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Government adopts Decrees with the force of law in respect to some of the economic measures previously announced

Government adopts Decrees with the economic measures

As announced on its web site, the Government of the Republic of North Macedonia on its 28th session held on 25 March 2020, adopted certain Decrees with the force of law, thus enacting some of the measures announced previously. Some of those Decrees were published in Official Gazette N.79 from 26 March 2020 and entered into force on the same day. A summary of some of the enacted measures is provided below:

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Decreased rate of the penalty interest 

The Decree with the force of law in respect to the application of the Law on Tax Procedure provides that the penalty interest for public liabilities is reduced by 50%, i.e. from 0,03% to 0,015%.

Also, it has been enacted that the Public Revenue Office (PRO) will not publish the list of debtors with overdue tax liabilities for April, May and June 2020.

Extension of the term for convening and holding an annual meeting of shareholders

The Decree with the force of law in respect to the application of the Law on Trade Companies provides for extension of the term for convening and holding an annual meeting of shareholders, for the duration of the state of emergency. Such extension also refers to the already initiated procedures for convening and holding an annual meeting of shareholders.

Exemption of certain categories of taxpayers from payment of advance instalments for corporate income tax and personal income tax purposes

The two Decrees in respect to the CIT and PIT Law regulate for the duration of the state of emergency the exemption from the obligation to make advance tax instalments due for the months March, April and May 2020 of certain categories of taxpayers (the measures in respect to PIT apply to individuals conducting independent business activities). 

The measures will apply with regard to taxpayers conducting business activities in affected sectors (as per the National Classification of Business Activities (НКД Рев.2), as follows:

  • code 56: activities for preparation and service of food
  • code 79: tourist agencies, travel organizers (tour operators) and related activities
  • code 55: accommodation facilities
  • code 49: land transport and transport via pipelines
  • code 50: water transport and
  • code 51: air transport

In order the above exemption to apply, the taxpayer should not decrease the number of its employees for the period starting from the date the respective Decrees enter into force until the expiry of three months after the Decrees’ effect has expired, except in cases of death, retirement or in the case of termination of the employment by the employee.

In respect to CIT taxpayers, there are certain additional requirements introduced that should be considered such as: (i) no dividend are paid to shareholders, and (ii) no award for business success (profit participations, bonuses) or other type of annual awards are paid to employees and members of management and supervisory bodies, from the date the Decree entered into force until the day the exemption from advance instalments applies (15 June 2020).

The above measure is also to apply to other taxpayers who have been affected, who in ddition to the above noted requirements, fulfil one of the following conditions:

  • the taxpayer’s total revenues have been reduced for at least 40% in a current month in comparison to February 2020, or its total revenues for 2020 have been reduced for more than 40% compared with the same period of last year, or
  • the number of employees who cannot be actively involved in the taxpayer’s business activities due to the measures, is more than 25% from the total number of employees in February 2020, or
  • the taxpayer has closed at least 50% of its points of sale through which its activities are carried on (branch offices, selling facilities).

The exemption is subject to a request for exemption to be submitted by the taxpayers through the e-tax system (e-PDD PIT taxpayers), which is to be confirmed by the tax authorities within 15 days of receiving the request.

Taxpayers who have used the measure but have not fulfilled the conditions above, are obliged to pay the respective instalments plus late payment penalty interest.

Additional measures

  • Further to the measures announced by the Government on 19 March 2020 in respect to reducing the effects from the COVID19 on the economy, on 25 March 2020 the Development Bank of North Macedonia issued a public announcement for receiving applications from companies and sole proprietors registered in North Macedonia for direct financial interest free loans. The announcement details amongst other, the manner of application, the conditions, terms, as well as the types of businesses eligible to apply for such financing. The deadline for application is set within 30 days from 26 March 2020. The complete announcement can be found on the website of the Development Bank of North Macedonia (in Macedonian).
  • The National Bank announced the adoption of the decree on the manner in which contractual conditions can be changed by banks and saving houses in respect offering more beneficial terms to affected clients for servicing their debt.
  • The Decree in respect to the application of the Law on Obligations in respect to the statutory penalty interest is expected to be published.

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KPMG team remains at your disposal for any inquiries or need assistance you may have in the current situation. 

© 2020 KPMG North Macedonia DOO, a limited liability company registered in the Republic of North Macedonia and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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