The main objectives of the changes in the VAT legislation are to support domestic production (mainly in the agricultural and inward processing sectors), amend the treatment of advertising and introduce incentives for environmentally friendly initiatives:
- The VAT treatment of advertising service depends on the type of the supplying media. Advertising in written media remains exempt from VAT; advertising supplied via audiovisual media (e.g. television) is taxable at the reduced rate of 6% (previously the standard rate of 20% applied); and advertising via electronic media is taxable at the standard rate (previously exempt).
- Supplies of books are taxable at 6% (previously exempt).
- The supply of electric mini buses with the capacity for at least nine passengers for public transport, is taxed at 6% until 31 December 2021 and 10% thereafter.
- The VAT exemption for imports of certain types of agricultural machinery is extended to supplies within Albania. Certain agricultural inputs also are exempt from VAT. Lists of the exempt items are expected to be provided by the Council of Ministers. The rate of compensation for agricultural producers that apply the farmers’ compensation regime is reduced to 6% from 20%.
- Veterinary services (other than for domestic pets) are exempt from VAT.
- The supply of goods processing services by subcontractors of economic operators in the inward processing industry are treated as exports and zero-rated for VAT purposes.