Formalization of the Agricultural and Livestock Market: Tax Campaign, Government Support, and the Role of AKU (Updated May 2026)

The formalization campaign by the Tax Administration

This article covers the formalization campaign in the agricultural and livestock market, the tax incentives in effect, the lot-code traceability system, and the AKU reform. Verified on October 11, 2026.

The Tax Administration has begun a new informational and awareness campaign for the formalization of the trade of agricultural and livestock products, both wholesale and retail. As of July 7, 2025, taxpayers in this sector are being informed (through official channels and field visits) about the legal obligation to issue a fiscalized invoice for every product they sell. The primary goal of this initiative is to reduce informality in the agro-livestock market, enhance food safety, and protect consumers by enabling better traceability of products from the farm to the end consumer.

According to Law No. 87/2019 “Regarding the invoice and the traffic monitoring system”Businesses in this sector have two key obligations regarding the fiscalization of transactions:

Important Exception: The Tax Administration clarified (July 15, 2025) that street vendors have no legal obligation to issue invoices or other tax documentation. This clarification was made public one day after the campaign began and is important for entities operating in informal markets as mobile vendors.

After a one-week awareness campaign, the Tax Administration has announced the formation of a task force made up of tax inspectors, who will begin field inspections. These inspections will verify that every agricultural or livestock product on the market is accompanied by a fiscalized tax invoice, both at collection points and in wholesale and retail markets.

Businesses that fail to meet these obligations risk penalties under the applicable tax legislation. The message from the tax authorities is clear: accurate and complete reporting of commercial activity is essential to ensure fair competition and food safety, and evasion of fiscal requirements will not be tolerated.

Read also: Expected tax law changes for 2026

Government financial support for the agricultural sector

Situation

The Albanian government states that the agricultural and agri-processing sectors are among its top priorities, as reflected in the increase in budget funds in recent years. According to the 2025 draft budget, a figure that has not been updated in the current budget, funds for agriculture and rural development were around 15 billion lek, about 41 percent. more than a year ago. Of these, 4.4 billion lek are planned as direct support for farmers (e.g., production subsidies, national schemes, duty-free fuel, etc.), while 2.6 billion lek are dedicated to improving food safety (strengthening controls, laboratories, and inspections). Special attention is also being paid to irrigation and drainage infrastructure, with ~2.9 billion lek allocated to this sector, aiming to increase productivity and reduce risks from droughts or floods.

An important element of government support is facilitating farmers' and agribusinesses' access to financing. In February 2025, a lending scheme for the sector was introduced, established between the government and second-tier banks. Beware of a common confusion. The Bank of Albania does not provide loans to businesses; it is a supervisory and monetary authority. Schemes of this kind are backed by state guarantees and implemented by commercial banks. Specific terms and amounts are verified in the notice of the sector.

The sovereign guarantee for 70% of credit

This line of credit aims to spur private investments in farming and agribusiness, with the government acting as the sovereign guarantor for 70% of each loan's principal. The government, through its sovereign guarantee, covers the vast majority of the risk and thus creates incentives for banks to lend to agricultural projects at low interest rates and favorable terms. As a result, it is expected to finance strategic investments in modern greenhouses, processing units, fisheries and aquaculture, agritourism, and technological innovation in rural areas—sectors with high growth potential. This initiative is expected to boost agricultural lending, which currently accounts for only about 21 percent of the country's total loan portfolio, a low level that the government aims to increase significantly.

AgroPark Tirana

 “AgroPark Tirana”The recently opened wholesale agro-food market in Farkë (Tirana) is an example of infrastructural investments aimed at formalizing the market. This park, built on a 55,000 m² site, was created specifically to provide modern facilities for farmers and gatherers, who can sell their products directly with “zero local taxes.” .

In this new market, agricultural products are inspected and certified according to European standards, ensuring quality and food safety for consumers. Thanks to low rents and the elimination of fees on every product entering the market, farmers are expected to increase their profits, while consumers benefit from lower prices on quality products.

This model of cooperation between the Ministry of Agriculture and the Municipality of Tirana demonstrates the authorities' new approach: alongside fiscal tightening measures, physical and logistical incentives are being created to make formalization more affordable and attractive to farmers.

Fiscal incentives under the legal framework

Parallel to inspections and fines against violators, the government has undertaken legal reforms to provide fiscal relief to the agricultural sector, with the aim of reducing costs for honest farmers and promoting formalization. Agricultural inputs—namely fertilizers, pesticides, seeds, and seedlings—are now taxed at the reduced rate of 10%, pursuant to Article 49 of Law No. 92/2014, as amended. The historical background helps prevent confusion about the rule. The 2019 package exempted these inputs from VAT.

