AGP Executive Report

Vehicle Taxes: A proposed tax package would double annual vehicle tax on older cars from January: a 2013 two-litre diesel would rise from 9,000 to 18,000 lek. Removing the per-litre fuel levy could cut fuel taxes by about 32 lek, including VAT; parliament must approve the changes. 2027 Budget: Albania’s record €10 billion budget includes €2 billion in public investment and a planned €690 million eurobond. Business groups oppose parts of the tax package, and the government says it will reconsider proposed increases. Investment & Tourism: Bank lending to the economy grew 10% year-on-year in January–September. Albania is targeting 16 million foreign visitors in 2027, while construction has begun on the country’s first wind project, at Spille. Fraud Probe: A Europol-backed investigation involving Albania led to seven arrests and the seizure of more than 100 servers over an alleged investment scam with estimated losses above €4 million.

EU Accession: Brussels is due to publish Albania’s reform roadmap on November 4, alongside those for Montenegro, Moldova and Ukraine. The four are considered frontrunners, but the roadmaps will set out steps toward membership, not guarantee accession dates. Payments: From January 1, payment firms must keep customer funds separate from their own, report serious cyberattacks and meet new capital requirements; the rules also give customers an out-of-court route to resolve disputes. Energy Investment: Construction is set to begin on Albania’s first wind farm at Spille, adding 72.6 MW of renewable capacity and advancing efforts to diversify energy supply. Budget and Business: The €10 billion 2027 budget includes €2 billion for public investment and higher pensions, while business representatives have warned the proposed fiscal package could raise costs and investment risks. Albania also plans a record €690 million bond issuance next year. Financial Crime: Europol says illegal investment call centres in Albania, Kosovo and North Macedonia were linked to a wider fraud network with estimated losses exceeding €4 million; authorities seized more than 100 servers in a coordinated operation.

Banking Rules: From January 1, payment firms must keep customer funds separate, and digital-wallet providers need at least €350,000 in capital. Customers will also be able to settle payment disputes without going to court. Clean Energy: Construction has begun on Albania’s first wind farm at Spille, a 72.6 MW project expected to diversify power supply and strengthen energy security. Budget & Business: The 2027 budget is projected at about €10 billion, with higher pension support. A proposed tax package is drawing business concerns over a lower VAT-registration threshold and a higher standard VAT rate. Finance & Demand: New lending to the economy rose 10% year-on-year in January–September, while October confidence data showed households still cautious about big purchases and trade firms less optimistic. Tourism & Debt: Albania is targeting 16 million foreign arrivals in 2027 and plans a record bond issuance of about €690 million.

Banking Security: A masked suspect robbed a bank in Tirana’s Komuna e Parisit district; no staff or customers were injured. Police also warned of fake bank texts designed to steal account details, urging anyone who clicked a link to contact their bank. Business Climate: Albania’s economic confidence edged up in October, but households remained wary of major purchases. Confidence weakened in trade and construction, while services and industry improved. 2027 Budget: The proposed budget tops €10 billion, with higher pension support and student grants among its priorities. Opposition MP Jorida Tabaku warned proposed VAT changes could raise costs and uncertainty for small businesses. Green Investment: EBRD and the Green Climate Fund doubled concessional financing for their Green Cities programme to €174 million, which can support eligible Albanian cities with climate plans and infrastructure investment.

Fiscal Policy: Albania says its proposed 2027 tax measures aim to ease household costs for food, fuel, rent and housing, but business groups have warned that tax increases could discourage investment. Student Support: The draft budget would raise monthly grants for low-income university students from 10,000 to 25,000 lek, with 1.1 billion lek allocated and about 16,000 students expected to benefit. Tourism Rules: A draft law would require short-term rentals to register through e-Albania and display a unique code on platforms such as Airbnb and Booking.com; the proposals remain under consultation. Public Finance: The government plans a record €690 million Eurobond in 2027, its largest yet, alongside other foreign borrowing. Credit: New lending to Albania’s economy grew 10% year on year in January–September.

