Albania

Merchandise Trade

 

 

• Albania joined the World Trade Organization (WTO) in September 2000. As a result, Albania grants Most Favoured Nation (MFN) treatment to all of its trading partners.
   
• Albania's average tariff rate is 1.1%, which is the second-lowest in South East Europe (out of 12 states) and the fourth-lowest in the wider Emerging Europe region (out of 31 states).
   
• Albania has no significant non-tariff trade barriers. However, administrative bureaucracy, such as the use of sanitary or phytosanitary measures, can delay the movement of goods and increase costs. Furthermore, the application of market prices, often referred to as 'reference prices' in calculating customs duties and other customs taxes, has become a concern and is a potential barrier for businesses involved in trading activities.
   
• In January 2015, Albania eliminated import tariffs on products, such as live bovine animals and swine, live poultry, eggs, wheat or flour, and petroleum oils. The government also reduced import tariffs on new pneumatic tyres made of rubber, from 15% to 10%.
   
• Albania's Business and Investment Development Strategy 2014-2020 stipulates that its trade policy objectives are guided by WTO principles. The country also complies with the ambitions and objectives of the EU in the area of business and investments promotion. The strategy guarantees the absence of quantitative restrictions on imports and exports (except in cases of environmental protection or assistance to fragile industries, cultural heritage, forestry and arms and ammunitions), export subsidies, any kind of tax on exports and export bans.
   
• In May 2018, representatives of the Durres Port Authority, in Albania, and the Rijeka Port Authority, in Croatia, signed a memorandum of understanding to widen bilateral co-operation in the field of maritime transport and port industry. The two states also agreed to co-operate on issues related to economic promotion in order to boost trade.

Sources: WTO – Trade Policy Review, Republic of Albania Ministry of Economic Development, Trade & Entrepreneurship, Fitch Solutions

Trade Updates

In mid-October, EU leaders were unable to reach unanimous agreement that talks should begin with both Albania and North Macedonia after a 12-month review that came to an end in June 2019.

Multinational Trade Agreements

Active

1. The Central European FTA (CEFTA): CEFTA came into force on May 1, 2007 and helps to increase trade between regional counterparts and foster non-EU bilateral relations. The signatories are Albania, Bosnia and Herzegovina, Serbia, Moldova, Montenegro, North Macedonia and Kosovo.
    
2. Albania and the European Free Trade Association (EFTA): EFTA consists of Switzerland, Norway, Iceland and Liechtenstein. The main focus of the EFTA is on the liberalisation of trade in goods. The agreements with Liechtenstein and Switzerland entered into force on November 1, 2010 and the agreements with Norway and Iceland entered into force on August 1 and October 1, 2011 respectively.
    
3. Stabilisation and Association Agreement between Albania and the EU: The bilateral free trade agreement (FTA) entered into force on December 1, 2006 for trade in goods and on April 1, 2009 for trade in services. The agreements stimulate Albania's already large export and import volumes with EU member states, including Germany, Italy and Greece.
    
4. The bilateral FTA between Albania and Turkey: The FTA covers trade in goods and entered into force on May 1, 2008. Turkey is Albania's third-largest supplying market as of 2017, with imports from Turkey accounting for 7.5% of Albania's total imports, of which articles of apparel and clothing accessories (knitted or crocheted) made up the highest percentage.

Sources: WTO Regional Trade Agreements database, Fitch Solutions

Foreign Direct Investment

• Value Added Tax: 20%
• Corporate Income Tax: 15%

Source: Republic of Albania Ministry of Finance and the Economy

Important Updates to Taxation Information

• In November, the government proposed a number of measures intended to clamp down on tax evasion, notably to make it compulsory for foreign investors to pay capital gains tax when selling assets in Albania by ensuring that transactions cannot be made tax-free. Another proposal – or aspiration – is to introduce a fiscal package that will improve the business climate and boost investment by reducing the dividend tax to 8%. The government has indicated that the reduced rate would also apply to undistributed profits from the pre-2018 period provided the tax was paid by the end of September 2019. The government also wishes to increase – from 6% to 9% – the mining royalty on chromium exports, to discourage exports of raw chromium and encourage a local processing industry.
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• The minimum and maximum salary for social and health contribution purposes have increased from ALL24,000 to ALL26,000, and from ALL105,850 to ALL114,670, respectively.

Foreign Worker Permits

Although visa, residence and work permit requirements are simple in Albania and do not pose a burden on potential investors, the Law on Foreigners requires foreign businesses to prove that foreign employees are less than 10% of the total workforce before the government can grant work permits.

Localisation Requirements

While some workers in the Albanian labour force are highly skilled, many work in low-skill jobs or have outdated skills. The education level of the workforce is low, constricting economic prospects and access to high-quality jobs. The government provides fiscal incentives for labour force training for the inward processing industry, which includes the shoe and textile sectors.

Visa/Travel Restrictions

Foreign nationals from 85 jurisdictions, from Europe, North America, South America and some parts of Asia (including Hong Kong), can enter Albania without a visa for a maximum stay of 90 days.

Sources: Government websites, Republic of Albania Ministry for Europe and Foreign Affairs, Fitch Solutions

Sovereign Credit Ratings

Sources: Moody's, Standard & Poor's, Fitch Ratings

Competitiveness and Efficiency Indicators

Sources: World Bank, Transparency International

Fitch Solutions Risk Indices

Source: Fitch Solutions

Date last reviewed: May 31, 2020

Hong Kong’s Trade with Albania