Explore Albania - Agribusiness
On May 23rd 2019, the International Finance Corporation (IFC) and the Albanian Investment and Development Agency (AIDA), in close collaboration with the Albanian Ministry of Agriculture and Rural Development, held an informative event in Zurich as part of their broader investor outreach campaign “Explore Albania-Agribusiness”.
The World Bank Group has been assisting the Albanian government in designing and implementing reforms in the area of trade and investment climate for over three decades. Recently, particular emphasis has been placed on the development of the agribusiness sector and attracting new investment. The event enabled existing and prospective investors from both Albania and Switzerland to network and acquire deep insights into concrete opportunities of doing business in Albania.
Deloitte Albania and Kosova was a key contributor to this event and brought its wealth of tax and legal expertise with a focus on the agribusiness value chain to all event participants.
In her presentation, Sabina Lalaj, Senior Manager at Deloitte Legal, outlined the legal framework for establishing a company in Albania. In general, the registration procedures for a new company in Albania, be it a Joint Stock Company or a Limited Liability Company, are simplified and short, with registration becoming effective within 24 hours from the moment of application. Furthermore, special provisions have been made for those companies wishing to be organized as Agriculture Cooperative Companies and solely focusing on agricultural production, procession and supply. Agriculture Cooperative Companies are subject to several fiscal facilities and support schemes from the Albanian government, and the legal framework that regulates them is partially aligned with EU Regulation on European Cooperative Societies. The government in Albania offers additional incentives and facilities to what it defines as “strategic investors” – those who invest over €3 million in a particular economic segment and create more than 50 new jobs. Facilitated licensing and permit procedures, grants, preferential lease prices on agricultural land, support with auxiliary infrastructure and administrative assistance are some of the incentives that are available. Overall, the legal backdrop in Albania is supportive of foreign investment in the agribusiness sector.
Blerina Memo, Tax Director at Deloitte Albania and Kosova, provided a fiscal overview of doing business in the agriculture sector. Special direct and indirect tax provisions are in place for agribusinesses. The standard VAT rate in Albania is 20%. However, farmers not exceeding the VAT threshold of 5 million Lek are incentivized by a special scheme that allows them to receive compensation at 6% as applied on the sale price (VAT exclusive) of supplies of agricultural products. The main aim of such incentive is to ease the administrative burden that the normal VAT scheme brings, and to some extent compensate for the VAT incurred on inputs acquisition. Imports and domestic supplies of agricultural machinery, as well as the supply of agricultural inputs such as chemical fertilizers, pesticides, seeds and saplings, are all exempt from VAT. In terms of Corporate Income Tax, a reduced rate of 5% is applicable to legal entities whose activity is organized as an Agriculture Cooperative Company, regardless of their annual turnover, from 2019 onwards. Relief from other taxes may be possible based on double tax treaties in place between Albania and the country of origin of investor.
Deloitte Albania and Kosova prides itself on the breadth and depth of knowledge and expertise it possesses on all tax and legal aspects of doing business locally, regionally and internationally. Deloitte experts are available to further advise companies on the optimal avenues of penetrating the agribusiness value chain in Albania.