This should enable importers and traders to lower input prices for farmers, reducing agricultural production costs. According to the Tax Administration, removing VAT on inputs helps agricultural producers reduce expenses and increase investments in farms, since agriculture is a priority sector of the economy.

The full exemption is no longer in effect. Today the reduced rate of 101 TP 3 T applies, so the invoice for agricultural inputs includes VAT, and that VAT is credited by registered taxpayers.

Also, the current legal framework provides a number of additional fiscal incentives in support of the agro-livestock sector, among which the following are worth mentioning:

Verify if your business meets its fiscalization obligations.

Reduced/zero VAT on agricultural equipment and tools

The law provides a 0% VAT rate both on imported agricultural machinery and on that purchased domestically. of the country. This significantly reduces the cost of agricultural mechanization, encouraging farmers to invest in tractors, irrigation systems, modern greenhouses, etc. A special treatment has also been proposed for fishing equipment. Note: the source of this point is a public consultation document, i.e., a proposal, not the text of the law. Before using it for a specific purchase, verify Article 49 and the annexes of Law No. 92/2014. These measures are intended to provide financial relief to the fishing sector as well, which is closely linked to livestock farming and food.

Tax exemption on fuel and vaccinations

To reduce the fiscal burden on production activities, the purchase of fuel oil by fishing vessels is exempt from excise tax, turnover tax, and carbon tax. This enables artisanal and industrial fishermen to operate at lower costs, further formalizing their sales. At the same time, a zero tariff has been imposed on the mandatory registration and vaccination of livestock, a relief measure that encourages farmers to register and vaccinate their animals free of charge. This policy not only saves money for livestock farmers but also improves livestock security by increasing the number of animals vaccinated against dangerous diseases.

Favorable taxation for small farms 

Tax legislation continues to offer relief to small businesses, from which many formalized farmers also benefit. Currently, individuals or agricultural entities with annual turnover below a certain threshold enjoy a low profit tax rate (even 0.1% for minimal turnover) as well as exemption from VAT if their turnover is below the VAT registration threshold. These policies aim to avoid an excessive bureaucratic and fiscal burden on low-productivity farmers, so that their entry into the formal scheme does not entail unaffordable costs.

In practical terms, the combination of facilitative measures (such as those mentioned above) with punitive campaigns is aimed at creating a “new climate” in the agricultural products market: where all actors have both an obligation and an interest to operate within the rules of formalization. Fiscal incentives give farmers the economic reason to formalize (lower costs, access to subsidies, entry into larger markets), while tax inspections and fines provide the legal incentive to do so as quickly as possible.

Update 2026: VAT Compensation 10% for Farmers

The 2026 fiscal package has reinstated and increased the VAT compensation scheme for agricultural producers. Farmers who are not registered as VAT taxpayers and sell their goods to registered businesses (gatherers, processors, or certified agritourism operators) are entitled to receive 101% of the sale price as a direct refund from the Tax Administration.

This rate, which had been 6.1% until 2019 and was completely removed with that year's package, has been reinstated at a higher level to encourage formalization and increase farmers' liquidity. The fiscal impact of the measure is estimated at around 1.5 billion lek in costs for the state budget.

Foreign funds and projects for the formalization of the sector

IPARD III and the European Union

Albania's efforts to formalize and develop the agro-livestock sector have also attracted support from international partners. One of the main instruments is the European Union's IPARD III Program, which was recently approved for the period up to 2027. This program makes available 146 million euros in grants for Albanian agriculture and rural development. IPARD funds enable the financing of projects such as: farm modernization (beekeeping, fruit growing, greenhouses, etc.), the establishment of processing capacities (fruits and vegetables, milk, meat), the development of agritourism, and the improvement of food safety standards on farms and in factories.

So far, with the support of IPARD II and III programs, hundreds of Albanian farmers and agribusinesses have received co-financing to purchase machinery, build refrigerated warehouses, or certify their products according to EU standards. These EU-driven investments not only increase the productivity and quality of domestic produce but also require beneficiaries to be formal (registered as entities, with proper invoicing, and in compliance with environmental and veterinary regulations). In this way, foreign funds also serve as a positive incentive for formalization: only those who meet the legal criteria can benefit from EU grants.

World Bank

In addition to EU funds, other international institutions have contributed projects and loans to this sector. One example is the new World Bank–funded project worth USD 70 million, which became effective in February 2024. This project aims to increase the competitiveness of agri-food supply chains and includes key components for market access and compliance with standards. In particular, Component 2 of the project focuses on increasing compliance with food safety, veterinary, and phytosanitary standards by addressing the current weak official inspection and control mechanisms.

