Albania's Business Environment

238 Pages·2009·0.81 MB·English

by  Gmb Publishing

GLOBAL MARKET BRIEFINGS
Albania’s Business
Environment
ConsultantEditor:
AlicaHenson
ii
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Contents
Publishers’note ii
Foreword v
ZefMazi,AmbassadorofAlbaniatotheUnitedKingdomofGreatBritain
andNorthernIrelandandtotheRepublicofIreland
Foreword vii
Pe¨rparimKalo,FoundingandManagingPartner,Kalo&Associates
AbouttheContributors ix
PartOne:BackgroundtotheMarket
1
1.1 PoliticalBackground 3
ArdKelmendi
1.2 EconomicBackground 9
ArdKelmendi
1.3 BusinessEnvironment 15
ArdKelmendi
PartTwo:LegalandRegulatoryFramework
19
2.1 BusinessStructures 21
Kalo&Associates
2.2 CorporateGovernance 31
AnisaRrumbullaku,HeadofCorporate/Infrastructure,Kalo&
Associates
2.3 AgencyandDistribution 43
SophiaDarling,Partner,Kalo&Associates
2.4 EmploymentLaw 53
EmelHaxhillari,Associate,Kalo&Associates
2.5 ForeignInvestmentPromotion 67
AlessandroBoscaino,Associate,Kalo&Associates
2.6 InsolvencyLaw 75
ArdjanaShehi,HeadofTaxandEmploymentDepartment,
Kalo&Associates
2.7 DisputeResolution 81
FlorianPiperi,SeniorAssociate,Kalo&Associates
2.8 BankingLaw 89
EniKalo,Associate,Kalo&Associates
iv Contents
2.9 PreventionofMoneyLaundering 101
JonaBica,HeadofBankingandFinanceDepartment,Kalo&
Associates
2.10 CompetitionLaw 105
JonaBica,HeadofBankingandFinanceDepartment,Kalo&
Associate
2.11 Import-ExportRegulations 117
Kalo&Associates
2.12 PrivatizationLaw 125
Pe¨rparimKalo,ManagingPartner,Kalo&Associates
2.13 IntellectualPropertyLaw 135
ShirliGorenca,Associate,Kalo&Associates
2.14 RealEstateLaw 145
ZamiraXhaferri,HeadofCommercialPropertyDepartment,
Kalo&Associates
2.15 InsuranceLaw 153
Kalo&Associates
2.16 EnvironmentalLaw 159
Kalo&Associates
PartThree:FinanceIssues
171
3.1 DirectCorporateTaxation 173
Deloitte,Albania
3.2 IndirectCorporateTaxation 183
Deloitte,Albania
3.3 IncomeTaxandSocialContributions 189
Deloitte,Albania
3.4 AccountingandAudit 195
Deloitte,Albania
3.5 BankingSector 199
RaiffeisenBank,Albania
3.6 InsuranceMarket 203
RaiffeisenBank,Albania
3.7 CapitalMarkets 207
RaiffeisenBank,Albania
Appendix
211
Appendix1:Contributors’ContactDetails 213
Index
215
Foreword
ItisnotinfrequenttomeetpeoplewhohavelittleknowledgeofAlbaniaand
what Albania looks like today. I wouldn’t be surprised if many have an
outdated perception of the situation and of the things we in Albania have
achieved, how Albania looks today, and what it wants to achieve in the
future.Atatimewhenwearetryingourbesttopromoteandattractinward
investment to Albania, I am particularly delighted to see ever increasing
interestbeinggeneratedrightnowinAlbania’sreality.Itisbecomingmore
and more visible in the Western media that Albania is today a very
interesting and attractive destination. Opportunities do exist there and
conditionsarerightandripetoseriouslyconsidermovinginwithinvestment.
Albania, its institutions, its business community and the Albanian people
arepreparedandreadytoworkwiththerestoftheworld.
This publication is another excellent opportunity to show that Albania
hascome a long wayin itstransformation.Itprovidesarealisticvisionfor
its future, in particular with regard to how to include international
businesses,andtheAlbaniandiaspora,inthatvision.
