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Local business incentives - Legal forms of companies - Registration and licensing procedures - Legal framework - Foreign exchange control - Regulations concerning equity investment - FDI inflows - Expertise of the political risk

Local business incentives

The Albanian Agency for Business and Investments AlbInvest is the government body responsible for attracting foreign investment to the country. The institution was created under law No, 9497, dated 20.03.2006. It reports to the Ministry of Economy, Trade and Energy. The main activities of AlbInvest are given below::
1.Promotion, attraction and support of foreign investments, in accordance with the government policies.
2. Identification of opportunities for investments in Albania and their promotion.
3. Study, research, analysis the business climate in the country and make desired policy changes.
4. Promotion of local production and products for the export market.
5. Development of promotional activities in the country and abroad supporting the improvement of the image of Albania.
6 Providing expertise and consulting services to central and local government bodies and foreign investors for the feasibility of investments, etc.

Albanian law generally does not provide much detailed incentives for foreign investors. However, the legal incentives include:
1. Equal treatment of foreign and domestic investors.
2. Full profit and dividend repatriation (after taxation).
3. Funds from the liquidation of a company may be repatriated.
4. Bilateral agreements on the promotion and protection of reciprocal investments.
5. Double taxation treaties.

Besides, there is an incentive program for investment in the tourism sector. The investor can, pursuant to a law entitled, "For development of the areas with tourist priorities", obtain the title of "stimulated person" and would be entitled to tax exemption for the first five years of activity and for the following five years would pay only 50 percent of the tax on profit. Such persons would also be excluded from custom taxes on imported goods used for capital investment.
For information on privatization, one can also refer to the site National Agency of Privatization


Legal forms of companies

Form Number of partners/shareholders Minimum and/or maximum capital Liability Registration fee Release of financial documents
Joint Stock Company Minimum of 2 Lek 10 million for setting up a company with a public offer and Lek 2 million for setting up a company without a public offer. Liability is limited to the amount contributed. Registration with Commercial Register: Lek 1,500;
Registration with Tax Authorities: Lek 12,000;
Annual mandatory fees for membership of Chamber of Commerce: Lek 20,000
Limited Liability Company Minimum of 1 Lek 100,000 Liability is limited to the amount contributed. Registration with Commercial Register: Lek 1,500;
Registration with Tax Authorities: Lek 12,000;
Annual mandatory fees for membership of Chamber of Commerce: Lek 20,000
General Partnership Minimum of 2 No minimum capital is required All partners are jointly and severally liable, without limitation, for the company obligations. Registration with Commercial Register: Lek 1,500;
Registration with Tax Authorities: Lek 12,000;
Annual mandatory fees for membership of Chamber of Commerce: Lek 20,000
Limited Partnership Minimum of 2 No minimum capital is required There must be at least a limited partner (in addition to the general partner) whose liability for the company obligations is limited to the amount of his/her contribution. Registration with Commercial Register: Lek 1,500;
Registration with Tax Authorities: Lek 12,000;
Annual mandatory fees for membership of Chamber of Commerce: Lek 20,000

Registration and licensing procedures
In order to establish a legal business organization in Albania, it must register with the Commercial Register. It is located at the District Court in the capital city of Tirana. The application for registration should include the following documents:
a) Registration Request: This request must include a statement of the type of business (i.e. partnership, limited liability company, etc.), its anticipated duration, trade name, headquarters location, purpose, amount of capital investment, date statute was signed, and certain other information specific to the type of entity being created.
b) Corporate Statute : The entity's organizational statute.
c) Acts of Appointment: The signed official acts appointing Administrators or members of the Board of Directors.
d) List of members: of the Supervisory Board, a list of the members' full names, dates of birth, and birthplaces.
e) Statement of Contributions: A statement describing in-kind capital contributions, if any.
f) Deposit Certificate: In cases involving a limited liability company or a joint stock company, a bank certificate must be obtained showing that the required minimum capital is on deposit.
g) Official Authorization: Where government authorization (i.e. license) for a specific activity is required, the registrant must attach a certified copy of the official authorization.

After registration with the Commercial Register, a general business license and a tax identification number is obtained from the tax authorities. The license needs to be renewed on annual basis. Once registered, a company is assigned a State Registration Number and a Registration Certificate.

Legal framework
Many commercial activities in Albania require a special license from the relevant government ministry or regulatory authority responsible for supervising that business activity. These activities include financial services and manufacturing including building & construction. However trading activities generally do not require a license.

A commercial company applying for a license for a specific business activity needs to submit the following information to the relevant regulatory authority:
a) A written request for the issuance of the license, signed by the company's administrator (for a limited liability company) or board of directors (for a joint stock company);
b) A detailed description of the proposed business activity;
c) The name and headquarters of the company proposing to perform the activity;
d) Proof of the company's legal status, including a copy of its corporate statute;
e) The financial background of the company;
f) The experience of the company or its principals in the activity for which the license is sought.

Foreign exchange control
The Albanian currency, lek, is freely convertible at banks and exchange bureaus. All commercial banks licensed by the Central Bank of Albania may carry out foreign payments. Most transactions are carried out in cash and the dollar and euro are legally and commonly used. The Bank of Albania, which is responsible for managing foreign currency is also active in making international payments. Every local or foreign person may own an unlimited number of accounts in any currency in any bank in the country.
The transfer of capital into and out of Albania can be carried out without limitations in amount. Transfers and payments abroad can be carried out by any commercial bank after the presentation of proper documentation.
A non-resident person can open an account/s in Albania, without limitations, in the domestic or foreign currency, in a bank or a
branch of a foreign bank licensed by the Bank of Albania, and buy or sell securities, etc.

Regulations concerning equity investment
The Albanian Securities Commission (ASC) is the main and sole regulatory authority of Securities Market in Albania, including merger and acquisition. ASC is a board comprised of seven commissioners, approved by the Albanian Parliament on the proposal of the President of Republic. Rules are drafted by the Commission and need to be approved by the Council of Ministers.
The Rule No. 10, dated 21.12.1998 covers 'take-overs' (Mergers & Aquisitions). It applies to all take-over offers concerning public joint-stock companies registered in Albania. The object is to ensure fair and equal treatment for shareholders that are affected by take-over transactions. Fair treatment may be achieved by ensuring equality of treatment to all shareholders and timely disclosure of adequate information to enable shareholders to make an informed decision.
Knowing that take-overs, if not handled with transparency, could lead to improper trading and unfair profits, ASC tries to prevent this by closely enforcing the rules of the game. A subject or group of subjects acting in concert, that acquires control of a company (50% or more of voting rights) or has acceptances for shares that will give it effective control has to make a mandatory general offer for any class of shares of the company. All the persons involved in take-overs have to undertake all the steps to prevent leak of confidential information and to obey certain rules to eliminate unfair advantages. The public has the right to know if there is any change in substantial holdings (higher or lower than 20% of voting rights).  

Foreign Direct Investment inflows in Albania

FDI inflows 2003 2004 2005 World rank (*)
FDI inflows (USD million) 178 332 260 56/141
Source : UNCTAD - World Investment Report
Note : (*) World Rank = UNCTAD Inward FDI Performance Index. It is a measure of the extend to which a host country receives inward FDI relative to its economic size. It is calculated as a ratio of the country's share in global FDI inflows to its share in global GDP.


Last modified in mai-07
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