Tax News: Draft amendments to the Personal Income Tax Law
KPMG's Tax News outline and highlight legislative changes and trends in the area of tax.
Draft amendments to the Personal Income Tax Law (PIT Law) have been adopted by the Government of the Republic of Macedonia and it is expected that they will be submitted to the Macedonian Parliament. We will notify once they have been adopted as law.
This issue of Tax News highlights some of the main proposals in the draft PIT Law.
The changes are of a technical nature and mostly focus on introducing a procedure for calculation and payment of personal income tax for individuals and legal entities. The most significant aspects are:
Reporting and payment of PIT by legal entities
Legal entities would be required to prepare and submit an electronic calculation through an online portal administered by the tax authority indicating the gross income, PIT due, available deductions and net income, before each payment of monetary income to employees apart from the salary or payment of income to other individuals.
The same procedure would apply in the case of provision of non-monetary benefits to employees which are considered taxable under the provisions of the PIT Law.
Upon submission of the calculations, the tax authority will generate an electronic payment order for simultaneous payment of income and PIT due on that income. In the event of provision of non-monetary benefits, the tax authorities will generate an electronic payment order only for the PIT due.
Reporting and payment of PIT by individual taxpayers
Payment and reporting of advance PIT
Resident and non-resident individual taxpayers generating income subject to PIT will be obliged to prepare and submit an electronic calculation through an online portal.
The types of income that would trigger an obligation of individuals to submit an electronic calculation upon receipt of the income are:
- Income from property and property rights in case of lease contact concluded between individuals
- Capital gains from sale of shares, capital and immovable property
- Income generated from abroad
- Income received from diplomatic and consular missions of foreign countries in Macedonia for which the individuals receiving the income are obliged to settle the PIT, and
- Other income subject to PIT (e.g. income from e-commerce, income from provision of internet marketing services etc.).
The deadline for submission of the calculations is the 10th of the following month for income generated in the previous month. Upon submission of the calculations, the tax authority will generate an electronic payment order only for the PIT. The proposed deadline for payment of PIT due on income generated in the previous month is the 15th of the following month.
Payment and reporting of annual PIT
At year end, the tax authorities will generate an annual income tax return latest by 30 April of the following year based on the electronic filings made by the individual or by legal entity(s) on the individual’s behalf throughout the year.
This generated annual income tax return should afterwards be confirmed by the individual by 31 May or amended if such amendments are needed. If the generated annual income tax return is not confirmed or amended by the taxpayer within this date, it should be considered final.
The taxpayers would also have the possibility to claim refund of overpaid PIT through the annual income tax return.
Extension of the list of income exempt from PIT
It is proposed that the list of tax exempt income is extended with the following payments:
- Payments made by the Government and local self-government units in case of natural disasters
- Financial assistance provided to individuals for medical treatments in the country and abroad
- Accommodation and transport costs paid by a company in regards to individuals who are not employed by the company but are engaged to perform certain activities related to its business
- Food, accommodation and travel costs for events organized by non-governmental organizations
- Food, accommodation and travel costs incurred for members of the syndicates during events organized by the syndicates.
Amendment of the definition of types of income falling under “Other income”
The definition of “Other income” is extended to include income from e-commerce, internet marketing services and sale of scrap waste as taxable income. With the proposed amendment, receipt of share without consideration does not fall within the definition of “Other income”.
It is proposed that the above amendments should take effect as of 1 January 2018.
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