With World Bank financing, institutional capacities (laboratories, inspectorates) are expected to be strengthened and more efficient monitoring systems for food safety implemented. At the same time, the Climate Resilience in Agriculture Project (also by the World Bank) supports the creation of market infrastructures that give farmers better opportunities to sell. Such interventions (e.g., the construction of agro-food markets or standard-compliant collection points) are often part of foreign programs, as illustrated by investments in the “Blue Economy” for building fish markets in coastal areas, which also include the formalization of artisanal fishing.

Other international partners

Other agencies such as Germany's GIZ, the American USAID, and the FAO have also contributed technical assistance to the sector. For example, through pilot projects, farmers have been trained on food safety, digital market platforms linking producers with traders have been established, and the National Food Authority (AKU) has been supported with expertise to enhance its inspection capacities. Many of these projects aim to harmonize the Albanian system with EU standards, as the formalization of the agricultural market and the guarantee of food safety are important conditions in the European integration process.

In summary, the presence of foreign funds and projects has created a twofold impetus: (1) funds for concrete investments that require meeting legal criteria (encouraging entities to formalize in order to benefit), and (2) the transfer of knowledge and successful models on how to develop a modern, formalized, and sustainable agro-livestock market.

New traceability system: “lot” code from January 2026

As of January 1, 2026, all food products circulating in the Albanian market must bear an identification code known as a “lot.” This code enables identification of the production batch, date, and country of origin, and allows authorities and businesses to trace a specific product throughout the entire chain: from the farm, to processing, to the market.

This obligation stems from the Ministry of Agriculture and Rural Development directive published in the Official Gazette, and the AKU has been tasked with monitoring its implementation. Products manufactured and labeled before the directive's entry into force are allowed to remain on the market until stocks are depleted.

Key exclusions: agricultural products sold directly from the farm (before formal weighing and packaging), products packaged at the point of sale at the buyer's request, and packages with an area under 10 cm².

What does this mean in practice: businesses that buy and resell food products must ensure their goods are labeled with the lot code and keep documentation showing the series' origin. This is directly related to fiscalization: the tax invoice and the lot code must go hand in hand.

The role of AKU and recent developments in food safety

Scandals and uncovered weaknesses

National Food Authority (NFA) It is the main institution responsible for inspecting the quality and safety of food products in Albania, thus the next essential link (besides taxes) for formalizing the agro-livestock market. If the tax administration handles invoicing and the fiscal treatment of goods, the AKU is responsible for their quality and sanitary control (e.g., ensuring that meat is certified, that vegetables do not exceed pesticide residue limits, that milk is pasteurized, etc.).

In theory, these two institutions should operate in parallel: a formalized market (with invoices) is more traceable and more controllable by the AKU for food safety. However, recent years have shown that the AKU has been a weak link, where informality and a lack of accountability have allowed dangerous products to circulate on the market.

During 2022-2024, a series of food scandals occurred that called into question the efficiency of the AKU. Repeated cases of contaminated food were uncovered in the Albanian market, ranging from shipments of imported meat contaminated with salmonella to fruit with high levels of pesticides. The peak was reached in early 2025, when it came to light that dozens of tons of salmonella-contaminated chicken had been brought into Albania from Brazil and had ended up on the market for consumption.

Similarly, earlier shipments of Albanian mandarins exported to Croatia were found to have excessive pesticide residues, causing the cargo to be returned. These incidents exposed serious shortcomings in both border and domestic food controls. Law enforcement authorities even uncovered suspicions of corruption within the AKU itself: In the case of the salmonella-tainted meat, the owners of the importing and distributing companies were criminally prosecuted, and three AKU inspectors were placed under investigation for allegedly allowing this unsafe meat into the market.

Measures taken and restructuring

Thus, impunity and mismanagement within AKU had become a serious problem, endangering public health and undermining formalization efforts (as consumers lose confidence, fair competition is harmed by those selling substandard goods, etc.).

Faced with this alarming situation, the Albanian government took radical measures to reform the AKU. The legal basis for the restructuring is Law No. 99/2024. The new structure merges three institutions, not two: the AKU, the Directorate of Fisheries and Aquaculture Services, and the National Agency for Veterinary and Plant Protection, into a single inspection body.

In simple terms, a new national institution will be created that will handle both official food control (for food products intended for humans) and veterinary and phytosanitary control (for animals and plants). This reform aims to eliminate overlaps, strengthen coordination, and increase accountability: when responsibility is concentrated in a single entity, it becomes easier to hold it accountable for failures or successes. The law provides that this reorganization will be implemented by 2025, after the necessary regulations are issued and the transition of personnel and functions is completed. Essentially, the government is signaling that “the AKU as we know it will cease to exist.”  to be replaced by a new structure, hopefully with greater integrity and efficiency.

