Albania

Why trade or invest in Albania?

The Republic of Albania is a democratic and centrally planned European country that has been an official candidate for accession to the European Union since 2014,full member of NATO since 2009 and a WTO Member since 2000.

The Albanian state is a rapidly developing country endowed with considerable resources and characterized by an open-market economy, with an excellent geographical and demographical profile.

In addition, Albania is characterized from a dynamic and skilled workforce with 57% of the population under the age of 35, qualified individuals both through university or professional training, and wide spoken languages as English, Italian and Greek (French and German are also included in the educational system).

Albania is located in the center of Southeastern Europe, at some of the major crossroads between East and West, bordered by Montenegro to the north, Kosovo to the northeast, Macedonia to the east, and Greece to the south-east. 

The country is rich in natural resources, and the economy is mainly bolstered by agriculture, food processing, lumber, oil, cement, chemicals, mining, basic metals, hydropower, tourism, textile industry, and petroleum extraction. The strongest sectors are energy, mining, metallurgy, agriculture, and tourism. Primary industrial exports are clothing, chrome, oil, and refined fuels.

Albania has a coast (450 km) on the Adriatic Sea to the west and on the Ionian Sea to the southwest providing a very attractive sector-specific opportunity for hospitality & tourism investments.

The country is visited by more than 3.8 million tourists annually and has been ranked among the top 25 tourist destinations in Europe and voted also as one of the world’s top destinations in 2014 from The New York Times. 

Furthermore, Albania is home to many seaports including main ports, petroleum ports, touristic and gallery ports.

The largest and the most important one, it is the leading Port of Durrës, ranked also as one of the largest passenger ports in the Adriatic Sea and considered as a major gateway since has opened the country to international trade and to 40 million strong markets across Europe and the Balkans.

Albania has strong growth potential and has made enormous progress in terms of development. The government is determined to take the country forward by creating stable legal partnerships and establishing a very competitive business framework.

Indeed, Albania has signed several MTLs (free trade agreements) with major markets (European Union, Turkey, CEFTA, and EFTA countries) which provide free customs access to most consumers at a large market and has operational Free Economic Zones for areas of technological and economic development to be developed by serious investors. 

Albania grants a very friendly environment in terms of foreign investment and competitive taxes. Depending on the sector, the government offers many facilities and advantages as following:

Tourism

The tourism sector in Albania has great potential and the government is making efforts to stimulate this sector through special motivating incentives as for example, the State gives lands for investments in tourism with 1 euro for 99 years, reduced VAT to only 6% for supplies to 5 start hotels with special status, a 6% VAT for hotel services, zero infrastructure tax, zero property tax, zero profit tax for 10 years, exclusion from profit tax for the first 10 years for all accommodation structures with 4 or 5 stars with special status.

Technical and Economic Development Areas (TEDA)

Developers and users are exempted from 50 % of the profit tax rate for a 5 years period - (currently, rate 15%), buildings in TEDA are exempted from real estate taxes for a period of 5 years, buildings transferred to the TEDA are not subject to the transfer tax on real estate, salaries, social and health insurance contribution is 150% deductible for the first year, new expenses for salaries and social insurance contribution compared to the previous year are 150% deductible for the subsequent years, research and development costs are double deductibles for a period of 10 years.

Energy

In regard to the energy sector, the government is working to develop a long-term strategy aimed at creating an operationally and technically, and financially stable power system, capable of meeting domestic demand and exporting energy to an integrated market.

Building new power generation capacity and transmission lines to meet future energy needs is a priority for the government. According to the Partnership for Renewable Energy and Energy Efficiency, Albania uses only 35% of its potential. Hydropower reserves are estimated at around 3,000 MW. The annual production potential can reach 16,000 GWh.

The strategy, harmonized with EU legislation, provides for facilities for the necessary investments in the energy sector, in the diversification of energy sources, and in the increase of energy efficiency.

Incentives in the energy sector provide VAT exemption for machinery and equipment for all investments worth over 50 million Lekë (400,000 Euros); VAT exemption for imported cement and iron for the construction of HPPs; tariffs set for the purchase of energy from HPPs and the obligation of KESH to purchase it for a period of 15 years.

The TAP project and related projects open up new opportunities in terms of the economic development of Albania and the entire region.

Agriculture and food processing

Agriculture is one of the largest and most important sectors of the Albanian economy that employs 44% of the labor force and contributes 20% of GDP.

This sector needs investment and is facing stiff competition coming from imported goods. Challenges include the size of farms, the lack of cooperation between producers and traders, the marketing of products for export, the lack of suitable warehouses for storing production, processing, and packaging of food products, as well as irrigation and drainage systems.

Fertile soil, mild climate, abundant water, high potential for export, educated and motivated employees are some of the advantages that Albania offers in this sector.

Mining sector

Albania is a country rich in mineral resources. Exploration, exploitation, and processing of minerals are important components of the Albanian economy that generate significant income. Minerals exploited and processed in the past that continues to be a source of profit are chromium, iron, copper, coal, etc. The mining industry is privatized and the government encourages foreign investment in the sector in cooperation with a local business.

ICT

The ICT sector is growing rapidly, becoming one of the most dynamic industries in the country. In recent years, measures taken by the government have been applied through the Information Society Cross-cutting Strategy aimed at introducing Albania to the digital age.

The government has liberalized legislation for the telecom industry, harmonizing it with the EU regulatory framework for communications and promoting competition. In 2007, the National Agency for the Information Society was established, which aims to accelerate the development of the information society and e-government services. Almost 80% of basic services at the central government level are accessible via the Internet at the first and second levels of sophistication, while more than 50% of government services for business are provided at interactive levels of sophistication.

Finally, investing in Albania has never been so easy given the digitalization and simplification of business procedures avoiding procedural bureaucracies.