Albanian law applies the principle of worldwide taxation. Resident entities are taxed on all sources of income in and outside the territory of Albania, while non-resident entities are taxed on income generated only in the territory of Albania.
The corporate income tax (CIT) rate in Albania is 15%. CIT is assessed on the taxable profits calculated as taxable income less deductible expenses.
Taxpayers with annual turnover up to 5 million Albanian lek (ALL) are exempt from CIT, whereas taxpayers with annual turnover from ALL 5 million to ALL 14 million are subject to a reduced CIT rate of 5%. Other taxpayers with annual turnover greater than ALL 14 million are subject to a 15% CIT rate.
However, taxpayers whose activity is software production and development are subject to a 5% CIT. Similarly, taxpayers whose activity is based on agricultural co-operation and those whose activity is certified as 'agro tourism', in accordance with the respective laws, are subject to a 5% CIT.
Local income taxes
Local taxes on income depend on a number of factors, such as type of activity, municipality where the business is located, and the annual turnover. Consequently, these taxes may vary from ALL 20,000 to ALL 550,000.