Klodian Tomorri
At the end of last year, many major media outlets in the country began broadcasting a sponsored report on the establishment of a business park in Kashar. Called Nexus Park Tirana, the park consisted of the construction of a warehouse complex and its builder was businessman Sokol Kraja.
But although it was launched as a completely private investment for the construction of warehouses, the day before, the Council of Ministers decided to declare the warehouses a Technology and Economic Development Zone.
"Upon the proposal of the Minister of Economy, Culture and Innovation, the Council of Ministers decided to declare the territory with an area of 52,140 m2, part of cadastral zones 2105, 2119, located in Kashar, Tirana, as a "Technology and Economic Development Zone" under the name "TEDA NEXUS PARK TIRANA," the government decision states.
According to the government's decision, the activities that will be developed in the technological zone with developers Astral and Capital Resources of Kraja are the automotive industry, ICT, electronic or mining equipment industry, pharmaceuticals, agro-processing and agro-supply industry, processing and warehousing of goods, etc.
"The period of operation of the zone is 35 years with the right to renew for up to 99 years," the VKM states.
Tax cuts and bailouts
The declaration of a technology and economic development zone is not just a formality. It has a number of significant fiscal benefits. According to the law, the companies developing the zone and the businesses that carry out their activities within it are exempt from paying 50 percent of the corporate tax rate for the first 5 years, from the start of their activities in the zone.
In parallel, developers who invest in the zone, within 3 years from the date of commencement of works, or users who invest in the zone, within 3 years from the start of economic activity in the zone, are recognized as deductible expenses, for the tax period, 20 percent of annual capital expenditures, regardless of depreciation amounts, according to the income tax law, for a 2-year period.
The supply of Albanian goods, intended for placement in the zone, is considered as a zero-rated export supply, in accordance with the provisions of the law on value added tax and customs legislation.
The developer's project is exempt from the infrastructure impact tax, while constructions carried out within the territory of the zone are exempt from the real estate tax for a period of five years.
In addition, developers or users of the zone are exempt from the tax on the transfer of ownership rights over real estate, while businesses within the zone are recognized with 150 percent of salaries and insurance as deductible expenses during the first year.
So the tax breaks offered to a technology zone are considerable. But why should the government grant technology zone status to an activity launched as a private investment, and more so, a warehouse complex?
In a way, this is a financial rescue or bailout as it is known in English of a private business with money from the state budget. Only in this case the money is not given directly as financial support, but comes through the abolition of taxes. However, in the end the result is the same.
The government cannot use citizens' money to bail out private businesses that cannot sell their warehouses. But this is not the only problem.
Violation of competition and the Constitution
The Nexus Park Tirana Technology Zone has an area of 5 hectares and is located at the Rinas Corner. This is the location in the photo below.
Adjacent to Nexus Park Tirana, there is another industrial park where many businesses develop activities. Called Tirana Industrial Park, it was built by businessman Artan Dulaku's Concord company. But Tirana Industrial does not enjoy the status of a Technological Zone nor the fiscal benefits that derive from it.
So two businesses next to each other, but one is charged with taxes, while the other is exempt from taxes. Apart from a special government decision with a single beneficiary, just like the famous Fusha law, this is a decision that violates fair competition in the market, which makes it anti-competitive. But this is a mechanism that the Albanian government has started to use often, not only through technological zones, but also through the strategic investment mechanism.
Violation of the public
There is another technological and economic development zone in Kashar. Called TEDA Kashar, it is developed by the Municipality of Tirana and covers an area of 35 hectares. The construction of this zone has a total cost of 16 million euros and the money was paid from the budget of the Municipality of Tirana.
But now in the same area, the government announces another Technology Zone, thus adding a direct competitor to the Technology Zone of the Municipality of Tirana.
This is a questionable decision from all aspects. Not only because it started as a private investment for the construction of warehouses. Nor because it violates free competition in the market by unfairly disadvantageating other businesses that have invested in business parks in the Kashari area. But above all because it also sabotages the public by adding a direct competitor to an area with a public developer such as that of the Municipality of Tirana. Exactly a special VKM in all senses.
Editorial
