Albania: Changes to tax depreciation and inventory valuation methods

New income tax law—Law no. 29/2023

New income tax law—Law no. 29/2023

The new income tax law—Law no. 29/2023 (dated 30 March 2023 and effective 1 January 2024)—introduced changes to the tax depreciation and inventory valuation methods effective 1 January 2024. 


Under the new law, the person entitled to deduct depreciation expense is either the (a) the owner of the assets, or (b) the person who bears the risk of loss or damage to assets (e.g., in the case of leased assets or usufruct).

Financial assets and tangible fixed assets, which are not subject to consumption and obsolescence (such as land, works of art, antiques, jewelry, metals, and precious stones) are not depreciated.

Non-current assets must be depreciated using the straight-line method (and not the residual method), and non-current assets of each category are depreciated individually.

The new law also introduces a limitation on depreciation expenses for vehicles having a capacity up to five passengers (i.e., 50% of the purchase price and any repairing costs (including VAT), not to exceed ALL 10 million). 

Inventory valuation

The new law stipulates that taxpayers must consistently use the same accounting method for inventory valuation and work in progress as specified by the accounting legislation. However, the inventory valuation method chosen by the taxpayer must be applied for at least five consecutive years. 

In addition, under the new law expenses for consumable items are recognized at 50% in the year of acquisition and 50% in the subsequent year.

Read an October 2023 report prepared by the KPMG member firm in Albania

For more information on the new income tax law, read TaxNewsFlash:



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