Fiscal Package 2027, VAT Refunds, and Tax Audits: Why Kosovo is Becoming an Attractive Alternative for Albanian Companies?

Should an Albanian company continue to invest and expand exclusively in Albania, or should it also seriously consider Kosovo?

This question is becoming increasingly relevant as Albania prepares its 2027 Fiscal Package, which projects increases in several major taxes burdening businesses.

According to information published by "@Revista Monitor" (https://monitor.al/150-mln-euro-taksa-shtese-per-bizneset-e-individet-nga-rritja-e-tatimfitimit-dividend-akcize-tvsh/) on October 27, 2026, based on the explanatory memoranda of the Ministry of Finance draft laws, the fiscal changes are projected to generate approximately €150 million in additional annual revenue for the state budget, of which about €85 million relates solely to the increase in corporate income tax and dividend tax.

However, the analysis of the fiscal burden cannot be limited solely to tax percentages.

For an entrepreneur, VAT refund procedures, tax inspector audits, administrative deadlines, legal certainty, and the ability to contest a tax assessment without severely harming the company's liquidity are equally important.

From this perspective, the comparison between Albania and Kosovo is particularly significant.

1. Fiscal Package 2027: What Changes for Albanian Businesses?

According to the reported proposals, the main changes include:

Rates for 2027 are proposals, not enacted changes. The table reflects general rates and does not include all exemptions and special regimes.

It should be clarified that the Albanian 0% profit tax regime for entities with annual gross turnover up to 14 million ALL is legally scheduled to continue until December 31, 2029.

The package also proposes reducing VAT on certain basic food basket items to 6%, a mitigating measure that should be evaluated alongside other increases.

However, for companies subject to the general corporate tax rate, the gap with Kosovo becomes significant.

2. What Does a Company Actually Retain from Profits?

Let us take the example of a company with €100,000 in annual taxable profit, which distributes all remaining profit to an individual shareholder who is a fiscal resident in the state where the company operates.

• In Albania, under 2026 rates:

  • Corporate tax: €15,000.

  • Dividend tax: €6,800.

  • Total tax burden: €21,800.

  • Final net profit for the shareholder: €78,200.

• In Albania, under the 2027 proposal:

  • Corporate tax: €17,000.

  • Dividend tax: €12,450.

  • Total tax burden: €29,450.

  • Final net profit for the shareholder: €70,550.

• In Kosovo, under current rates:

  • Corporate tax: €10,000.

  • Dividend tax: €0.

  • Total tax burden: €10,000.

  • Final net profit for the shareholder: €90,000.

Thus, for the same profit of €100,000, the theoretical difference between Kosovo and Albania-if the proposed 2027 rates are adopted-amounts to €19,450.

For a company with €1 million in taxable profit, this difference theoretically reaches €194,500.

The comparison assumes a wholly domestic structure in each state. It does not constitute an automatic calculation of savings for an Albanian shareholder establishing a company in Kosovo.

3. VAT Refunds: A Crucial Difference for Business Liquidity

Beyond profit taxes, one of the most critical issues for enterprise is the VAT refund.

When a company has more creditable VAT from purchases than output tax on sales, a credit surplus may arise which, under legal conditions, can be requested for a refund.

These financial resources directly impact the company's working capital.

In Albania, according to procedures published by the General Directorate of Taxation:

• For non-exporters, the refund deadline is 60 days from the submission of the request, provided conditions are met.

• For certain categories of exporters, the deadline is 30 days.

• The request is subject to verification and risk analysis based on taxpayer category.

• The procedure is conducted electronically via e-Filing and refunds are executed through the Treasury system.

In Kosovo, Article 26 of Law No. 08/L-257 dated January 12, 2024, on Tax Administration Procedures, establishes a clear standard.

According to paragraph 4, the Tax Administration of Kosovo must review a refund request within 30 calendar days of receipt.

However, the most important feature is found in paragraphs 5 and 6 of this article.

When a taxpayer is entitled to a refund and the administration fails to execute the refund within the specified deadline, the law mandates the payment of interest on the amount owed to the taxpayer.

Interest begins to accrue from the 31st day following the submission of the request and is calculated for each month or part of a month until the refund is realized.

The law also contains exceptions when a refund is rejected or withheld for lawful administrative reasons.

This provision holds special legal and economic significance.

It embodies the principle that the tax administration also holds financial obligations toward the taxpayer and that failure to respect deadlines can entail financial consequences for the administration.