We are glad to note an ever greater appreciation of our general efforts,
progress and commitment in moving ahead with reforms, change and
developmentinthecountry.TheWorldBank’sDoingBusiness2008Report,
whichranksAlbania86thoutof181countries(upfrom135th),alsoplaces
itasthesecondtopreformergloballywithregardtobusinessenvironment
reformsimplementedoverthepastyear.
TheAlbanianauthorities’commitmenttosoundmacroeconomicandwell-
anchored structural reforms has been highlighted by the International
Monetary Fund: “Thanks to generally prudent policies, Albania’s economy
largelypassedademandingtestin2007,despitechallengesfromadifficult
external environment. Growth improved and inflation expectations re-
mained low, notwithstanding a drought and rising food and energy prices.
Prudentfiscalandmonetarypolicieswerekeyinthisregard,whileongoing
structuralreformisreapingrewardsfromimprovedcompetitiveness.”
TheWorldBankfurthercommented:“Albania’srecordsinceitembarked
on its transition in the early 1990s has been impressive. The country has
successfully built the foundations of market-based economy, created
democratic institutionsandgradually builtcapacityin thepublic adminis-
tration to cope with political and economic transformation. These efforts
have resulted in a track record of macroeconomic stability, as well as
achievementofthefastestratesofGDPgrowthinSouthEasternEurope.”
Our objectives are clear, our plans are clear, our determination is there.
In these efforts we are not asking for any commitment. We are actually
vi Foreword
sharing our commitment to the targets we have set ourselves and to our
resolve. Ingenuity will be displayed and imagination evoked from a large
numberofcompetentpeople,diligentcompaniesandverybusiness-minded
individuals in Albania to ensure that we will make it. We are aware also
that international cooperation, in particular from developed countries,
strong economies and international financial institutions, will be required
aswemoveahead.
We are hopeful that, given the highly improved, secure, normal and
attractive environment, this cooperation will not be lacking and foreign
investorswillberewardedbycomingtoinvestinAlbania.
ZefMazi
Ambassador of Albania to the United Kingdom of Great Britain and
NorthernIrelandandtotheRepublicofIreland
Foreword
Albania is situated in the south-western coast of the South East Europe
region with a population of 3.8 million. The country began its transitional
phase from 1991, the year that marked the opening of the country to the
outside world and the lifting of the ban on foreign capital and private
initiative. Since that time, the country has made significant progress in
completing the legislative framework by introducing modern and sophisti-
catedlaws,withaparticularfocusonlawsandregulationsthatimprovethe
businessclimate.Albaniaisworkinghardonreformsthatareaimedatthe
strengtheningoflawenforcement.Suchattitudehasbeenseenasaguaranty
for the safety and fairness in doing business in Albania—so much so that
thecountrywasrecentlygivenaratingof“B1”byMoody’s,whichismoreor
lesssimilartothatofCroatia,Bulgaria,Ukraine,IndonesiaandJamaica.
Albania is a member of the International Bank for Reconstruction and
Development(IBRD),EuropeanBankforReconstructionandDevelopment
(EBRD),WorldTradeOrganization(WTO),etc.,andissignatoryofseveral
regional and bilateral treaties on investment protection and economic
cooperation and some 30 double tax treaties. Albania has preferential
regimes with the United States, Australia, New Zealand, Switzerland,
Norway, Russia, Japan and Canada and has also signed a Free Trade
AgreementwithTurkey.
Some factors that have made the country attractive are the steady GDP
growth rate, stable currency, a strong banking sector, and the notable
foreignlanguageproficiencyoftheyoungworkforce,manyofwhomarewell
educated, are accustomed to international best practices and possess
excellentlanguageskills.
The fantastic location in the Balkans has made Albania increasingly be
seenasaspringboardforexpandinginvestmentopportunitiestothewider
regionalmarket.Ithasalsobecomeincreasinglyattractivefortourism,with
its impressive coast being referred to as the last untouched frontier of
Europe.
Key sectors include tourism, real estate, oil, energy, cement, agriculture
and the food processing industry, mining, infrastructure and information
andcommunicationtechnology.
