Albania is to establish a state-owned company called “KAYO” sh.a., which will undertake the production and trade of weapon systems, ammunition, military equipment and technologies.

According to the new bill, which was published in the Official Gazette and will enter into force at the end of the month, this company will pursue economic and commercial interests related to the country’s defence industry.

The responsibilities of “KAYO” include the support and strengthening of the production and trade sector, with the aim of meeting the needs of the Armed Forces of Albania, as well as other security structures. The company will undertake the production and supply of the necessary equipment for security companies, while investing in technological innovations to improve production processes. 

At the same time, it will cooperate with national and international bodies, state and private sector, for the development of the object of its activity. It will also finance projects in the field of defence and national security, or enter into partnerships with other companies to implement such projects.

The creation of “KAYO” aims to exploit the existing industrial potential of the country, while at the same time, it will integrate new technologies and innovations into the production processes.

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Also, according to the same law, all companies that will invest in the defence industry will be exempt from taxes, as reported by Euronews Albania. From now onwards, the production, trade and development of weapons is the exclusive right of the state of Albania.

For companies, the corporate income tax rate for the first 10 years from the start of the business will be zero per cent.

Other tax benefits include exemption from duties on goods that directly serve the production of military weapons, while another benefit is a reduced value-added tax rate of 10% on the purchase or sale of military weapons.

In addition to the tax advantages, the law provides for administrative ones, such as a fast procedure for licensing and registration of activities.

For these companies, support will be provided for the construction and maintenance of ancillary infrastructure, such as roads, water supply, drainage, electricity and telecommunications, which are necessary for the execution of the activities of the body, as well as access to funds and support for research and development programs in the field of defence technologies.

The Defence Industry Organization is the authority responsible for taking administrative action in case of violations by arms manufacturing companies.

In addition, fines from five to 50 million are provided for all companies engaged in military weapons testing or specialized activities without the approval of the Defence Industry Organization.

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