Albania's government plans to raise the dividend tax rate from 8% to 15% under its 2027 Fiscal Package, alongside changes to personal income tax, VAT, excise duties and the circulation tax, which it says will be revenue-neutral overall.
Albania’s Ministry of Finance announced the 2027 Draft Budget on 30 October 2026, when Finance Minister Petrit Malaj presented it to the Committee on Economy, Employment and Finance. Malaj said the Fiscal Package is built on the redistribution of income rather than higher taxation.
The budget includes the following tax measures:
Dividend tax
The dividend tax rate rises from 8% to 15%. Malaj said that the extra revenue from the dividend tax will be channelled towards the middle class, the money raised will be redirected to the increase in the salary band.
Personal income tax
The progressive structure of employment income tax is to be revised, easing the burden on the middle class and strengthening progressivity for higher incomes. The salary band is raised from ALL 200,000 to ALL 300,000.
VAT
The standard VAT rate increases from 20% to 21%, while a reduced VAT rate of 6% applies to 54 products in the basic basket. The VAT registration threshold is lowered from ALL 10 million to ALL 5 million.
Malaj said the reduced rate on basic goods costs more than the revenue gained from the higher standard rate, leaving a gap of about EUR 20 million. He said the lower registration threshold covers this gap, and noted that international institutions, including the IMF, have long requested the change. He added that Albania currently has the highest VAT registration threshold, and that the ALL 5 million ceiling is the level those institutions recommend.
Excise duties
The calendar of excise increases on tobacco products continues, in line with European Union directives. Malaj said tobacco excise is the only source of additional revenue in the package.
Circulation tax and vehicle tax
The circulation tax on fuels is moved to the annual vehicle tax. The minister said this leaves a shortfall of about ALL 5 billion (EUR 50 million), because the revenue from the ALL 27 charge on fuels has not been fully reflected in the vehicle taxes.
Overall fiscal effect
Malaj said that, once all measures are offset against each other, the effect on the state budget is zero or a net loss of ALL 300 million.
Budget context
The 2027 Draft Budget projects public expenditure above EUR 10 billion for the first time. Budget revenues are projected at ALL 907.9 billion, or 30.9% of GDP, with a deficit of 2.3% of GDP and public debt falling to 52.4% of GDP.
Among the social measures, pension indexation will be brought forward to April 2027, and the monthly bonus for pensioners in specified categories will be doubled from 1 January 2027.
The draft budget and the Fiscal Package are now before the committee for consideration.
