On fiscal reliefs for accommodation units with 4 and 5 stars that benefit the “special status”

The General Directorate of Taxes would like to inform all taxpayers that the DCM No. 257 has entered into force, dated 09/05/2018 “On defining the criteria, procedures and documentation for the entities that apply for the status “Investor in an accommodation structure with 4 or 5 stars, special status”, which has been published in the Official Journal No. 70, dated 16/05/2018.

The scope of this decision is to define the criteria, procedures and documentation that the entities shall comply with in order to apply for the status “Investor in an accommodation structure with 4 or 5 stars, special status”, the structure that will deal with the review of the applications and procedure to be followed till the submission of the proposal at the Council of Ministers.

This decision clearly defines the criteria to be fulfilled by the applicant to receive the special status “investor in an accommodation structure with 4 or 5 stars, special status”, the procedures to be followed to grant the status “investor in an accommodation structure with 4 or 5 stars, special status”, the comprising elements and the documentation for application, the procedure of submission and review of application.

When the investor fulfils all these procedures, it is up to the minister in charge of tourism to review the briefing report of the commission and if he/she agrees with the decision-making of the commission, shall within 15 (fifteen) days propose to the Council of Ministers the granting of the special status “Investor in an accommodation structure with 4 or 5 stars, special status” to that applicant.

And if the “special status” is given to the investor, then a development agreement in entered into with the investor, where the mutual rights and obligations of the parties derive from.

In this sense, but also in the framework of the reforms undertaken by the government on fiscal reliefs and policies to promote one of the most strategic sectors of the Albanian economy, such as tourism, now all taxpayers that operate in the area of accommodation structures or even those that will recently undertake investments in this sector, shall apply to receive the “special status”, in order to benefit from the fiscal reliefs in the area of VAT and Income Tax.

Therefore, pursuant to the Law No. 92/2014 “On Value Added Tax in the Republic of Albania”, as amended, Article 49(4) (the Law No. 107/2017 “On some addenda and amendments to the Law No. 92/2014 “On VAT in the Republic of Albania, as amended), the reduced rate of Value Added Tax of 6% shall be applied for every service supplied within the accommodation structures “Hotel/Resort with five stars, special status” and that bear a registered trade mark also recognized internationally, a “brand name”.

Moreover, the accommodation structures “Hotel/Resort with four and five stars, special status” shall be exempted from income tax. In the framework of the fiscal package, the Law No. 105/2017 “On some addenda and amendments to the Law No. 8438, dated 28/12/1998 “On income tax”, as amended, stipulates that the accommodation structures “Hotel/Resort with four and five stars, special status” and that hold an internationally recognized brand name, shall be exempted from income tax for a period of 10 years.

The effects of exemption shall begin from the very moment when the accommodation structure begins its economic activity, but not later than 3 years upon receipt of the status, provided that they have received the special status by December 2024.

Moreover, pursuant to the Law No. 106/2017 “On some amendments and addenda to the Law No. 9632, dated 30/10/2006 “On local tax system”, as amended, the accommodation structures “Hotel/Resort with four and five stars, special status” and that hold an internationally recognized and registered brand name, shall be exempted from the tax on buildings.