Transcript Document

INVESTMENT IN
MACEDONIA
The economic and tax environment
2007
Contents
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Introduction
Business entry
Tax and tax system
Profit Tax
VAT
Personal income tax
Conclusions
INTRODUCTION- Republic of
Macedonia
Independent since 1991
 Overcoming legacy of the socialist period
 Will for reforms
 Recognition- Macedonia 4th best performer
in the world (WB Doing Business Report)
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Business entry
Free and unrestricted access for foreign
investors
 No additional requirement
 Free participation in all types of legal
entities-existing or newly founded
 Free transfer of profit
 One-stop-shop system
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Tax system
Profit (corporate) tax
 Value Added Tax
 Personal Income Tax
 Property taxes
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Profit tax
Tax rate: 12% in 2007 and 10% afterwards
 Lump-sum for micro-companies: EUR 300 for income up to 25.000
EUR and EUR 700 for income from 25.000-50.000 EUR
Tax payers:
 Macedonian entities- on world-wide income
 Permanent establishment of foreign entities- on Macedonian source
profit
 Group taxation for Macedonian entities and their subsidiaries; valid
for 5 years
Deductions
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Incomes from dividends from participation in equity of
the Macedonian companies are not included in the tax
base
30% of the capital gains from sale of securities, equity
and real estate are not included in the tax base.
Capital losses may be carried forward in the next three
years
Revenues earned on the basis of the funds that are
strictly earmarked for performance of the activity of the
legal entity – taxpayer (budgets, funds) are not included
in the tax base for calculation of the profit tax
Corporate tax incentives
Reduction of the tax base:
 For the amount of re-invested profit in Republic
of Macedonia
Reduction of the tax payable
 For procurement of up to ten fiscal devices, by
the amount of their value
Full tax exemption
 Users of the free economic zones-10 years
Withholding tax
Introduced 1 January, 2006
Tax rate: 12% (for 2007) and 10% after
Subject to taxation:
 Incomes from dividends
 Incomes from interests
 Incomes from royalties
 Incomes from management, consulting and other types of services
 Rents
 Insurance premiums
 Awards and prizes from entertainment and sport activities
 Telecommunication services
Exception from withholding
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Transfer of a portion of the profit of a permanent
establishment of a foreign legal entity in the Republic of
Macedonia, to which tax profit has been previously paid;
Income from interest from debt instruments issued
and/or guaranteed by the Macedonian Government, the
National Bank of the Republic of Macedonia, banks or
other financial institutions acting as an agent of the
Macedonian Government;
Income from interest from deposits in a bank located in
the Republic of Macedonia; and
Income from intermediation or consulting with state
securities on international financial market.
Withholding tax
Double taxation treaties relief available
 Macedonia has concluded 25 DTT, among
which with Slovenia, Serbia and Montenegro,
Albania, Bulgaria
 Full tax exemption or lower tax rate
Reporting obligation- By 15 February in current
year domestic entities are obliged to report PRO
for the tax withheld in the previous year
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Value Added Tax (VAT)
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Introduced 1 April, 2000
General tax rate 18% and preferential 5% on certain products
Registration
Voluntary
Mandatory-turnover ≥1.300.000MKD (EUR 21.000)
Tax period
Calendar month ≥EUR 400.000
Quarter < EUR400.000
A year- voluntary registered tax payers
Tax return- 15 days following the respective tax period
Tax refund- theoretically within 30 days from the submission of the tax
return
Tax credit deduction available
Value Added Tax- exemptions
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Tax exemptions in the country
Without right to tax credit
deduction (sale of residential
buildings and apartments, except
the first sale, postal, banking and
financial services, insurance,
culture, health services etc.)
With right to tax credit deduction
(export of goods, sale of goods to
the FEZ, custom zones; services
connected to the import, export
and transit etc)
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Tax exemption during import
Goods the sale of which is VAT
exempt in the country
Goods in transit, re-export or
temporary imported goods
Goods imported by foreign,
diplomatic or consular
representative missions for official
needs, as well as by diplomatic
personnel, for personal needs
Goods to be exhibited on fairs,
which will be exported afterwards
Goods necessary for
implementation of projects
financed with funds from foreign
donors
Personal Income Tax
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Tax rate: 12% (2007)
10% after
Tax payers: Physical
persons-residents and
non-residents
Tax return deadline: 15
March following year
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Subject to taxation:
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Personal income
Income from agriculture
Income from independent activities
Income from property and property
rights
Income from copyrights and
industrial property rights
Capital revenues
Capital gains
Gains from games on chance
Other Incomes
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Property taxes
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Property tax: from 0.10% to 0.20% of the market value
of the real estate and the movable property;
Tax on inheritance and gifts: it is free for the first order
of successors, 2-3% tax rate in second order of
succession and for the taxpayer in third order of
succession or a taxpayer who is not related to the
testator, it is paid at 4-5% tax rate, calculated on the
market value of the inherited or the property received as
a gift;
Tax on sale of real estates and rights: 2-4% of the
market value of the real estate.
Conclusions
Improved business
climate
 Attractive tax package
 Low taxes and flat tax
rates
= Attraction of foreign
investments
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Other competitive advantages
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Member of CEFTA, WTO
Agreement for Stabilization and association and future EU
Membership
One-stop-shop system for registration of new businesses
Low costs and simple procedure for starting-up a business
Free market access
E-government
Competitive cost of labor
Free Trade Agreements
Investment Protection Treaties
Additional incentives for the foreign investors (incentives in the free
economic zones, double taxation treaties, equal treatment with the
domestic entities, free transfer of profit etc.)
FDI- top priority in
the Country