New minimum salary and financial compensation to certain business activities

Recently, the Albanian Government has decided to amend the minimum salary at national level and to award a financial compensation to the private entities operating in specific sectors to cover the financial effects deriving from the changes to the minimum salary at a national level. 

Starting from 1 April 2023, the minimum monthly salary at national level will be ALL 40,000 from ALL 34,000 which is currently. This increase of the minimum salary indexes automatically the maximum salary for the purposes of monthly calculation of the mandatory social security contributions whereby the new level will be ALL 176,416 from ALL149,954 which is currently. 

The new level of the minimum salary is taken into account as a starting base also for the purposes of calculation of the monthly mandatory health insurance. The rates applicable for the computation of the monthly mandatory social security [employer: 15%; employee: 9.5%] and health insurance [employer: 1,7%; employee: 1.7%] remain unchanged. 

The Decision no. 113 dated 1 March 2023 is published in the Official Gazette no. 34 dated 3 March 2023 and is effective from 1 April 2023. 

The Albanian Government has decided through the Decision no. 114 dated 1 March 2023, to award a financial compensation to private entities aiming to cover the effects from the changes of the minimum salary in Albania applicable from 1^st of April 2023. The entities which are eligible to benefit from such compensation are limited to those exercising their activity in the inward processing, agriculture, forestry and fisheries and the period of coverage will be April - December 2023.

The monthly compensation amounts to ALL 1,674 per employee and will be applicable up to the maximum number of the employees declared with minimum salary in the payroll list of December 2022. In order to benefit such compensation, the entities should apply in the governmental platform of electronic services (www.e-albania.al) within 20 days after the deadline for declaration of the payroll list and should simultaneously meet the following conditions:

• Should be a privately owned legal entity and not a self-employed taxpayer; 
• No bankruptcy procedure is initiated against the entity; 
• Should not have any outstanding social security and health insurance contributions liabilities or at the application date should prove that have entered into a settlement agreement whereby having duly settled the liabilities, excluding penalties.

Detailed rules on the method of application, compensation calculation, verification and appealing will be regulated through an Instruction of the Minister of Finance and Economy. 

The Decision no. 114 dated 1 March 2023 is published in the Official Gazette no. 34 dated 3 March 2023 and is applicable for the period April – December 2023.

For information

Alba Paparisto, FCCA
Managing Director, Tax
Tel: +355 (4) 2274 524

Sonila Selmani
Senior Manager, Tax
Tel: +355 (4) 2274 524