Investor s Guide: ALBANIA

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1 ATTSO Albanian-Turkish Chamber of Commerce and Industry Address: Rruga Ismail Qemali, 34/1 Tel: Fax: Investor s Guide: ALBANIA

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3 Table of Contents 1. ALBANIA AT A GLANCE 4 2. GENERAL INFORMATION AND INDICATORS ABOUT THE BUSINESS ENVIRONMENT 4 3. INFLOW OF FOREIGN DIRECT INVESTMENTS IN ALBANIA 5 4. FOREIGN INVESTMENTS LEGISTATION AND INCENTIVES 5 A. Country Legislation on Foreign Investments 5 B. Investment Incentives 7 a. Most Important Incentives 7 b. Support of Tourism Sector 7 5. TAX SYSTEM IN ALBANIA: 8 A. Main Taxes: 8 B. National Taxes: SOCIAL HEALTH LEGISLATION STARTING A BUSINESS IN ALBANIA TURKISH CITIZENS WHO TRAVEL TO ALBANIA IMPORTANT LINKS 15

4 1 ALBANIA AT A GLANCE CAPITAL / OFFICIAL LANGUAGE Tirana / Albanian POPULATION : Muslim (%70), Orthodox (%20), Catholic (%10) SURFACE AREA km 2 / arable area % 22,7 GDP billion $ GDP / CAPITA $ GDP GROWTH %3,8 (2017 estimation) EXPORT/ IMPORT 1,9 billion $ / 4,3 billion $ GDP SECTOR COMPOSITION Agriculture %22,3; Industry: %15; Services: %62,6 - Agriculture %41,8; Industry %11,4; Services %46,8 THE MAIN AGRICULTURAL PRODUCTS EXPORTS BY COUNTRY IMPORTS BY COUNTRY Wheat, corn, potatoes, vegetables, fruits, sugar beets, grapes; meat, milk and dairy products Italy (%51), Kosovo (%10), Spain (%5,2), Malta (%4,6), Greece (% 4), Turkey (%3). Italy (%30), China (%8,6) Turkey (%8), Greece (%7,8), Germany (%7) Source: TradeMap-UN/WTO (2015), IMF (2016) 2 GENERAL INFORMATION AND INDICATORS ABOUT THE BUSINESS ENVIRONMENT the business regulatory environment is captured through various reforms. EASE OF DOING BUSINESS IN ALBANIA, INDICATORS 2017 Starting a Business Dealing with Construction Getting Registering Property Getting Credit Paying Trading across Enforcing Contracts Resolving Insolvency DB 2017 Rank Procedure Time /9 (Exp./ Imp.) 15/18 hours (Exp./Imp.) year Cost (% of income per capita) ,5 9, /730 34, INVESTOR S GUIDE: ALBANIA

5 3 INFLOW OF FOREIGN DIRECT INVESTMENTS IN ALBANIA When we look at the Turkish investments in Albania, they reach a value of 397 million with a share of 9% of the total foreign investments in Albania. FDI in Albania 2015 (IMF)* According to statistics of the Central Bank of Albania, the total FDI stock during 2015 ant source of FDI in 2015, with 25 %. The country s second largest in terms of source of FDI in Albania is Holland with 14 %, followed by Canada with 13 %, than Italy with 11% 9,000 people are employed by Turkish companies operationg in Albania. 4 FOREIGN INVESTMENTS LEGISTATION AND INCENTIVES A. COUNTRY LEGISLATION ON FOREIGN INVESTMENTS vorable investment climate for foreign investors in Albania. No prior government authorization is needed for foreign investments and no sector restrictions apply; There is no limit on the share of foreign participation in a company (100% foreign ownership is possible); Foreign investment may not be expropriated or nationalized directly or indirectly, expect Foreign investors have the right to expatriate all funds and contributions in kind; plete protection; al practice allows; Special state protection through replacement with full rights of foreign investors by the INVESTOR S GUIDE: ALBANIA 5