Tourism Rules: Albania’s draft law would require short-term rentals to register through e-Albania and display a unique code on platforms such as Airbnb and Booking.com. The proposal remains under consultation. Public Borrowing: The government plans a record €690 million Eurobond in 2027, alongside other foreign borrowing. Business Climate: Companies oppose proposed tax increases, warning they could deter investment; AmCham says the government will reconsider the measures. Governance: SPAK investigators allege former deputy prime minister Belinda Balluku was the real owner of a €720,000 Dhërmi villa registered to another person. Electricity Bills: Two-thirds of businesses enrolled in a repayment scheme paid old bills in full to secure cancellation of late-payment interest. Household Pressures: Economist Selami Xhepa warns Albania’s middle class is shrinking as wealth concentrates, with rising inequality putting social stability at risk.

Business Finance: Two-thirds of Albanian firms enrolled in a scheme to repay overdue electricity bills chose to pay in full, cancelling late-payment interest; 789 businesses had received reductions by October. Household Pressures: Economist Selami Xhepa warns Albania’s middle class is shrinking as wealth concentrates, with rising inequality threatening social stability. Tourism: The government targets 15.5 million foreign arrivals in 2027 and 16 million by 2029, while aiming to expand rural and year-round tourism. Bank Lending: New credit to the economy rose 9.8% year on year to 336.8 billion lek in January–September, led by stronger borrowing from households. Tax Debate: Business groups are challenging proposed increases in dividend tax from 8% to 15% and standard VAT from 20% to 21%, warning of risks to investment and prices. Renewable Energy: Albania signed an agreement with Austria’s Verbund to build the country’s first wind farm, at Spille, as it seeks to diversify power supply.

Tourism: Albania’s draft 2027 budget forecasts 15.5 million foreign arrivals next year, rising to 16 million by 2029, as the government seeks to grow rural and year-round tourism. Banking: New lending reached Lek 336.8 billion in January–September, up 9.8% year on year; loans to individuals grew faster than business credit. Renewable Energy: Albania signed an agreement with Austria’s Verbund to build the country’s first wind farm at Spille, aiming to diversify power supply beyond hydropower. Tax Policy: Business groups are warning that proposed increases in dividend tax from 8% to 15% and standard VAT from 20% to 21% could weigh on investment and prices; the 2027 package is still under review. Public Spending: The government’s record 2027 budget plans about €2 billion in public investment, while a major procurement probe involving 12 tenders has named 32 defendants, including businesspeople and former officials.

Renewable Energy: Albania has signed an agreement with Austria’s Verbund to build the Spille wind farm, the country’s first, aiming to diversify power supply and strengthen energy security. Business Climate: AmCham is urging the government to reconsider 2027 tax hikes, including higher VAT and dividend tax, warning they could raise costs and deter investment; officials say they will review business concerns. Public Spending: The proposed budget includes 20 billion lek for doubled pension bonuses from January, alongside plans for major public investment. Procurement Probe: Thirty-two people, including former deputy prime minister Belinda Balluku and several business figures, face allegations tied to 12 public tenders; one defendant is in custody. Central Banking: The European Commission is reviewing amendments to the Bank of Albania law that grant the governor immunity from arrest or searches linked to official duties.

Fiscal Package: Albania’s proposed 2027 tax changes are drawing business pushback. AmCham warns that raising standard VAT to 21% and dividend tax to 15% from 8% could weaken investment and competitiveness; it wants impact analysis and consultation before the changes take effect. Budget and Investment: The government’s record budget tops €10 billion, including about €2 billion for public investment. It plans to double pension bonuses from January and raise pensions in April, while also increasing support for families with young children. Business Support: The government has approved compensation for businesses whose premises were damaged during October’s protests. Central Banking: The European Commission is reviewing amendments to the Bank of Albania law that give the governor legal protection in cases linked to official duties, as part of Albania’s EU accession process. Finance: Albania is among nine countries planning to establish a Defence, Security and Resilience Bank, expected to begin operations in 2027 and finance defence and industrial projects.

Tax Policy: AmCham is urging the government to reconsider proposed 2027 tax increases, warning that raising dividend tax from 8% to 15% and VAT from 20% to 21% could deter investment and push up costs. 2027 Budget: The draft budget tops €10 billion, including about €2 billion for public investment and higher pension benefits. But capital spending has lagged: only 35.6% of this year’s allocation was used in the first nine months. Fuel Prices: New caps set retail prices at 212 lek per litre for diesel and 181 lek for petrol; a separate proposal to remove the road tax, which Rama says could cut fuel prices by 32 lek per litre, has not yet taken effect. Digital Business: The government is preparing tax rules for influencers and online sellers, but has yet to announce rates or an implementation date.

