Latest developments in the tax legislation - KPMG North Macedonia
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Latest developments in the tax legislation

Latest developments in the tax legislation

KPMG's Tax News outline and highlight legislative changes and trends in the area of tax.

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Draft Amendments to the Corporate Income Tax Law

The Ministry of Finance recently published draft amendments to the Corporate Income Tax (CIT) Law on the ENER website. The proposed amendments include:

  • Introduction of a specific regime for non-profit organizations: 1% tax on all income derived from business activities if this income is higher than EUR 2,500
  • Amendments in relation to non-deductible expenses 
  • Revaluation of non-current assets: Depreciation/amortization in relation to revalorization of non-current assets is not recognized for CIT purposes
  • Nomenclature on depreciation/amortization: Depreciation/amortization expenses will be recognized for tax purposes at rates and methodology to be prescribed by the specific Nomenclature (to be promulgated by the Minister of Finance)
  • Court decisions related with impairment of receivables: The provision from the current law stipulating that expenses for impairment of receivables are recognized if there is a court decision in relation to those receivables is deleted 
  • Changes in transfer pricing rules
    • All methods from the OECD TP Guidelines are provided for 
    • Introduction of preparation and submission of documentation on transfer pricing 
  • The exemption of banks and other credit institutions from transfer pricing rules regarding interest is deleted 
  • Thin-cap rules: The limit for “qualifying” shareholder in terms of thin-cap rules is reduced to shareholders who hold at least 20% of the shares in the taxpayer (the limit is 25% under the current law) 
  • Related party definition: The definition of related parties is broadened 
  • Donations in sports: Changes in the procedure for utilization of the incentive for donations in sports (introduction of utilization of vouchers, and requirements for obtaining approvals from the tax authorities) 
  • Payment of dividends: Introduction of a requirement that dividends and other distributions from profits are to be made in a chronological order (starting from the oldest)
  • Covering of losses: Use of non-taxed profits from 2009 to 2013 to cover losses will trigger CIT
  • Application: The amendments will apply from 1 January 2019.

Draft Amendments to the Law on Mandatory Social Security Contributions

The draft Amendments to the Law on Mandatory Social Security Contributions were adopted by the Government of the Republic of Macedonia and entered in a parliament procedure. The proposed amendments include:

  • Increase in the rates for calculation and payment of the contribution:
    • From 18% to 18.4% for pension and disability contributions for 2019 and to 18.8% for 2020 
    • From 7.3% to 7.4% for health insurance contributions for 2019 and to 7.5% for 2020
    • Higher rates for pension and disability insurance for the years of service that are calculated with increased duration will apply for 2019 and for 2020 onwards 
  • New obligation for payment of contributions for:
    • Interns engaged under the new Law on Internship 
    • Individual who is registered for performance of an independent activity for retail trade at booths and markets, registered in the register of the Traders' Chamber of Macedonia, provided that he/she is not insured on any other basis. 

The draft amendments are envisaged to enter into force on the day of their publication in the Official Gazette.  

Draft Amendments to the Law on the Public Revenue Office

The draft amendments give the Public Revenue Office (PRO) with access to certain data from banks, money transfer providers, international organizations, foreign tax administrations, domestic and foreign legal entities-payers of income. The PRO will use the data provided by these entities solely for tax purposes such as:

  • Preparation of the tax returns for each taxpayer starting from 2019 
  • Exchange of information and provision of international legal assistance in tax cases in accordance with international agreements
  • Assessment, collection and control of taxes and other public revenues prescribed by law.

Banks are obligated to provide the PRO with the data regarding the inflows of funds to the accounts of the individuals no later than 15th of the current month for the previous month. In addition, the other parties apart from banks can be requested to provide the PRO with further data.

The draft amendments are currently in a parliament procedure and, if enacted, will apply from 1 January 2019. 

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