“In Albania we have a hospitable climate for foreign investors, not just from a legal perspective, but from a business perspective as well, and we are trying to do the best to implement the laws as they are written,” reports Jonida Skendaj, Partner at Boga and Associates.
According to Skendaj, Albania is in a state of “constant development,” in areas such as agriculture, energy and mining, transport, telecommunication, and urban waste. And while she reports that domestic investors are getting more and more active, primarily in public infrastructure projects, she says that “foreign investors, on the other hand, are becoming interested in the agriculture sector.”
According to Skendaj, “we also hope to see some more movement in tourism, as it is being incentivized quite strongly by the government. We have no restrictions on repatriation of funds, no tax on net profit of a branch, many tax conventions in place which provide for a low rate of tax on dividend repatriation, and equal treatment for foreign and domestic investors, meaning that we do not have discrimination from a taxation point of view; foreigners don’t pay more than locals.” According to her, this equal treatment — combined with attractive tax rates — is key. “When you are a foreign investor and come into a country that you don’t know, at first glance you want to see what protection the country can offer to you, but also how the tax treatment will be. We have friendly tax rates — 15% rate for profit tax — and then with the double tax treaties, the income that is generated in Albania may be taxed at reduced rates depending on its nature.”
Also important, Skendaj says, is that foreign investors don’t need prior governmental approval to invest. In addition, the investment can be 100% foreign, including management. “The law on tourism has been changed recently, and it now provides for incentives to state-owned immovable properties that are located in areas that are priorities in the development of tourism, so they can be made available for investors for a duration up to 99 years. The right to use state-owned property can be also obtained for a symbolic price of 1 euro,” she reports, adding that when someone has the status of a "special strategic investor," Albania’s Council of Ministers may also change the ownership of the state-owned territory in its favor. “In this case, the contract will contain a condition that the investment should be fully realized as undertaken in the original contract,” she says. “The agreement would be ratified by the parliament.”
"The investment value in these cases is very high,” she reports, “and for someone to qualify as a 'strategic special investor,' they need to ensure that some jobs will be in place, the project will be finished in time, and so on. In exchange, the state gives you special protection: you’ll have a contract ratified by the Parliament, which gives you more security, or if you need some immovable property that is privately owned, the state undertakes the expropriation.”
“The law is there to protect,” Skendaj concludes, adding that Albania also has special bodies like the Albanian Agency for Foreign Investments and the Strategic Investment Committee that have been designed to help investors. “If they need assistance, these agencies can put them in contact with relevant ministries, and if they need expropriation, they prepare the field. Foreign investors are literally accompanied by the state (in its bodies) on every step.”
