A potential candidate country for EU accession, Albania is a member of World Trade Organization since 2000 and a NATO member country since April 2009.
Albania has achieved strong economic positive growth despite the global economic and financial crisis with a GDP growth of 6% for the period 2000 - 2009, and of more than 3% for years 2010 and 2011 respectively.
Strategically located in the Western Balkans, with its developing market economy, low tax burden and its young, educated and cost competitive workforce, Albania offers many opportunities for investors. Albania’s natural resources include significant hydro, solar and wind power capacity, large tracks of agricultural land and over 400 km of coastline with excellent tourism potential. The country is rich in oil and gas and is endowed with valuable mineral deposits such as copper, iron and chrome ores.
Well anchored structural, legal, fiscal and administrative reforms focusing on trade liberalization and ease of doing business, have boosted investors’ confidence in Albania. According to UNCTAD World Investment Report 2012, in 2010 the number of foreign direct investments received by Albania amounted to $1051 million, and in 2011 amounted to €1031 million. According to the same report, Albania ranks in the countries with the highest performance index meaning that the number of foreign investments received was above expectations and this thanks to improvements in its investment climate.
The focus for the future development of the Albanian economy will remain on attracting FDIs with a focus on sectors where the Albanian economy has unexploited potential both in terms of natural resources as well as in developing sectors that are yet underperforming
such as renewable energy, tourism, agribusiness, infrastructure and services. Albania has adopted a liberal framework which has been designed to create a favorable investment climate for foreign investors. Albania has also signed a considerable number of Bilateral
Investment Treaties with different countries such as United Kingdom, France, Germany, Italy, Austria, Switzerland, United States, China, Russia, Israel, Egypt, Malaysia, Cyprus, Kuwait, Turkey, Serbia etc.

Economic Situation

Albania has achieved strong positive economic growth over the recent years, despite the impact of the global financial and economic crisis. The GDP growth in 2010 was 3.5 % and in 2011 it has reached 3.9%.¹

The pursuits of macro-prudential policies and well-anchored structural reforms, focusing on privatizations, fiscal probity, trade  liberalization, the business climate, energy and financial sectors, have enabled Albania’s economy to be the most resilient of South-Eastern European economies.

In their last reports up to date (September 2012), the global rating agencies “Moody’s Investors Service” and “Standard and Poor’s”, reaffirm their previous credit ratings (B1 from Moody’s and B+ from S&P) and their “stable” outlook for the Albanian economy. According to these reports, Albania has made significant progress in improving its economic and institutional strength since the late 1990s, albeit from very low levels. The economy remained relatively resilient during the global financial crisis of 2008-09.

They emphasize that Albania has demonstrated in the last years a steady economic growth of 4%. Besides the economic growth over the last years, the agencies highlight the high growth potential of the Albanian economy over the next years.

Foreign Trade Regulations

Albania applies a liberal trade regime while its foreign trade has been liberalized since 1990 and follows the guidelines set by the European Union and World Trade Organization. Albania has been a member of WTO since 2000 and applies WTO rules on import
licensing. As a result of this liberalization and an on-going process of harmonization of Albanian customs rules with the EU system, imports and exports of commodities are not generally subject to special authorization requirements. Exceptions apply to quotas
or control requirements imposed through different bilateral or multilateral agreements 24signed by Albania. Licenses are also required for specific commodities with restricted circulation within the country such as military or strategic goods, radioactive materials
and psychotropic substances, drugs etc.

Exports are not subject to any export taxes, fees or other barriers. Imports are not subject to any import duty taxes other than customs duties. Imports are subject to VAT and some items, such as tobacco, alcoholic beverages and fuel are also subject to an excise tax.

Trade Developments

Trade volume in 2011 rose by 23.9 % compare to 2010, with imports rising by 12.4% and exports by 20 %. During 2011 total imports amounted to 544,004 million ALL (3,867.09 million euro) and exports amounted to 197,459 million ALL (1,404.16 million euro).

The EU remains the main trading partner of Albania, providing 64.1 % of imports and receiving 72.5 % of Albania’s exports. Albania imports mainly from Italy, Greece, China, Germany and Turkey, and exports to Italy, Kosovo, Turkey, Greece, Spain and Germany. Italy and Greece represent respectively 47.7 % and 16.6 % of imports, and 73.3% and 7.1% of exports.

