square meter on constructions for residential and/or commercial purposes. The rate ranges from 2% to 4% of the investment value in Tirana, from 1% to 3% in other cities for buildings that will be used for tourism purposes or for industry and agriculture. Four or five-star hotels with special status and agro-tourism entities are exempt from the real estate tax on construction projects.
A property tax is levied on real estate by municipal authorities at variable rates. The property tax is calculated on the market value of real estate at variable rates depending on the type of building. The rate is 0.05% for residential properties and 0.2% for commercial properties. The tax is levied at 30% of the rate applicable on properties under construction. The property tax on agricultural and urban land is calculated according to the area of ​​the land (from ALL 700 to ALL 5,600 per hectare on agricultural land, from ALL 120,000 to ALL 200,000 per hectare on urban land).

Social security contributions payable by the employer amount to 16.7% of salary (15% for social security, 1.7% for health insurance). For 2021, the gross salary base for calculating social security contributions ranges from ALL 30,000 to ALL 132,312.

Stamp duties are levied in the form of notary fees that apply to all transactions involving movable and immovable property (levied up to ALL 1,000). Notary fees vary between 0.23% and 0.35% of the transaction value for real estate and between 0.23% and 0.3% for movable property.
Property transfer taxes vary between ALL 100 and ALL 2,000 per square metre for commercial property and amount to 2% of the sale price for any other property.
The fee for the registration of a business entity is ALL 120 (waived if made online).

Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the tax treaties signed by Albania
Withholding Taxes
Dividends: 0 (resident companies)/8% (non-resident companies; individuals); Interests: 0 (resident companies)/15% (non-resident companies; individuals); Royalties: 0 (resident companies)/15% (non-resident companies; individuals).

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