SEEU Review vol. 6 Nr. 2 (pdf) - South East European University

Tax Competitiveness and FDI in AlbaniaHaderi S., Prof. DrKola T., Prof. Asocc. DrLiko E., DrLecturer of Macroeconomics, Economics DepartmentUniversity of TiranaAbstractThe main focus of this work is analyzing the impact of statutorycorporate tax rate in foreign direct investment. The statutory corporate taxrate applied in Albania is from the lowest tax rate relative to both developedin developing countries, this is consistent with economic theory that expectsin small countries not only a small tax rate but also interdependence in therates these countries impose.The main findings of this work are that statutory corporate tax rate hasnegative impact in FDI inflow, consistent with economic theory. Market sizemeasured by GDP per capita has positive and highly significant impact onFDI, which states that the purpose of FDI has also been serving local market.The EBRD index on infrastructure and openness of domestic market foreigntrade has both positive impacts in attracting foreign investment.The average nominal wage has negative impact on FDI flows. This is inaccordance with economic theory which suggests that the type of FDI madein transition economies are directed by cheap labor costs that exist in thesecountries.Keywords: Statutory corporate tax rate, FDI, Fiscal incentives133