Understanding corporate tax rates in Albania is essential for any foreign investor or business owner planning to operate in the country. Albania applies a relatively simple corporate tax system, with competitive rates by European standards and no distinction between local and foreign-owned companies.
Companies in Albania are taxed on their net taxable profits, calculated as gross revenue minus allowable business expenses and deductions.
Current Corporate Tax Rates
As of current Albanian tax law, corporate income tax rates depend on the company’s annual turnover. The applicable rates are:
– 0 percent for companies with annual turnover up to 14 million Albanian Lek (€140,000) that qualify for small business relief (specific conditions apply)
– 15 percent for companies with annual turnover exceeding 14 million Albanian Lek (€140,000)
All companies must register with the tax authorities and file annual tax returns, regardless of size. Advance tax payments are generally required throughout the fiscal year.
How Corporate Tax Is Calculated
Corporate tax in Albania is calculated on the company’s net taxable income after deducting eligible expenses such as salaries, rent, utilities, depreciation, and business costs. Non-deductible expenses are excluded from tax calculations.
Companies must maintain proper accounting records and submit supporting documentation to justify deductions in case of a tax audit. Failure to comply may result in penalties or adjustments by the tax authority.
Does VAT Affect Corporate Tax
Value added tax (VAT) is separate from corporate income tax and does not reduce corporate tax liability directly. However, VAT collected on sales and paid on purchases is accounted for in VAT returns, while corporate income tax is based on net profits.
Companies exceeding the VAT threshold or engaging in VAT-liable activities must register and comply with VAT obligations in addition to corporate tax filings.
Tax Compliance for Foreign-Owned Companies
Foreign investors operating in Albania through a registered company are subject to the same corporate tax rates as Albanian-owned companies. There are no higher rates or additional corporate tax surcharges for foreign shareholders.
All companies must file tax returns on time, submit advance payments, and comply with Albanian accounting standards. Appointing a local accountant or tax consultant is strongly recommended to ensure accurate filings and compliance with evolving tax regulations.
Corporate tax rates in Albania are straightforward and competitive, with a 15 percent flat rate applying to most businesses above the small business threshold. Foreign investors benefit from equal tax treatment and access to Albania’s simple corporate tax system.