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6.5. Deduction of Cross-Border Payments and Non-Deductible Expenses

Generally, all business expenses are allowed as a deduction, unless specifically disallowed.

The following expense types are not deductible or have limited deductibility for Albanian tax purposes:

  • Gifts;
  • Expenses incurred in cash in excess of ALL 150,000;
  • Wages, salary, bonuses or any other emoluments paid to an employee in cash;
  • Payments for technical, consultancy and management services to non-residents not registered for tax purposes in Albania and on which no withholding tax has been paid by 20 January of the following year;
  • Impairment loss on fixed assets;
  • Representation, entertainment and reception expenses in excess of 0.3% of the annual turnover;
  • Sponsorship expenses in excess of 3% of profit before tax and sponsorships of press and publications exceeding 15% of profit before tax;
  • Expenses incurred for participation in fairs or expositions abroad by qualifying exporters in excess of 3% of their annual turnover, subject to certain conditions (effective 1 January 2020).
  • Interest expense in excess of average interest rate published by Bank of Albania. Interest deductibility is also subject to thin-capitalization rules (See Sec. 13.2);
  • Per diems are deductible up to ALL 3,000 per day for traveling inside Albania and up to EUR 60 per day for traveling abroad;
  • Per diem expenses paid to employees exceeding 50% of the annual gross salaries;  
  • Voluntary pension contributions by employers for their employees to professional pension plans are deductible up to ALL 250,000 per year;
  • Income tax, VAT and other taxes paid; and
  • Fines and penalties;