The tax on profit depends on two things: the form of the business and the annual figures. Companies are taxed 15% on profit, individuals are taxed 15% up to 14,000,000 lekë of taxable profit and 23% only on the excess, while any business with a gross turnover of up to 14,000,000 lekë pays nothing until December 31, 2029.
This page compiles the applicable rates, the thresholds that separate them, how to convert reported income into taxable income, and the payment deadlines. It is the main page on the topic, so the details for each step can be found on the linked subpages.
Read also: Who doesn't pay tax until 2029.
| Mass | Term or condition | Article |
|---|---|---|
| Notice and Demand for Payment | The first step, after the exhaustion of appeal | 89 |
| On-site monitoring, daily confiscation of no less than 50% of turnover. | According to the administration's decision | 89 |
| Request for a travel ban outside the country | Only in case of emergency | Eighty-nine point four A |
| Freezing of bank accounts | By order of the administration | 90 |
| Insurance and mortgage lien | With prior notice | 91 |
| Seizure of property | 30 days after the order, or immediately when the collection is at risk. | 93 |
| Confiscation and auction | Auction within 15 days; surplus returned within 5 business days. | 96 |
| Third-party transfer | Payment within 14 days | 97 |
| Direct request to the third party | thirty days | 98 |
| Appeal of the measure | thirty days | 92 |
The distribution of profit to the partner is the second step and is taxed separately, at 81% on the dividend.
The figure 14,000,000 lekë appears twice in the law, and this is where the most common mistake arises.
Under the zero regime, the 14,000,000 lek limit is measured on annual gross income, that is, on turnover.
In the 23% bracket, the same threshold is measured on the individual's taxable income, that is, on what remains after allowable expenses.
Note: A natural person with a turnover of 40,000,000 lekë and a taxable profit of 9,000,000 lekë does not qualify for the zero-rate regime because its turnover exceeds the threshold, but the entire profit is taxed at 15%, since the profit remains below 14,000,000 lekë. The 23% rate does not apply.
Rate 23% applies only to the portion of profit exceeding 14,000,000 lek, not to the entire profit. This is the point where many businesses believe that crossing the threshold increases the tax on every lek earned.
Natural person with taxable profit of 20,000,000 lek. The first portion, 14,000,000 lek, is taxed at 15% and yields 2,100,000 lek. The excess, 6,000,000 lek, is taxed at 23% and yields 1,380,000 lek. The total tax is 3,480,000 lek, so it's 17.41% of the profit and not 23%.
A sole proprietor doesn't receive dividends, because the profit is his directly. After paying taxes, the money goes into his personal account with no further obligation.
Companies—namely LLCs, joint-stock companies, partnerships, and limited partnerships—are taxed at 15% on taxable profit, with no brackets or thresholds. There is no reduced rate for small profits, except for the zero regime until 2029.
The second step comes when the profit is distributed. The shareholders' decision to distribute the dividend gives rise to an 81% tax withholding obligation.
Partnership with taxable profit of 20,000,000 lek. The 15% tax on profit yields 3,000,000 lek. If the partner distributes the entire remaining profit, 17,000,000 lek, the dividend is subject to a 1,360,000 lek withholding. Of the 20,000,000 lek profit, 15,640,000 lek remain in the partner's pocket.
Read also: Dividend distribution procedure and decision format.
Under profit tax rates, an individual is better off when profits are high and the money is withdrawn for personal consumption. A company is better off when profits are retained within the business and reinvested.
| Taxable profit 20,000,000 lek | Sole Proprietorship | LLC. |
|---|---|---|
| Profit Tax | 3,480,000 lek | 3,000,000 lek |
| Dividend tax when the money is withdrawn | zero lek | 1,360,000 lek |
| Total when the money goes to the owner | 3,480,000 lek | 4,360,000 lek |
| Total when profit remains in the business | 3,480,000 lek | 3,000,000 lek |
This comparison measures only the tax. The decision on the form also depends on liability for obligations, on capital, on the number of partners, and on credibility with major clients.
Read also: Sole proprietor or LLC, which structure suits you?.
Until December 31, 2029, regardless of turnover, the 5% rate applies to agritourism structures certified under the tourism legislation, for agricultural cooperation societies under Law No. 38/2012 and for the activity in the automotive industry.
Attention: The 5% rate for software producers expired on December 31, 2025. From January 1, 2026, they will be taxed under the general regime, i.e., 15%, or 0% if turnover remains below 14,000,000 lekë.
Income tax is paid by resident entities on income earned in and outside Albania, by nonresident entities on income sourced in Albania through a permanent establishment, and by individual traders and self-employed persons on business income.
An entity's residency is determined by its place of registration or by its place of effective management. A company registered abroad but actually managed from Albania may be treated as a resident.
Nonprofit organizations are taxed only on income from economic activities, while income from grants, donations, and membership fees remains outside the taxable base.
Read also: Tax residency and double taxation avoidance treaties.
Tax is not calculated on the profit shown in the financial statements, but on the taxable profit. The starting point is the same—accounting profit—and adjustments are made to it.
✔ Expenses that the law does not recognize are added, such as fines, undocumented expenses, or amounts exceeding the permitted limits.
✔ The difference is added when accounting depreciation is greater than that recognized by law.
✔ Offset the carryforward loss from prior years within five years.
✔ Transactions with related parties are adjusted when the price does not match the market price.
Accounting profit of 5,000,000 lek. Undocumented expenses of 300,000 lek and fines of 100,000 lek are not recognized, so they are added. Carryforward loss from last year of 1,000,000 lek is deducted. Taxable profit becomes 4,400,000 lek, and at a 15% tax rate, tax is 660,000 lek.
Read also: Which expenses are recognized and which are not..
The annual income tax return is filed by March 31 of the following year, together with payment of any difference. The return must be filed even if the tax is zero and even if the business has had no activity.
During the year, advance installments are paid, calculated based on the previous year's tax. If the previous year's tax is zero, no installments are due.
| Deadline | Obligation |
|---|---|
| March 31 | Annual declaration and payment of the difference |
| First quarter | The advance payment, when there is an obligation. |
| Second, third, fourth quarter | Remaining installments |
| July 31 | Financial statements in the QKB for companies |
Read also: How prepayments are calculated and when a review is required.
For companies, 15% on taxable profit. For individuals, 15% on profits up to 14,000,000 lekë and 23% on the excess. For businesses with gross revenue up to 14,000,000 lek, 0.3% until December 31, 2029.
Only for natural persons and only on the portion of taxable profit exceeding 14,000,000 lekë. Companies do not have this bracket.
Outside the zero regime, no. The 15% rate is the same for a company with a profit of one million and for one with a profit of one billion.
The zero regime does not apply because turnover is measured. The tax is 15% on amounts over 2,000,000 lek, i.e. 300,000 lek, the same for individuals and for companies.
Yes, when the withdrawal is treated as a profit distribution, the dividend is taxed at 8%. Withdrawals without legal title risk being reclassified by the tax authority.
No. The law recognizes only a portion of the expenses and has its own depreciation standards, so the difference is to be expected and must be documented.
Yes. The annual declaration must be filed even if there was no activity and even if the tax is zero.
The same rules apply to the natural person trader, following Constitutional Court Decision No. 52 of June 27, 2024, which repealed the special treatment.
Read also: The self-employed regime and the status declaration.