Who pays corporate income tax and who is exempt

This section of the law defines who is a taxpayer of corporate income tax and who is exempt. The rates that apply on this basis are on our website. of norms and thresholds.

Practical point. The legal form places the entity inside or outside this chapter, while residency determines whether worldwide income or only income sourced in Albania is taxed. The non-resident rules are on page non-resident's tax.

Corporate income tax payer

Every entity is subject to corporate income tax, which mainly includes:

a) general partnerships;

b) limited partnerships;

c) limited liability companies;

d) joint-stock companies; and

any other entity, including non-resident entities, not covered in letters “a” through “d” of this point, including entities subject to a special tax regime.

The following entities are exempt from corporate income tax:

• executive, legislative, and judicial bodies of power, established by the Constitution, law, or decision of the Council of Ministers, whose primary activity is the fulfillment of central government functions;
• Bank of Albania, Financial Supervision Authority, and Deposit Insurance Agency;
• non-bank financial foundations or institutions, established or transferred by decision of the Council of Ministers, which aim to support government development policies through granting credit;
• entities that carry out only activities of a religious, humanitarian, charitable, scientific or educational nature, whose assets or profits are not used for the benefit of their organizers or members;
• work organizations or chambers of commerce, industry, or agriculture, whose assets or profits are not used for the benefit of an individual or their member;
• entities foreseen in international agreements ratified by the Assembly;
• Film production houses, licensed and subsidized by the National Cinematography Center.

All entities defined in point 2 of this article, except for letters “a” and “b,” regardless of corporate income tax exemption, are required to submit a tax return and financial reporting statements to the tax authorities within the same deadlines as entities subject to corporate income tax.

Residence

An entity is a resident of the Republic of Albania in a tax year if:

• the entity is established in the Republic of Albania, or,
• At any time during the tax year, the management and control of the entity's affairs are exercised in the Republic of Albania.

In addition to what is provided in point 1 of this article, the management and control of an entity's affairs are considered to be exercised in the Republic of Albania if the meetings of the entity's management board are held in the Republic of Albania or if at least two of the following conditions are met:

• Decisions regarding the daily management of the entity are made in the Republic of Albania;
• at least 50 percent of the entity's board members or directors are residents of the Republic of Albania;
• at least 50 percent of the entity's capital or voting rights are directly or indirectly owned by persons residing in the Republic of Albania.

Source: General Directorate of Taxes.