A company awaiting a €200,000 VAT refund may need these funds to pay suppliers, salaries, investments, or bank obligations.

Delays in their return carry a real financial cost.

Nevertheless, the existence of this legal guarantee should not be confused with its automatic compliance in practice.

The National Audit Office of Kosovo report for 2024 identified 326 cases where return or refund requests were not reviewed within the statutory deadline, and no interest was applied for the delay. This demonstrates that the Kosovar administration also faces challenges in enforcing the law.

Therefore, the fair comparison lies between legal guarantees, deadlines, and the measurable results of administrations, not the assumption that every request in Kosovo is paid within 30 days.

4. Tax Inspector Audits: How Protected Is the Business?

A favorable investment environment is determined not only by the taxes paid, but also by how they are administered.

Tax auditing is a legitimate and necessary instrument for combating informality and protecting fair competition.

However, it must be conducted in compliance with the principles of legality, proportionality, transparency, and respect for taxpayer rights.

In Albania, legislation provides for various tax audit, fiscal visit, and on-site verification procedures, with differing rules regarding prior notification.

In Kosovo, Law No. 08/L-257 requires tax audits to be grounded in established procedures and that taxpayers be informed of their rights and obligations.

A practically significant distinction relates to the appeals procedure against tax assessments.

In Albania, pursuant to Article 107 of Law No. 9920/2008, a taxpayer challenging a tax liability must, as a condition for the administrative appeal to be reviewed, pay the principal liability or post a bank guarantee for it. Fines and late-payment interest are not included in this requirement.

In Kosovo, the appeals procedure under Law No. 08/L-257 does not impose the same preliminary payment or bank guarantee condition for the admissibility of an administrative appeal.

However, filing an appeal in Kosovo does not automatically suspend the payment obligation, while enforcement measures are subject to relevant rules and limitations.

For a company contesting a €100,000 tax assessment, the difference in procedural admissibility conditions can have considerable significance for liquidity and effective defense capabilities.

In this sense, the issue is not whether the administration should audit businesses, but how to guarantee that audits remain objective legal processes and that defense against a contested assessment is genuinely accessible.

5. Why Should Albanian Companies Consider Kosovo?

Kosovo presents several characteristics of interest for Albanian entrepreneurship:

• A general corporate income tax rate of 10%.

• Exemption of dividends from taxation in Kosovo.

• Standard VAT rate of 18%.

• A 30-day legal deadline for reviewing refunds, with interest accruing from the 31st day under conditions specified by law.

• A tax appeal procedure without the specific Albanian prerequisite of prepayment or guarantee for admissibility.

These elements can make Kosovo a jurisdiction of interest for new investments, the establishment of commercial companies, the expansion of international services, and the development of cross-border economic activities.

However, the impression should not be created that the formal registration of a company in Kosovo is sufficient to automatically transition to its tax regime.

Such a structure must engage in genuine economic activity and comply with rules concerning fiscal residence, permanent establishment, the source of income, transactions between related parties, and shareholder obligations.

In particular, a shareholder who remains a fiscal resident in Albania may incur Albanian tax obligations on dividends received from the Kosovar company, even though those dividends are tax-exempt in Kosovo.

For this reason, any decision to expand or restructure business operations must be subject to an individual legal and financial analysis, also taking into account the double taxation avoidance agreement between Albania and Kosovo.

6. Conclusion: Business Needs Not Only Competitive Taxes, but Also Legal Certainty

The discussion surrounding the 2027 Fiscal Package must go beyond its effect on budgetary revenues.

Any tax increase must also be evaluated in relation to business costs, reinvestment capacity, regional competitiveness, consumer impact, and legal certainty.

Kosovo provides an important point of comparison, both in tax levels and procedural guarantees for their administration.

However, improving the business climate also requires more: timely real refunds, reasoned decision-making, proportional audits, effective appeals, and equal enforcement of the law.

In an economy where capital, services, and investments can move across jurisdictions, companies will analyze not only the tax percentage, but the total cost of operations.

The question posed for Albania is whether the increased fiscal burden will be accompanied by measurable improvements in tax administration, legal certainty, and the quality of state services offered to enterprise.

A competitive economy requires sustainable public revenues, but simultaneously businesses that trust rules, institutions, and their predictability.

Petani Law & Tax

Legal and fiscal analysis for Albania and Kosovo.