The country is fully committed to modernizing the economy and the
information society, as these are conditions necessary to move ahead with
the process of European Union (EU) integration, which has already been
initiated by the signing of the Stabilization and Association Agreement
(SAA)in2006.Inaddition,Albaniaisputtingtremendouseffortsintojoining
viii Foreword
NATO,andthecountryreceivedaformalinvitationtoenterintoaccession
negotiationsfollowingthelatestsummitinBucharestinApril2008.
Within this ambit, Albania is improving the business climate by
introducing anti-corruption programmes in the business registration and
licensing process and also by implementing a profound legal and judicial
reform and by increasing transparency in the public procurement and
concessionbiddingprocedures.Thegovernmentismakingstepsforwardto
introducinge-commerceande-procurementandhasambitiousprogrammes
forinternetservices,withaviewtointroducingtheminallschools.
The governmentrecentlyintroduceda flattaxrateof10percenton any
incomeasofJanuary2008andalsoabolishedcustomsdutiesonalmostall
itscarimportsinlinewithWTOcommitments; dutiesoncarimportsfrom
the EU have also abolished under the SAA, but some environmental taxes
onoldcarshavebeenincreased.
Investors continue to show an increased interest in the country’s energy
sector through the building and operation of hydropower plants on a
concession basis. Recently, important regional energy players have been
contractedforfoursignificanthydropowerplantsworthintotal€1.5billion.
Other recent significant investments are the construction of two cement
plants in the vicinity of Tirana, valued at €170 million and €250 million,
respectively.
Toconclude,Albaniansareveryfriendlyandwelcomeallforeigners,beit
forpleasureorbusiness.
Pe¨rparimKalo
FoundingandManagingPartner,Kalo&Associates
About the Contributors
DeloittewasestablishedinAlbaniain1996andisregardedastheleading
professional servicesfirm inthe country.DeloitteAlbaniaemploysover40
peopleandiscontinuouslyexpandinganddeveloping.Thefirmhasachieved
remarkable results within the short period of its presence in Albania,
providing Audit and Advisory, Tax, Legal, Consulting, Accounting and
FinancialAdvisoryServicestomanyofAlbania’sleadingcompanies.
Dawn Connolly, Senior Manager – International Tax Services, joined
Deloitte Albania in June 2008, with over five years’ experience advising
multinationalclientsoninternationaltaxplanningmattersinSiliconValley
aswellastwoyearsinLuxembourg.DawnisaCPAintheStateofMaryland
andanattorney-at-law(StateofCalifornia),havingearnedaJurisDoctorate
fromtheUniversityofCalifornia–HastingsCollegeoftheLaw,aswellas
BaccalaureatesinBusinessandEconomicsfromtheUniversityofMaryland.
Ms Connolly has also studied European tax law with the LLM program at
Maastricht University (Netherlands) as well as US tax law with Golden
GateUniversity’sLLMprograminSanFrancisco.
Nuriona Sokoli is a manager in the Audit Department of Deloitte
Albania.MsSokoliisagraduateofTiranaUniversitywithaBAinFinance
andBankingandsheisalsoanACCAmember.Sheisacertifiedaccountant
inKosovaandisregisteredasanindependentaccountintheIEKAlist.She
isanactivememberofFinancialServicesGroupofDeloitteCentralEurope.
MsSokolihasthreeyears’extensiveexperiencewiththeauditdepartment,
involved mainly in audit of financial institutions, manufacturing sector,
publicsector,andotherprojectfinancedfromotherinternationalorganiza-
tions.Shejoinedtheauditpracticeafteranextensiveexperienceinthetax
departmentofDeloitteAlbaniaandshehasgainedsignificantexperiencein
tax advice and limited tax audit. She has a very good understanding of
Albanian fiscal law and local accounting standards. She speaks fluent
English,ItalianandFrench.
Dorina Tila, Consultant – International Tax Services, joined Deloitte
AlbaniainSeptember2008,withovertwoyears’experiencewithconsulting
in efficient economic systems design. She has earned a B.S. in Economics
from University of La Verne and a PhD in Experimental Economics and
IndustrialOrganizationfromGeorgeMasonUniversity,Virginia.
The largest law firm in Albania with over 30 lawyers, Kalo & Associates
wasoriginallyestablishedandfoundedbyPe¨rparimKaloin1994.Thefirm