- This article describes a proposed fiscal plan, not a law in effect.
- The plan provided for the elimination of certain reduced tariffs and exemptions that did not produce the expected effect.
- The reduced VAT rates of 6% and 10% are still in effect today.
- Before any business decision, the rate is verified under Article 49 of Law No. 92/2014, as amended.
Important note. This text refers to a plan announced in the medium-term fiscal framework, not to an enacted law. The plan has not been implemented in the described form.
Current status. The reduced rate of 6% applies to accommodation, certified agritourism, books, advertisements in audiovisual media, and several other categories. The 10% rate applies to agricultural inputs, namely fertilizer, pesticides, seeds, and seedlings. Both are still in effect, and the full list is on our website. reduced VAT rates.
What has really changed. The 5% rate for software producers expired on December 31, 2025, so as of January 1, 2026 they are taxed under the general regime. The rates in effect for income tax are on the page of of norms and thresholds.
The government plans that over the next two years, within the fiscal framework, it will eliminate certain reduced tariffs, exemptions from direct taxes, and those exemptions that have not produced the expected effect. In an official document on the compatibility of Albanian legislation with European Union directives, it is acknowledged that harmonization is an ongoing challenge that also requires increasing operational capacities and computerizing the tax administration, which affects its efficiency.
In this context, the document clarifies what Albania's priorities and plans will be through 2030 for aligning with and meeting the European Union's criteria in the area of taxation, and it appears that one of these relates to tax exemptions.
“Based on the Medium-Term Revenue Strategy, the Ministry of Finance and Economy has drafted and initiated a review of reduced rates and exemptions in the tax laws, which increase the volume of “tax expenditures,” in this context:
During 2024 and beyond, changes will be adopted to eliminate reduced rates and exemptions in direct taxes.
”During 2025 and beyond, the current exemptions in the field of value-added tax will be reviewed with the aim of eliminating those that have fulfilled their mission or that have proven unsuccessful in implementation and have not produced the expected effect," the government document states.
Criticisms of international institutions
Exemptions from direct taxes or value-added tax have been criticized from time to time by international institutions, which consider this a problem that makes it more difficult to collect revenues and easier to evade taxes.
Over the years, government fiscal packages have provided exemptions mainly in VAT but also in direct taxes. Earlier, such exemptions included VAT relief for energy investors; later, a full-package exemption was granted to investors with special tourism status who brought in an international hotel brand, a practice that continues to this day.
The latter is one of the most criticized policies because it has on numerous occasions been labeled a form exploited by developers to avoid paying taxes on constructions not intended for tourism. Meanwhile, exemptions have been numerous over the years and affect a range of sectors.
Source: Monitor Magazine.
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