Question No.1 for all investors and successful business leaders is the level of the tax rate in the particular jurisdiction or destination where the business can be developed. We are inviting you to discover the tax benefits in North Macedonia which is a real tax pearl among European countries.
Contrary to most European countries with a tax rate of 20%, North Macedonia charges a corporate income tax only of 10%.
The corporate income tax in Macedonia is charged on
- any forms of distribution from the profit (including dividend distribution)
- certain non-deductible expenses and understated revenues. The non-deductible expenses include, but are not limited to, expenses that are not related to taxpayer’s business activities and employee-related expenses (e.g., holiday allowance, meals for employees, expenses for the organization of business trips). The understated revenues include, for example, understated revenues for supplies of services and goods between related parties.
In the past 2 years, North Macedonia has made many strategic decisions to attract investors, not only with the low rate of corporate income tax but also with providing a tax exemption to investors in Macedonian Technological–Industrial Development Zones. The exemption applies to corporate income tax, utility taxes to the local municipality, fees for land building permits, VAT, and customs duties for equipment, goods, machines, and raw materials. But that is not all, the investors may receive a grant from the Macedonian government of up to EUR 500.000 plus the investors may conclude a long-term lease (up to 99 years) for land in the TIDZ.
VAT is levied on the import of goods into Macedonia and the supply of goods or services in Macedonia. The standard VAT rate is 18%. A reduced VAT rate of 5% applies to certain goods and services, such as agricultural machines, accommodation services, computers, food products, publications, pharmaceutical and medical devices, software, and transportation of persons.
Finally, it should be also noted that Macedonia has signed five important free trade agreements, namely:
(1) Stabilization and Association Agreement (SAA)with the EU countries;
(2) European Free Trade Association Agreement (EFTA) with Switzerland, Norway, Iceland, and Liechtenstein;
(3) The Central European Free Trade Agreement (CEFTA) with Albania, Moldova, Serbia, Montenegro, Bosnia, and Herzegovina, and Kosovo;
(4) Bilateral free trade agreement with Turkey;
(5) Bilateral free trade agreement with Ukraine.
We have only given you a brief overview of the possibilities regarding tax optimization in Macedonia, but we will be happy to give you more details if you call us on WhatsApp number +381 63 8487288 or send us your question by email info@balkanadvisor.com