The general corporate income tax rate for all taxpayers in the Mazars in North Macedonia is flat and amounts to 10%. Exceptionally, companies with a total revenue up to 3 million denars (MKD) are exempted from the payment of CIT, and companies with a total revenue between 3,000,001 and 6,000,000 denars have the option to pay CIT in the amount of 1% of the total revenue.
The tax base is the pre-tax profit modified by several increasing and decreasing items. Losses can be carried forward within a limited period of 3 years. Loss carry-back is not permitted. No special limitations are applicable in case of M&A transactions. The tax base is reduced for the amount of investment of profits (reinvested profit) for development purposes i.e. investment in tangible assets (property, plant and equipment) and intangible assets (computer software and patents) intended to expand the activity of the taxpayer.
FYROM applies thin capitalization (3:1). Thin capitalization rules do not apply to loans received from banks and other financial institutions and for newly established companies, within first three years. In the FYROM, there is a withholding tax at the rate of 10% on dividends, interests, royalties and other incomes paid by a FYROM company to a foreign company. The entities obliged to pay withholding tax should submit a Report about the paid withholding tax on the form “DD-I“ to the Public Revenue Office once a year. This form is submitted until 15 February in the following year.
FYROM has a wide international treaty (DTT) network with 45 double tax treaties, and the withholding tax rate can be reduced or abolished under the active DTT. Taxpayers are obliged to obtain approval from the Macedonian tax authorities prior to applying the tax rates from DTT.
|Transfer Pricing in North Macedonia|
|Arm’s length principle||since 2009|
|Documentation liability||Taxpayers are obliged to enclose a report for transactions with affiliated persons while submitting a tax balance|
|APA||The tax legislation does not provide for a binding APA. Companies are entitled to file an application to the tax authority for a ruling with respect to the tax position they intend to take, to which the tax authority is obliged to reply|
|Country-by-Country liability||No obligation regarding Country-by-Country reporting yet. However, as a new member of the Inclusive Framework, Macedonia has committed to the implementation of the four minimum BEPS standards including Action 13|
|Master file-local file (OECD BEPS 13) applicable||The tax authorities have not yet issued any guidance on the implementation of the Master File|
|Lack of documentation||~ EUR 2.500-3.000 / missing documents doubled on recurrent basis and tax authorities are entitled to suspend the taxpayer's business activity for 3 to 30 days.|
|Tax shortage||Up to 10 times the amount of the understatement of tax|
|- individuals and legal entities with control or significant influence
- family members of owners or members of the Management Bord
- all nonresident legal entities registered in low-tax jurisdictions, irrespective of whether they have control or are of significant influence to the taxpayer
|Safe harbours||Interest income/expense from the loans as EURIBOR + 1% (or SKIBOR +1% for loans extended in MKD)|
Level of attention paid by Tax Authority:
The general rate is 18%; a reduced rate of 5% applicable to food products, pharmaceuticals, production equipment, computers and public transportation. Exports are zero-rated. VAT-exempt services are mainly banking services, insurance, the rental of real estate, certain services provided by medical doctors and dentists, certain types of education and training, as well as some other activities which are tax exempt with regard to their public interest or their special character. Thresholds are as follows:
|VAT options in North Macedonia||Applicable / limits|
|VAT group registration*|
|Import VAT deferment|
|Local reverse charge||Construction including maintenance, electrical installation, plumbing, etc.|
|Option for taxation|
|- letting of real estate|
|- supply of used real estate|
|VAT registration threshold**||MKD 1 milion per year (EUR 16,260 /year)|
* related parties
** voluntary registration is possible
Other indirect taxes in FYROM are fuel tax and excise duties.
The new PIT Law, applicable from 01 January 2019, abandons the "flat" tax rate and introduces progressive taxation. Besides the tax rate at 10%, the new PIT Law consider a tax rate at 18% and 15%, applicable to different types of income. Progressive tax income, income from copyright and related rights, income from independent activity, and income from the sale of agricultural products. Personal income tax rates are 10% (monthly tax base up to 90.000MKD) and 18% (above 90.000 MKD). The personal income tax for capital income shall be paid at an increased single rate at 15%. Employers are obligated to calculate, withhold from employees’ gross salary, and pay into the accounts of respective funds the compulsory social contributions and personal income tax (PIT).. Social security contributions payable by employees altogether amount to 27% of the gross salary: pension contribution is 18,40%; health care insurance is 7,40%; unemployment insurance is 1,20%; and health care at work insurance is 0,5%. The examples below show the cost of the employer and the employee in case of minimum wage level and the average wage. The personal allowance is MKD 96.000(EUR 1.560) on an annual basis while the monthly personal allowance is in the amount of MKD 8.000. Starting from FY 18 the taxpayers are obliged to prepare and submit an Electronic calculation for advanced payment of tax (e-PPD) for the separate income they realize in the country and abroad during the calendar year.
|Wage- related taxes in North Macedonia||Minimal wage in MAC||Average wage in MAC|
|Exchange rate MKD/EUR61,58||in EUR||in MKD||in EUR||in MKD|
|282||17 370||593||36 488|
|Total wage cost||282||100,00%||593||100,00%|
|Social contribution on salary||-||0,00%||-||0,00%|
|Personal income tax*||8||2,96%||31||5,21%|
*Personal income tax base differs from gross salary, deductions apply.
The minimum base for social security contributions equals 50% of the average monthly salary for the current month. The highest base for payment of mandatory social security contributions on a monthly basis is 12 average salaries paid in Macedonia.