Albanian government is preparing a policy package to improve the tourism sector and the value-added tax (VAT) for accommodation facilities will be reduced, said a government official on Sunday.

"In the region we have Greece which applies a tax at the level of 6.5 percent, Montenegro at 7 percent, Macedonia at 5 percent and Italy at 8 percent. We have proposed a reduction of VAT to about 10 percent," said Sonja Popa, director of tourism development in Albanian Ministry of Economic Development and Tourism.

The legislation would also provide businesses that want to invest to improve infrastructure with soft loans, thus addressing the main problem of Albanian tourism, and poor service.

Popa said that the new rule would upgrade local standards and existing levels of service in hotels, and accommodation facilities will be given a period of 18 months to apply for star standards review which would be conducted by an independent body from the ministry and monitored by the Inspectorate of Tourism.

Tourism is one of the pillar industries in Albania. It creates new jobs throughout the country. The new policy arrangement on tourism is aimed to significantly boost the tourism sector.

The government also tries to attract foreign investors to build resorts and five star hotels in the Albanian Riviera by giving them the status of "strategic investor."

An international company will be hired to conduct certification and ranking of bars, restaurants and hotels which will be required to operate under strict standards of guest service.