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7 - Energy and mining; Transport, telecommunications, infrastructure and urban waste; Tourism; TEDA One of the main criteria in the selection of the investor/strategic investment is the investment value which based on the strategic sector varies from 1 Million Euro to 50 Million Euro, as well as the new job vacancies proposed to be opened by the investors. B. INVESTMENT INCENTIVES State aid support the implementation of important projects. sion concluded that making available of construction lands, agricultural lands as well as other state owned immovable properties, in terms more favorable than those of the market, may be considered as state aid. In any case of disposal of state owned immovable property, state authorities must assess if such disposal shall be considered as state aid, and in case of positive conclusion the disposal should be subject to prior approval by the Commission. MOST IMPORTANT INCENTIVES * The Textile and Footwear Industry Package 2014, giving a strong stimulus to the fashion industry ( 1 leasing contract, when renting government property; Instant reimbursement of VAT, in the case of taxpayers with a zero risk, and within 30 days in the case of ing incentives for job training; Facilitation of Customs Procedures, etc.) * NO VAT on machinery that cost of over 360,000 that is used to increase productivity; * NO EXCISE on the fuel used by oil-producing companies; * NO VAT on the import of cement and steel used for the construction of hydropower plants; * Incentives regarding with TEDA. SUPPORT OF TOURISM SECTOR tegic Investments Committee, headed by the Prime Minister of the Republic of Albania, is the competent authority for giving the strategic status to the investment projects in the - The approval of the tourism development planning, which should be prepared in accordance with the national territory planning, the strategy on tourism and the legislation governing the territory planning and development. - The projects exceeding the value of 50% of the annual fund foreseen for tourism proj- nancing of educational, promotion projects and studies or models of tourism products that help the development of tourism. INVESTOR S GUIDE: ALBANIA 7

8 - The state might assume the role of the developer, enter into public-private partnerships, hold shares/stocks in tourism companies, make available immovable properties to private investors, provide supporting infrastructure, as well as combinations of the forgoing forms of investment participation. - The investor might make use of the state immovable properties for up to 99 years and by virtue of Euro 1 contract. 5 TAX SYSTEM IN ALBANIA A. MAIN TAXES Corporate Tax % 15 Value Added Tax % 20 Withholding tax % 15 ALL 0-30,000 Rate 0% Personal Income Tax ALL 30, ,000 More than ALL 130,000 13% of the amount exceeding ALL 30,000 ALL 13, % of the amount exceeding ALL 130,000

9 Warehouse Services EXCISE DUTIES Based on Law No. 61 dated 24 May 2012, excise duties administered by the customs authorities Albania levies excise tax on products such as: by-products of petroleum alcoholic drinks tobacco and cigarettes pneumatic tyres incandescent lamps plastic glass mixed packages As of 1 January 2017, the excise duty applicable to certain products (some processed tobacco and its substitutes, natural gases etc.) has been changed. Detailed information can be reached from the Customs Authority website. INVESTOR S GUIDE: ALBANIA 9

10 B. NATIONAL TAXES There are a variety of other national and local taxes and fees. These include royalties charged on extraction and sale of natural resources, port charges, consular fees, TV and telephone taxes, driving license fees, airport arrival and departure tax, cleaning tax, advertising tax, circulation tax on vehicles, plastic and glass packaging tax and others. 1. Port taxes: Portal tax is calculated at the rate of 1 Euro. This tax is paid from every ship that is anchored and trade in all Albanian ports. 2. Circulation tax (on fuel): 3. Tax on used vehicles: The formula of the application of the annual tax on used vehicles is: Cylinder in cm3 x coef- ALL on oil and 20 ALL on gasoline. vehicles and will be subject to luxury vehicle taxes (previously, the price/value threshold was ALL 7,000,000) 4. Tax on mineral rent: Every natural or legal person who is licensed and / or operating in the mining industry, according to a contractual relationship with the Minister responsible for economy, mining has to pay rent for natural resources extracted from / on / and subsoil of the Republic of Albania. Mining Rent calculated monthly obligation taxpayer s subject at the time when 9 he sells mineral products. In the case of export of mineral products, rent paid at the time of making the export declaration. 25 percent of revenues from mining Rent exceed local government where the activity. 5. Carbon tax: - codes from to , and under the subchapter ) will also be subject to circulation tax and carbon tax. 6. Real estate tax: Entities that own real estate property in Albania are subject to real estate tax. It is calculated based on the location of the building and the purpose for which the building is used 7. Municipality taxes: Municipality taxes (or local taxes) depend on a number of factors, such as type of activity, municipality where the business is located and the annual turnover. 10 INVESTOR S GUIDE: ALBANIA

