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New Decrees with the force of law aimed at providing support to taxpayers in the state of emergency

New Decrees aimed at providing support to taxpayers

In line with the current situation caused by COVID-19, the Government of the Republic of North Macedonia adopted several new Decrees with the force of law aimed at providing support to taxpayers and easing their operations in the state of emergency.

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New Decree for Financial support to employers in the private sector

The Government of the Republic of North Macedonia adopted a New Decree with a force of Law for financial support of employers in the private sector with regard to the payment of April and May salaries. The Decree was published in the Official Gazette No.111 dated 28 April 2020 and entered into force on the same day. On 1 May 2020 the Government adopted amendments to the Decree which were published in the Official Gazette No. 113 and entered into force on the same day. The new Decree replaces the Decree for financial support of employers for payment of April and May salaries, published in the Official Gazette No.93 and 97.

Highlights of the new Decree are provided here

Decree for application of the Law on Labor Relations

The Decree was published in the Official Gazette No. 113 dated 1 May 2020 and provides the possibility for employers who terminated the employment relations with employees during the period from 11 March to 30 April 2020, to conclude settlements for restoring of the employment relation with those employees. By virtue of such settlement, the employer will be obliged to settle all obligations that arise from the employment relation from the day of termination of the employment until the day of the settlement. The deadline for registration of the restored employment relations with the Employment Agency is 7 May 2020.

If the employee does not sign such settlement, the employer has the right to hire new employee selected from the list of currently unemployed individuals held at the Employment Agency. The same deadline for registration of the new employees applies as in respect to restored employment relations.

Decrees for application of the VAT Law

The Government adopted several Decrees with the force of Law for the application of the VAT Law in the State of Emergency. The Decrees were published in the Official Gazette No. 102 dated 14 April 2020 and No. 108 dated 24 April 2020 and entered into force on the same date of their publication.

Some of the more relevant provisions of the Decrees set out the following:

  • Submission of VAT returns: extension of the deadline for filing the VAT returns and for paying the VAT due: 
    • The deadline for filing VAT return for April 2020 and payment of the VAT due for this period is extended to 31 May 2020
  • VAT exemption with regard to donations: the VAT exemption applies with regard to: 
    • supplies of goods and services provided as donation to state budget users, which will be used  for dealing with COVID-19, as well as 
    • the supply of goods and services financed by funds donated to a state budget user, which will be used for dealing with COVID-19.

For the VAT exemption to apply, the following conditions should be fulfilled:

  • with regard to donation of goods or services, the donor should obtain a certificate confirming the receipt of the donation from the budget user,
  • with regard to purchases of goods or services financed by donated funds, the supplier should obtain a statement from the budget user confirming, under full moral and criminal responsibility, that the supply of goods and services is paid with donated funds. 

In case the above conditions are not met, the supplier will have to calculate VAT according to the provisions of the VAT Law.

The invoice issued for the supply of goods and services given as donation to a budget user as well as for the supply of goods and services paid with a donated funds to a budget user should state the basis for the exemption from the VAT. 

Decree for application of the Law on Donations and Sponsorships in Public Activities

The Decree provides for new provisions in relation to the procedure for confirming the public interest and the eligibility to the tax incentives available for donations in the public activities, during the Sate of Emergency. The Decree was published in the Official Gazette No. 103 dated 16 April 2020 and entered into force on the same day.

For donations made to a state budget user which will be used for dealing with COVID-19 crisis, the procedure for confirming the public interest in front of the Ministry of Justice is not required. For other donations in public activities, the confirmation of the public interest is done by submitting a request to the Ministry of Justice in paper or in electronic form as provided with the Decree.  

In addition, in order to benefit from Personal Income Tax or Corporate Income Tax incentive in respect to funds donated to a state budget user which will be used for dealing with COVID-19 crisis the following should be fulfilled:

  • Individuals are required to submit electronically a Report for the donated funds to the Public Revenue Office (PRO) no later than 31 January of the year following the one in which the donation was made in order to use the amount of the donation made, but not more than MKD 24,000, as a deduction from the calculated PIT liability.
  • Legal entities are required to submit together with their annual CIT returns a copy of the agreement for the donation, written confirmation for the donation received as well as proof of payment of the funds in order to be allowed to claim tax deductibility of the amount of the donation made but not more than 5% of the total revenue reported for the year.

No later than 31 December 2020, the state budget user should submit to the PRO a Report for the received donations in an electronic form.

How can we help? 

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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