Albania is taking significant steps towards establishing its own arms production industry, a vision revealed by Prime Minister Edi Rama during the visit of Ukrainian President Volodymyr Zelensky. This initiative is now taking shape through a draft law currently open for public consultation.
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| Weapons produced by Albanians during communism, where automatics prevailed, including the Albanian AK56 model |
The proposed legislation outlines the framework for developing the arms production industry in Albania, setting specific regulations for companies involved in this sector. To incentivize businesses, the government plans to offer substantial tax relief, including a 10-year tax exemption period.
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| Weapons produced by Albanians during communism, where automatics prevailed, including the Albanian AK56 model and Bazookas |
“These incentives include expedited procedures for licensing and registering activities, in accordance with current legislation. The corporate tax rate will be 0% for the first 10 years of operation, a reduction in VAT to 10% for supplies and services necessary for military armament production, as well as other applicable tax exemptions based on existing VAT legislation. Additionally, companies will be exempt from infrastructure impact taxes, local and central taxes for a 10-year period, and all customs duties on goods directly used for military armament production.”
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| Albanian AK56 models |
Private companies will also receive support for utility bills, including electricity, water, and gas for 10 years, and will have access to funding for research and development in defense technologies. However, to benefit from these incentives, each entity must invest a minimum of 25 million euros.
“Entities that wish to invest in the military armament production industry in the Republic of Albania and plan an initial investment of at least 25 million euros qualify for these incentives and facilities.”
With this draft law, not only will the state have the capability to produce arms and munitions within Albania, but private companies will also be allowed to participate in this industry.
To oversee this sector, the Ministry of Defense will establish the Defense Industry Agency (AIM), which will be responsible for licensing, supervising, and regulating the production, trade, research, and development of military armaments.
Key Points of the Draft Legislation:
1. Tax Incentives:
- Corporate Tax: 0% for the first 10 years.
- VAT: Reduced to 10% for essential supplies and services.
- Infrastructure and Local Taxes: Exempt for 10 years.
- Customs Duties: Exempt for goods used directly in armament production.
2. Utility Support:
- Subsidized utility bills (electricity, water, gas) for 10 years.
- Access to funding for research and development in defense technologies.
3. Investment Requirement:
- Minimum investment of 25 million euros to qualify for incentives.
4. Regulatory Body:
- Establishment of the Defense Industry Agency (AIM) under the Ministry of Defense to oversee licensing, supervision, and regulation.
This legislative move marks a significant shift in Albania's economic and defense strategy, potentially transforming the country into a key player in the regional defense industry. The government's support and regulatory framework aim to attract substantial investment, fostering innovation and growth in military technology.