North Macedonia
Corporate taxes and other direct taxes
There is a 10% flat general corporate income tax rate for all taxpayers in North Macedonia. Exceptionally, companies with a total revenue of up to 3 million denars (MKD) are exempt 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 at 1% of their 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. Losses cannot be carried back. No special limitations are applicable in the case of M&A transactions. The tax base is reduced by the amount of the investment of profits (reinvested profit) for development purposes, i.e. investments in tangible assets (property, plant, and equipment) and intangible assets (computer software and patents) intended to expand the activity of the taxpayer.
North Macedonia applies thin capitalization (3:1). Thin capitalization rules also apply to loans from banks if they are granted in relation to a deposit of the shareholder in that particular bank. Also, thin capitalization rules do not apply for newly established companies for the first three years of their operation. In North Macedonia, there is a withholding tax at a rate of 10% on dividends, interests, royalties, and other incomes paid by a North Macedonian company to a foreign company. The entities obliged to pay withholding tax should submit a Report on the withholding tax paid on the form “DD-I” to the Public Revenue Office once a year.
In North Macedonia, there is a withholding tax at a rate of 10% on dividends, interests, royalties, and other incomes paid by a North Macedonian company to a foreign company. The entities obliged to pay withholding tax should submit a report on the withholding tax paid on the form “DD-I” to the Public Revenue Office once a year. This form must be submitted by February 15 of the following year.
North Macedonia has a wide international treaty (DTT) network with 50 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.
The tax rate on sales and other transfers of real estate and rights to real estate is 2% to 4% of the market value of the property. There is also a property tax (the rate is 0.1%-0.2%) paid annually by owners of immovable properties.
| Transfer pricing in North Macedonia |
| Arm's length principle |
 |
Since 2019 |
| Documentation liability |
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The CIT payer has prepare a TP report and keep it in its records. The CIT payer needs to provide the TP Report to the PRO within 15 days of their request
|
| APA |
 |
The tax legislation does not provide a binding APA.
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| Country-by-Country liability |
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No obligation regarding Country-by-Country reporting as yet.
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| Master file-local file (OECD BEPS 13) applicable |
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The report has to contain: Master File, Local File and attachments.
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| Penalty |
|
|
| - lack of documentation |
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~ EUR 2,500-3,000 / missing document, doubled for recurrence; tax authorities are entitled to suspend the taxpayer's business activity for 3 to 30 days.
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| - tax shortage |
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Up to 10 times the amount of the understatement of tax.
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| Related parties |
> 20% |
Individuals and legal entities with control or significant influence, family members of owners, or members of the Management Board, all non-resident legal entities registered in low-tax jurisdictions.
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| Safe harbors |
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Interest income/expense from the loans as EURIBOR +1% (or SKIBOR +1% for loans extended in MKD). |
Level of attention paid by Tax Authority:
VAT and other indirect taxes
The general rate is 18%; a reduced rate of 5% is applicable for food products, pharmaceuticals, production equipment, computers, and public transportation. Exports are zero-rated. VAT-exempt services are mainly banking services, insurance, certain services provided by medical doctors and dentists, certain types of education and training, as well as other activities that are tax-exempt with regard to their public interest or special nature. A reduced rate of 10% was recently introduced for hotel and restaurant services.
Other indirect taxes in North Macedonia include fuel tax and excise duties.
Personal income tax / Social security system
With the latest amendments to the Law on Personal Income Tax (PIT Law), progressive personal income taxation has been put on hold for 36 months as of January 1, 2020. The PIT Law amendments of January 1, 2019 introduced progressive tax rates for work-related income (such as salaries, pensions, etc.), income from copyrights and related rights, income from independent activities, and income from the sale of agricultural products (Labor Income). With the amendments to the PIT Law, Labor Income will be subject to tax at a flat rate of 10% until January 2023 regardless of the tax base amount. Employers are obliged to calculate, withhold from employees’ gross salary, and pay into the accounts of respective funds the compulsory social contributions and personal income tax (PIT). Altogether, social security contributions payable by employees amount to 28% of their gross salary: the pension contribution is 18.80%; health care insurance is 7.50%; 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 the case of the minimum wage level and average wage. The personal allowance is MKD 105,456 on an annual basis, while the monthly personal allowance amounts to MKD 9,540.
The minimum base for social security contributions equals 50% of the average monthly salary for the current month. However, for self-employed people, the minimum base is the average salary.
The highest base for the payment of mandatory social security contributions on a monthly basis is 18 average salaries paid in Macedonia for employees and members of managing and supervisory bodies and 12 average salaries for the self-employed.
Wage related taxes
in North Macedonia |
Minimum wage
|
Average wage
in private sector |
| Exchange rate MKD/EUR |
in EUR |
in MKD |
in EUR |
in MKD |
| 61,695 |
482 |
29,739 |
934 |
57,609 |
| Total wage cost |
482 |
100.00% |
934 |
100.00% |
| Social contribution on salary |
- |
0.00% |
- |
0.00% |
| Gross salary |
482 |
100.00% |
934 |
100.00% |
| Employees' contributions |
135 |
28.00% |
261 |
28.00% |
| Personal income tax |
20 |
4.16% |
53 |
5.63% |
| Net salary |
327 |
67.84% |
620 |
66.37% |
*Personal income tax base differs from gross salary, deductions apply.