Immediate measures during the transition

In addition to medium-term legal changes, immediate executive measures have been taken to prevent the recurrence of scandals during the transition period. The Ministry of Agriculture clarified in July 2025 that there is no general suspension of AKU's operations. Only unplanned actions without prior approval were prohibited, while scheduled inspections continued. By a special order, any unplanned or unmonitored checks by the central office were banned, with the aim of preventing potential abuses or corruption under the guise of spontaneous inspections.

Parallel to this, a working group of experts, including from the Agricultural University of Tirana, was established to reassess the existing corps of AKU inspectors. This commission will test and interview all current inspectors, both in writing and orally, to verify their professional skills and level of integrity. Only those who successfully pass this filter will continue working in the new inspection structure. At the same time, the commission will review new inspector candidates, aiming to bring a fresh spirit and new work ethic to the institution. According to Minister Denaj, this process is vital to ensure that the future inspectors will be “competent, professional, and of integrity,” restoring public confidence in food oversight.

The future

Furthermore, the government has stated that food safety will remain a key focus in future budgets as well (as seen with the budget increases for AKU in 2025). Investments in modern laboratories for food analysis and the digitization of processes have been announced (e.g., the creation of electronic databases to trace products from farm to table). The role of the reformed AKU is expected to be more proactive: not only to issue fines when violations occur, but also to advise businesses on how to meet standards, educate consumers on product storage, and cooperate closely with the Tax Administration and other law enforcement institutions.

Why did the situation come to this point? 

Expert analyses blame a combination of factors: years of neglect and politicization of appointments at the AKU, lack of investment in logistics (few inspectors, without adequate tools and fuel for inspections), and a culture of impunity for violators. Also, the informality of the markets themselves fueled the problem: when a large share of products circulates without documentation, it becomes easier to evade inspections (for example, smuggled or unsafe goods are mixed in with non-standardized products at informal markets).

Therefore, market formalization and strengthening the AKU are two processes that must go hand in hand: formalization aids traceability and enables effective inspections, while an AKU with integrity ensures that formalization does not remain on paper but actually guarantees safe products for the people. Recent government discussions have emphasized precisely this: the current situation (with serious food safety problems) has its roots in years of tolerating informality and a lack of seriousness in inspections.

It is now widely agreed that without a thorough shake-up of the AKU and formalizing the agri-food economy, it will be impossible to have either a fair market or health security for citizens.

Conclusions

The campaign launched by the Tax Administration to formalize the agricultural and livestock market marks an important step toward disciplining this vital sector. The issuance of fiscalized invoices for every product means greater transparency, higher tax revenues for the state, and better opportunities to trace products in case of quality issues. However, fiscal formalization is only one part of the solution.

To ensure that the products reaching the consumer are safe and high-quality, strong quality oversight is essential, and this is where the reformed role of the AKU comes into play. The government's reforms in food inspections, supported by additional budget funds and assistance from international partners, demonstrate the determination to see this mission through to the end.

On the other hand, the government is trying to balance the “stick” with the “carrot”: punitive measures against informality are being accompanied by easing measures such as subsidies, tax relief, and investments in modern markets, in order to make farmers part of the solution rather than its victims.

If these policies are implemented consistently, the benefits will be long-term. A formalized and monitored agro-livestock market ensures that honest farmers compete on a level playing field, without being undercut by those who evade taxes or sell substandard products. Consumers will have more confidence in what they buy, knowing that behind every product there is an invoice and a safety inspection.

Convergence with European standards and challenges

Also, Albania will move closer to European standards, where food safety and the formal economy are pillars of society. Of course, challenges remain numerous; it will take time to change the mindset of market actors and to restore confidence in institutions. But the steps taken in 2025 give reason for optimism that “the situation will not remain at this stage,” but will improve in the coming years through the joint efforts of the government, farmers, and consumers.

Frequently asked questions

Is an invoice required for every quantity of agricultural product?

Yes, Law 87/2019 provides for it for every commercial transaction between entities. Street vendors are exempt.

What is the 10% VAT compensation for farmers?

It is a refund that the Tax Administration pays directly to the farmer (not the buyer) when the product is purchased by a VAT-registered business. The farmer does not have to be VAT-registered himself.

What is the “lot” code, and does it also apply to domestic products?

The lot code is a production series identification number. It applies to all pre-packaged food products circulating on the market, including domestic products. Products sold unpackaged (open weight) are excluded.

How much of a fine does a business face if it doesn't issue a fiscal receipt?

The base figures come from Law No. 9920/2008. Failure to file within the deadline costs 10,000 lek for VAT and corporate income tax payers, and 5,000 lek for others, Article 113. Late payment costs 0.06% per day, up to 365 days, Article 114. An inaccurate declaration incurs a 201% penalty on the difference, Article 115, while evasion incurs a 1001% penalty, Article 116. An undeclared employee incurs a penalty of 200,000 lek or 50,000 lek depending on the type of taxpayer, Article 119.