2027 Budget: Albania has sent a record €10.2 billion spending plan to parliament, including about €2 billion for public investment, higher pensions and family support. The government targets a 2.3% deficit and plans its largest-ever Eurobond, borrowing about €688 million from international investors. Fuel Prices: New caps limit diesel to 212 lek and petrol to 181 lek per litre; a separate proposal to remove the road tax could cut pump prices further. Financial Sector: Parliament approved amendments to the Bank of Albania law, requiring parliamentary authorization before the governor can be arrested or searched. The vote took place amid opposition disruption and weeks of protests, adding to uncertainty for businesses. Growth and Trade: The World Bank expects Albania to keep growing by at least 3.4%, but warns that costly regulations and administrative hurdles across the Western Balkans continue to hinder trade and competitiveness.

Protest Measures: Albania has introduced fines of up to 500,000 lek (€5,500) for people who remain in crowds where violence or looting occurs. The package also allows police to restrict gatherings in designated areas and provides compensation for businesses damaged in protests. Fiscal Package: Business groups oppose proposed 2027 tax increases, including higher corporate and dividend taxes and a rise in hotel VAT from 6% to 10%, warning they could weigh on investment and competitiveness. Public Procurement: Prosecutors have closed their investigation into former Deputy PM Belinda Balluku, who faces charges tied to nine tenders worth about €1.2 billion, including major road projects; the case is moving toward trial. Growth Outlook: The World Bank expects Albania to maintain growth of at least 3.4% in 2026, among the Western Balkans’ strongest forecasts, with household consumption and investment supporting the region’s recovery.

Fiscal Package: Business groups oppose proposed 2027 tax rises, including a 17% corporate tax, dividend tax rising from 8% to 15%, and tourism VAT increasing to 10%. They warn the changes could deter investment as firms face high costs and a weaker euro. The government plans lower VAT on basic food and a record €10 billion budget; the package still needs parliamentary approval. Protest Damage: The government approved compensation for eligible businesses with annual turnover up to 14 million lek for uninsured damage from October 13–22. Police will verify claims, and the state may seek repayment from those responsible. Public Contracts: Prosecutors have closed their investigation of former Deputy PM Belinda Balluku, who faces charges involving nine tenders worth about €1.2 billion, including major road projects. The case is ready for trial. Currency & Tourism: The lek’s rise means one euro now buys fewer than 93 lek, compared with over 136 a decade ago. That helps importers but squeezes exporters and remittance recipients, while making Albania more expensive for euro-paying visitors. Growth Outlook: The World Bank projects Western Balkan growth of 3.1% in 2026 and 3.4% in 2027, urging lower trade barriers to help businesses compete and create jobs.

Growth & Trade: The World Bank expects Western Balkan growth to rise to 3.1% in 2026 and 3.4% in 2027. It forecasts Albania’s economy will grow 3.4% this year, and says cutting trade barriers and regulatory costs could lift the country’s economy by as much as 10% over the medium term. Tax Debate: Manufacturers warn proposed 2027 tax changes could raise business costs and threaten investment. Draft measures include higher corporate and dividend taxes, a 21% standard VAT rate and a lower VAT registration threshold; the government says it has yet to present its full plan. Infrastructure: The first five kilometres of the Kombinat–Ndroq–Plepa road are complete, with construction on the next nine kilometres set to begin soon. Funding is secured for the remaining section. EU Integration: Albania aims to complete its customs requirements for EU talks by March 2027, with a new customs code and digital systems intended to ease cross-border trade.

Growth Outlook: The World Bank expects Albania’s economy to grow 3.4% this year, citing higher wages, consumer spending and lending. Public debt has fallen below 50% of GDP, while trade reforms could lift the economy’s size by as much as 10% over the medium term. Tax Debate: Proposed 2027 changes include raising standard VAT to 21% and tourism VAT to 10%, cutting VAT on basic foods to 6%, and lowering the VAT-registration threshold from 10 million to 5 million lek. Manufacturers also warn proposed corporate and dividend tax increases could add about €85 million in annual costs and curb investment; the government says the proposals are not yet final. EU Trade: Albania aims to complete its customs requirements for EU accession talks by March 2027, with new rules and digital systems intended to ease cross-border trade. Inequality: Albania’s Gini coefficient rose to 30.4 in 2025, above the EU average of 29.2, despite a 10.5% rise in average disposable income per person.