Law No. 29/2023, titled 'Income Tax,' which was enacted on March 30, 2023, and subsequently published in Albania's official gazette on May 2, 2023, heralds significant transformations in corporate income tax, individual income tax, and withholding tax. This comprehensive law is set to take full effect on January 1, 2024, replacing the prior 'Income Tax' legislation, Law No. 8438, last amended on December 28, 1998.

The most important corporate income tax changes within the new law encompass an expanded definition of tax residency, stricter criteria for applying the dividend participation exemption, prolonged restrictions on interest deductibility, simplified depreciation methods for noncurrent assets, provisions for recognizing bad debts, regulations for long-term contracts, the introduction of an exit tax, and alterations to loss carry-forward rules.

From the perspective of individual income tax, key amendments include an extended definition of tax residency, the categorization of income into three distinct types (employment, business, and investment), an expanded scope for employment income, the introduction of controlled foreign company rules, the incorporation of taxation for inheritances and gifts, and revised tax rate structures for employment income.