WB6 IIP
Western Balkans Six
Investment Incentives Platform
The Western Balkans Six Investment Incentive Platform is the first of its kind in the region, providing detailed information on available incentives in each of the WB6. It is one of the key measures under the Regional Investment Area, which is part of the Common Regional Market Action Plan 2021-2024.
Developed with input from Investment Promotion Agencies (IPAs) across the region, the platform includes both financial and non-financial incentives, categorized by type, sector, and target audience.
It provides comprehensive information for investors looking to invest in the WB6. As an evolving resource, the platform will be updated every six months to ensure it remains current and relevant.
Partial Value Added Tax (VAT) Deduction
- Economy name
- Albania
- ID
- A36
- Incentive name
- Partial Value Added Tax (VAT) Deduction
- Brief description
- Partial VAT deduction allows a taxable person/legal entities to deduct only the portion of VAT related to transactions that entitle VAT deduction, calculated using a coefficient based on the ratio of turnover from deductible transactions to total turnover, excluding specific incidental or capital transactions.
- Legal reference name
- Law No. 92/2014 dated 24.07.2014 "On VAT in Albania"
- Legal reference
law section / article -
Article 71-73 Article 71
If supplies of goods and services are used by a taxable person, as per
carrying out taxable transactions that bring the right to VAT deduction, on the basis of
articles 69 and 70 of this law, even for transactions that do not bring this right, then
only the part of VAT related to the first category of transactions is deductible.
The part of the deductible VAT is determined on the basis of articles 72 and 73 for the entirety of
transactions carried out by the taxable person.
Law no. 92/2014, dated 24.07.2014, "On VAT"
28
Article 72 Calculation of the VAT deduction coefficient
1. The VAT deduction coefficient is calculated from the following ratio:
a) in the counter, the total amount of the volume of the annual turnover, excluding VAT, related to
transactions that bring the right of deduction, according to articles 69 and 70, of this law.
b) in the denominator, the total amount of the volume of the annual turnover, excluding VAT, related to
the transactions included in the counter and the transactions that do not bring the right of deduction.
2. In contrast to point 1 of this article, for the calculation of the VAT deduction coefficient, the following amounts are not taken into account:
a) the turnover value realized from the supplies of capital goods, used by
the taxable person for his business needs;
b) turnover value, realized from financial and property transactions
real estate if these transactions are incidental;
c) turnover value, realized from transactions defined by letter "b" to
in "e", of Article 53, of this law, if these transactions are random.
Article 73 Rules for the application of the VAT deduction coefficient
1. The VAT deduction coefficient is determined on an annual basis, it is determined in
percentage and rounded up to the highest unit.
2. The VAT deduction coefficient, provisionally applicable for one year, is
initial discount coefficient and this coefficient is calculated on the basis of the transactions of the year
previously under the terms of Article 71 of this law. In the absence of these transactions or when
their amount is negligible, the initial VAT deduction coefficient is estimated
provisionally by the taxable person himself, based on his forecasts and under supervision
of tax administration.
3. The VAT deduction, carried out on the basis of the initial deduction coefficient, must
adjusted in the first tax period of the following year, according to the final coefficient of
VAT deduction.
4. For the purposes of this article, the taxable person must notify the tax administration
for the initial VAT deduction coefficient that will be applied during the year and for the method
its calculation, no later than:
a) January 31, in the case when it is not the first year of application of the discount coefficient
VAT.
In this case, the initial VAT deduction coefficient is the final coefficient i
VAT deduction for the previous year;
b) the deadline for declaring the first tax period, in which the obligation to apply arises
the initial VAT deduction coefficient.
5. The Minister of Finance determines with instructions the rules and modalities of application of
this article
- Incentive group
- Financial
- Incentive category
- Value Added Tax (VAT)
- Economy-wide/Sector-specific
- Economy-wide
- Sector (Simplified)
- All sectors
- Sector (NACE)
- N/A
- Size of firm that can use incentive
- All sizes of firms
- Level at which incentive is available
- Economy-wide
- Ownership of firm that can use incentive
- Any
- Incentive location
- General
- Main objective of the incentive
- Increase competitiveness
- In case of grant, share of grant in investment (in %)
- Contact Info
- Street "Dëshmorët e Kombit" Nr.3, Tirana 1001
- Weblink to Incentive information in English
- Weblink to Incentive information in local language
- Click to open
- Eligibility criteria
description -
In order to be able to exercise the right to deduct VAT, the taxable person/legal entities must
meet the following criteria:
a) for deduction, according to the definition of letter "a", point 1, article 69, of this law,
related to the sale of goods and the performance of services, to have an invoice drawn up in
compliance with articles 96 to 105 of this law;
b) for deduction, according to the definition of letter "b", point 1, article 69, of this law,
related to actions similar to the sale of goods and the performance of services, must
the formalities determined by the instructions of the Minister of Finance are fulfilled;
c) for VAT deduction, according to the definition of letter "c", point 1, article 69, of
of this law, regarding the importation of goods, the taxable person must possess a document
that proves the import, issued at the time of release for free circulation of goods in
the territory of Albania, as defined in the Customs Code of
Albania, in which he is qualified as the recipient or importer of the goods and where the amount should be written
VAT paid and the method of its calculation;
ç) when the buyer is forced to pay VAT, according to the definition of point 2, article 86, of this law, the relevant formalities must be fulfilled, defined by instructions from the Minister of
Finances.
- Eligibility criteria
weblink - Click to open
- Awarding Authority (Name)
- Ministry of Finance, General Directorate of Taxes and Council of Ministers
- Application procedure + Weblink (where available)
- The official requests must be submitted to the General Directorate of Taxes with all additional documents.
- Implementing Authority (Name)
- Ministry of Finance, General Directorate of Taxes and Council of Ministers