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12 6 SOCIAL HEALTH LEGISLATION Working Hours: Pursuant to the Albanian Labor Code, the normal workday must not exceed eight hours per day. The normal working week must not exceed 40 hours. If the normal workday is exceed- According to the Labor Code, the employee must not perform overtime when working more than 48 hours per week. Overtime Working: The overtime must be paid with a bonus of 25% of the regular rate or may be compensated the collective contract. Pension System: In order to be eligible for the full old age pension, an individual must contribute for a period of insurance of 35 years and may receive pension when reaching 65 years of age for men and 60 years of age for women Minimum Wage: paid less then this mandatory minimum rate of pay. Based on Decision of Ministers from minimum salary that every employee must be paid in Albania by any employer is Lek. the government decision states, adding that this salary will be paid for a total of 174 working hours a month, during normal hours of work. Meanwhile, minimum hourly Social Health Contributions: is withheld by the employer on a monthly basis. The applied rates are as below : Social Contributions Rate Health Contributions Rate Employer 15% 1.7% Employee 9.5% 1.7% Total 24.5% 3.4% LEGISLATIVE FRAMEWORK FOR FOREIGN NATIONALS: Law on Foreigners (2013) is applied to those foreigners who are not citizens of the Re- self-employment. On , the Albanian Parliament approved the law no. 74/2016, 12 INVESTOR S GUIDE: ALBANIA

13 Generally, to obtain the work permit the following documents must be submitted to the Regional Labour Directorate. However, depending on the type of the work permit, addition- 2- Extract of the National Registration Center proving the registration of the employer; 3- Original copy of the Employment Contract; 4- Copy of the passport; the employer or the employee); 6- Five (5) photos. issued in the last six months; 7 STARTING A BUSINESS IN ALBANIA The Commercial Law no On Entrepreneurs and Commercial Companies ) into force on This Law regulates the status of entrepreneurs, the founding and managing of companies, the rights and obligations of founders, partners, members, and To registration of a new company in the National Registration Center the following doc- To start the registration, the applicant must complete the application form. The application tions for their completion can be retrieved at every service window of NRC or can be down- window with the help of the service window clerk if necessary, or via the Internet, using the will verity, copy and scan, and return; For more detailed information about Company Registration, please refer to the NRC website INVESTOR S GUIDE: ALBANIA 13

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15 8 TURKISH CITIZENS WHO TRAVEL TO ALBANIA According to the agreement mutual visa exemption between the Government of the Republic of Turkey and the Government of the Republic of Albania on 20 November 2009, all Turkish biometric, diplomatic, service/special passport holders can remain in Albania for a maximum period of 90 days from the date of entry within a period of six months (180 days). Mutual visa exemption has greatly increased the measures taken to prevent illegal immigration at border crossing control, as provided by the Agreement, as Albania is in a all other countries who wish to enter Albania without any discrimination. Pay attention to the following documentations: - Hotel reservation and round-trip ticket - Financial guarantee (accordingly with staying period, nearly 50 euro/day) - Documentation proving the stay of foreigner for tourism purposes in the country where visa application will be lodged together with supportive documents. - Passport validy 9 IMPORTANT LINKS 1. Turkish Embassy in Tirana ( ) ( 4. Ministry of Finance ( ) Central Bank of Albania ( 8. Albanian Investment Development Agency ( 9. National Registering Center QKB ( ) - Turkish Commercial Counselor: Road police: 126 Exchange rates: - 1 Dolar: 120 Lek INVESTOR S GUIDE: ALBANIA 15

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17 BOARD MEMBERS INVESTOR S GUIDE: ALBANIA 17

18 BOARD MEMBERS Softi Shpk Pentagene SHPK Tur- Tekstil Samuel International Shpk Ahmet Gjinishi IFIS Tashko Pustina AMG Shpk Boga and Associates Hoxha Security Trium Communication Studio Permbarimore Shkrela 18 INVESTOR S GUIDE: ALBANIA

19 GREEN ENERGY FOR A BETTER FUTURE Address: Papa Gjon Pali 2 Avenue, Bulding no. 12 Tirana - Albania

20 ENJOY THE JOURNEY WHERE BUSINESS MEETS BENEFITS To become a member and start receiving benefits of Turkish Airlines Corporate Club, please visit corporateclub.thy.com