Klodian Tomorri
A bill proposed by the government as part of the fiscal package creates a major tax break for businesses that build towers or villa resorts. Dubbed the "Fiscal Peace Agreement," the bill changes the profit tax formula based on an agreement between the business and the tax administration.
More specifically, businesses that pre-declare to the Tax Office that the following year they will have a profit over 18 percent higher than the profit of the existing year have the right to enter into an agreement with the Tax Office and a two-band tax rate will be applied to them. For the existing profit and the additional 18 percent, the profit tax rate will be 15 percent, which is the same for all businesses. But for every penny of profit above the additional 18 percent, then the profit tax is reduced to 5 percent.
A concrete example of illustration. A business has realized 100 lek profit in 2025. On January 1 to March 31, 2026, it enters its tax platform and requests the Tax Administration to conclude a Fiscal Peace agreement. The Administration responds to it on the platform by sending it the Peace agreement.
After the business accepts the agreement via electronic signature, it undertakes to declare a minimum of 118 lek profit for 2026, which will be taxed at a 15 percent profit tax rate. However, every lek profit above 118 lek will be taxed at 5 percent.
For example, a business that had a profit of 100 lek in 2025 and enters into an agreement with the Tax Authority, if for 2026 it realizes a profit of 200 lek, then it will pay (118 lek x 15 percent) + (82 lek x 5%) = 17.7 lek + 4.1 lek = 22.1 lek. Consequently, the effective profit tax rate for this business becomes 10.6 percent from the 15 percent that is for others.
If the same business had not entered into an agreement with the tax authorities, then for a profit of 200 lek, it would pay 30 lek in tax, or 7.9 lek more than the business that enters into the agreement.
At first glance, the formula seems like a gamble. For the vast majority of businesses, profits fluctuate more or less at the same levels with normal growth rates. So taking on the task of predicting a minimum 18 percent profit increase for the following year could be financial suicide. But the devil is in the details.
There is a category of businesses that have the space and opportunity to distribute their profits over time. These are the towers and large resorts with villas.
Tower or resort developers can allocate profits over time as they wish. They have dozens of ways to do this, from manipulating the timing of sales contracts to changing payment plans with customers.
So they are able to declare 100 lek profit the first year, 200 lek the second year, and so on. This is an opportunity that a market, an agricultural farm, or any other business does not have.
Fiscal peace is actually a trove to cut taxes for the government's favorite businessmen. These are the builders of towers, palace complexes, and seaside resorts.
And time will prove that they will be the greatest beneficiaries of Peace. While everyone else will have to warm up to the words of the Sun of the Sun.
Editorial
