Changes in the Profit tax law in North Macedonia

On 07th of December 2020, amendments of the Law on profit tax were entered into force by the publication of the law in the Official Gazzette of North Macedonia.

Based on these amendments, in order to provide further support to taxpayers for easier coping with the consequences of the coronavirus (COVID-19), it is proposed to extend the measure-relief from the obligation to pay profit tax advances for several more months.

In addition to this, in order to encourage employers to invest in creating better working conditions for employees and to increase their health care, the law amends the current provisions of the Law governing unrecognized expenses.

The amendments to the Law also arise from the need to provide support to companies – small and micro traders that fall under the simplified tax regime, ie pay total income tax. Further, in order to ensure greater use of the right to reduce the accrued income tax on donations given in sports, the law recognizes the necessity to regulate the limit on the number of sports entities to which taxpayers can donate funds.

Also, the amendments to the Law arise from the need to support taxpayers who during 2020 and 2021 will make a loss from their operations, so it is proposed that they have the opportunity to transfer it in the next five years, instead of three years in accordance with the existing legal solution. 

By the official proposer of the law, it is stipulated that the purpose of the proposed amendments to the Law on Profit Tax is to prescribe legal solutions in order to support taxpayers in dealing with the consequences of the coronavirus COVID-19 and increase their liquidity. Based on this, the law contains the following solutions:

– exemption from payment of profit tax advances for the months of November and December 2020, as well as for January and February 2021 for taxpayers who have suffered damage in their operations due to the spread of coronavirus COVID-19;

– regulation of unrecognized expenditures for tax purposes, ie prescribing provisions according to which the premiums for voluntary health insurance (additional and private health insurance) of the employees, the paid laboratory tests for COVID-19;

-longer period of transfer of the loss for the bonds that during 2020 and 2021 will realize a loss from the operation;

– increase of the threshold according to which the entities would be part of the non-taxation regime with profit tax for 2020 will be exempted from paying total income tax;

-increasing the threshold according to which the entities would enter the regime of total income in 2020, will have the opportunity to determine whether they will pay tax on total income or profit tax;

– abolition of the condition for prior coverage of the loss in accordance with the Law on Trade Companies, so that the taxpayer has the right to transfer the loss in future tax periods, and

– adjusting the number of sports entities to which taxpayers can donate funds and use the right to reduce the calculated profit tax.

The above text is for information purpose only. It’s content cannot be cosnidered a legal advise. Please consult a lawyer for more specific legal information.