Albania: Tax efficient solution in Eastern Europe according to Healy Consultants

Albania does not generally strike most investors as lucrative place to do business and invest successfully. High levels of corruption and red tape pull back the young economy. This is confirmed by the staggeringly low rating of 110 on the Corruption Perceptions Index for 2014.

The country is currently not a member state of the European Union and seems to struggle to operate efficiently in its respective region.

However, with the implementation of the new tax law, 2016 may prove as a key milestone for the Albanian nation, both in terms of gross tax revenue generated and foreign direct investments.

It seems that lowering tax rates is a trend in the Balkans that did not forget to pass Albania. Both Bulgaria and Macedonia have very low flat tax rates and offer to investors more competitive tax-wise advantages in comparison to West European high personal and corporate taxation. In countries with higher corruption levels, actually lower, flat taxes bring more funds in the economy due to lower rate of tax evasion. But how exactly was the tax burden lowered in Albania?

Starting from January 1st corporate tax in Albania got moderated to suit the demand for higher transparency and efficiency. The updated fiscal package entered into operations and aims to optimize taxation for small enterprises. For example, if the annual turnover of a business reaches up to €5 Euro, the new system allows full corporate tax exemption. Now starting from scratch in Albania really becomes lucrative option.

Furthermore, the new lowered 5% corporate taxation for companies with turnover between €5 and 8 million sales per annum will allow medium sized companies to operate more cost-efficiently in the Balkans, finally allowing Albania to catch up to on the FDI rates of its neighbors.