Albania offers a highly skilled labour force and one of the lowest labour costs in the region. Labor relations between employee and employer are regulated by individual employment contracts pursuant to the Labor Code of the Republic of Albania and Law no. 8549, dated 11.11.1999 “On the Status of the Civil Employee”.

Labor cost

• ƒƒ As for 1st of August 2012, the minimum wage in Albania is 21,000 ALL (approx. 153 Euro);
• ƒƒ Social insurance is 27.9% of the gross salary, with the employer paying 16.7% and the employee 11.2%;
• ƒƒ The average wage (public and private sector) is 36,075 ALL (approx. 260 Euro).

The state supports employers who employ the young generation up to 24 years old and females of special groups.

Employment structure by sectors:

The employment structure by sectors refers that during the period of years 2010 - 2012:

• ƒƒ 17.8% of the employees are employed in the public sector;
• ƒƒ 27.6 % of the employees are employed in the non-agricultural private sector;
• ƒƒ 54.6 % of the employees are employed in the agricultural private sector.

Albania adheres to all basic international labor organization conventions protecting worker rights.

Business entities

Under the Commercial Law as in effect, the types of business entities are:

• General Partnership Company - A company is a general partnership if it is registered as such, conducts its business under a common name and the liability of partners towards creditors is unlimited.
• Limited partnership Company - A company is a limited partnership, if at least one partner’s liability is limited to the amount of his interest (limited partner), while the liability of other partners is not limited (general partners). General partners have the status of partners in a general partnership.
• Limited liability company - A limited liability company is a company founded by natural or legal persons who are not liable for the company’s commitments and which personally bear losses only to the extent of any unpaid parts of stipulated contributions. Members’ contributions constitute the company’s basic capital.
• Joint stock Company - A Joint Stock Company is a company the basic capital of which is divided into shares and subscribed by founders. Founders are natural or legal persons, which are not liable for the company’s commitments and which personally, bear losses only to the extent of any unpaid parts of the shares in the basic capital they subscribed.
• Branches and Representatives

According to the Law No. 9901, persons authorized to manage a company may establish branches and representatives.

Tax legislation

Tax legislation in Albania is managed through the General Tax Department and is subject to frequent improvements and amendments due to the EU integration process and modernization of the Albanian public administration.

Tax and tariff regime in the Republic of Albania consist in a package of laws, directives, regulations and tax agreements displaying a complete review of all levels of calculations, procedures, methods and forms of tax control.¹²

Legal and/or physical persons in the Republic of Albania are subject to the following taxes:

1. According to Law no. 8438, dated 28.12.1998 «On the personal income tax» (as amended), personal income from employment are taxed according to the following scheme: for salaries up to 10,000 ALL tax is 0%; salaries to 30,000 ALL tax is 10% of the amount over 10,000 ALL; salaries over 30,000 ALL tax is 10% of the amount over 0 ALL.

2. Unless otherwise foreseen by law no. 7928, dated 27.04.1995 «On value added tax» (as amended).

The Albanian customs regimes can be briefed as follows:

1. Placing in free circulation regime gives non-Albanian goods the customs status of Albanian goods. Goods placed in free circulation, with a level of reduction or zero import duty, due to their particular/special use, will remain under customs supervision. This supervision shall end when the conditions for the level of reduction or zero rate of duty cease to exist, when goods are exported or destroyed, or when goods are used for purposes other than those provided for the implementation of level reduction or zero rate of duty, provided that the relevant obligations are paid.

2. The Temporary Permit Regime refers to the customs procedure allowing imported goods to be used without paying duties for a limited period of time. These goods must have the following characteristics in order to be allowed for import under this regime:

a. They should not be of Albanian origin;

b. They should not be owned by the importer. Instead, the importer should lease and use them for a certain period of time and return them to their prior location;

c. The goods should be easily identifiable and usable for a long period of time. As such, they must not be final goods for immediate consumption, except in cases involving their physical depreciation.

Imports

VAT is assessed, applied and paid at the moment goods enter the Albanian custom territory. The VAT rate is 20% of the taxable value. The taxable value includes the purchase price plus transport and insurance payments made until the moment goods enter the Albanian custom territory. Tariffs, taxes and other export - import duties paid until this moment are also included in the taxable value.