Profit Tax Law in North Macedonia – Current Rules 2026

The Profit Tax Law in North Macedonia governs the taxation of profits, the applicable tax rate, taxpayers, the tax base, filing and payment obligations, tax exemptions and related compliance matters. The 2023 amendments replaced several temporary or incentive-based rules with a more documentation-focused framework, particularly for transfer pricing and reinvested profit. This guide explains the rules currently applicable to companies and permanent establishments and replaces the previous version of this page, which concerned the temporary COVID-19 measures introduced in 2020 and 2021. This page is part of our practice in business and corporate law. 

1. Profit Tax Rate, Taxpayers and Tax Base

The statutory profit tax rate is 10%. A resident legal entity is a profit taxpayer on profit earned from activities in North Macedonia and abroad. A legal entity is treated as resident when it is incorporated or has its registered seat in North Macedonia. A permanent establishment of a foreign entity is also a taxpayer on the profit generated through activities carried out in North Macedonia.

The tax base is generally determined as the difference between total revenue and total expenses recorded under the applicable accounting rules and accounting standards. That result is then adjusted for non-deductible expenses and understated revenue for tax purposes. Foreign companies should separately assess whether their activities create a permanent establishment in North Macedonia. 

2. Effective Dates of the 2023 Amendments

The Law Amending and Supplementing the Profit Tax Law was published in Official Gazette No. 199/2023 on 25 September 2023 and generally entered into force on the date of publication. However, the repeal of the special sports donation provisions and the related advance payment rule applies from 1 January 2024. The transitional provision also preserved the former obligation to submit the transfer pricing report for the 2022 business year.

These dates matter because not every change began to apply at the same time. Companies should therefore examine the relevant tax period before determining the treatment of an expense, report or tax incentive.

3. Life Insurance Premiums Paid for Employees

The 2023 amendment deleted Article 9 paragraph 1 item 5-a, which had allowed employer-paid life insurance premiums for employees to be recognised up to a statutory annual threshold. According to the Public Revenue Office, from 25 September 2023 the entire amount of expenditure for life insurance premiums paid for employees is a non-deductible expense subject to profit tax adjustment.

This change concerns life insurance only. It should not be confused with the separate rule for voluntary pension contributions or the rule for voluntary health insurance premiums, which remain governed by their own statutory limits. Payroll, accounting and tax records should clearly distinguish these categories.

4. Transfer Pricing Reports and the P/TC Schedule

Article 12-a now requires a taxpayer covered by the transfer pricing rules to prepare and retain a transfer pricing report for transactions referred to in Article 12. If the total value of transactions with related parties during the year does not exceed MKD 10,000,000, the taxpayer prepares and retains a shortened-form report.

The report must be retained for ten years after the end of the year to which it relates. If requested by the Public Revenue Office, it must be delivered within 15 days after receipt of the request. The authority may issue such a request after 30 days have elapsed from the deadline for filing the tax balance under Article 39.

The amendment removed routine annual submission of the complete report from 1 January 2024, but did not remove the obligation to prepare adequate contemporaneous documentation. Taxpayers that prepare and retain a transfer pricing report must submit the schedule containing data on related party transactions — form P/TC — together with the form DB profit tax balance.

Under Article 12-b, Articles 12 and 12-a do not apply to transactions between related parties that are both residents of North Macedonia, or to taxpayers whose total annual revenue does not exceed MKD 300,000,000. The availability of an exclusion should be documented rather than assumed.

5. Abolition of the Sports Donation Voucher Incentive

From 1 January 2024, former Article 30-a and the special treatment of sports donations under Article 9 paragraph 1 item 10-a ceased to apply. The special voucher system, under which a taxpayer could reduce calculated profit tax for qualifying financial donations to sports entities, was therefore abolished.

A donation to a sports entity is now assessed under the general rules applicable to donations made in accordance with the Law on Donations and Sponsorships in Public Activities. Under the Profit Tax Law, qualifying donation expenses may be recognised up to 5% of the taxpayer’s total annual revenue. The transitional rule continues to apply to taxpayers that used the former Article 30-a exemption before the amendment and later cease to meet its conditions; the tax must then be determined and paid through form DD-DO within 30 days after the conditions cease.

6. Reinvested Profit and Fivefold Tax Exposure

Article 28 allows the tax base to be reduced by investments made from the previous year’s profit for development purposes. Reinvested profit includes qualifying investments in tangible assets — including real estate, plant and equipment and assets acquired through financial leasing — and in specified intangible assets such as computer software and patents used to expand the taxpayer’s activity. Statutory exclusions apply, including certain assets serving administrative purposes.

The 2023 amendment materially increased the consequence of non-compliance. If the taxpayer cannot document that the exemption was used for qualifying tangible or intangible assets for expansion of the activity, the taxpayer owes five times the tax that would have been payable without the exemption. The same fivefold consequence applies if the taxpayer fails to determine and pay the tax in accordance with Article 39 paragraph 2 when the relevant exemption conditions cease.

Companies using the reinvested profit exemption should maintain a traceable file linking the prior year profit, the investment decision, invoices, payment records, asset registers, evidence of use and any financial leasing documentation. Disposal of qualifying assets within five years and termination of a financial leasing agreement also require a separate tax review under Article 28.

7. General Anti-Abuse Rule (Article 42-a)

New Article 42-a introduces a general anti-abuse rule. A taxpayer may not use rights under the Profit Tax Law or an applicable tax treaty — including reductions of the tax base, exemptions, relief from profit tax or withholding tax, reductions of calculated tax, a lower rate or a different taxation model — for an arrangement or series of arrangements whose main purpose or one of the purposes is to obtain those tax benefits when the arrangement is not genuine.

An arrangement includes any business transaction, activity, scheme, agreement, obligation or event and may consist of one or more steps or parts. It is not considered genuine if it was not established for valid commercial reasons reflecting economic reality, or if it was established for tax evasion or avoidance of tax liabilities. In such cases, the tax liability is calculated under the Profit Tax Law and the applicable tax procedure rules.

In practice, formal documentation alone may be insufficient. Material transactions and group structures should have identifiable commercial purposes, consistent contractual terms, actual performance and evidence that the economic substance corresponds to their legal form.

8. Compliance Records and Penalties

The penalty provision was aligned with the new transfer pricing regime. A legal entity may be fined if it fails to retain the report, fails to deliver it to the Public Revenue Office upon request, or fails to submit the relevant form within the statutory deadline. The prescribed ranges depend on whether the taxpayer is classified as a micro, small, medium or large trader, and a separate fine may apply to the responsible person.

A practical compliance system should therefore coordinate the tax return, the P/TC schedule, the underlying transfer pricing file, related party registers, reinvested profit evidence and the accounting treatment of employee insurance and donations. For related tax and compliance questions, see our guide on tax inspections by the Public Revenue Office.

Practical Checklist

For companies subject to profit tax in North Macedonia: (1) Tax base calculation — confirm that the 10% profit tax calculation starts from the accounting result and includes all required tax adjustments. (2) Insurance cost classification — separate life insurance premiums from voluntary pension and voluntary health insurance costs in the accounting records; only life insurance premiums are fully non-deductible from 25 September 2023. (3) Related party identification — identify all related parties and determine whether Article 12-b excludes the taxpayer or the relevant domestic transactions from the transfer pricing rules. (4) Transfer pricing documentation — where the transfer pricing rules apply, prepare the full or shortened report, retain it for ten years and be ready to provide it within 15 days of a request from the Public Revenue Office. (5) P/TC form — submit form P/TC with the form DB profit tax balance where required. (6) Sports donations — treat sports donations under the general donation rules after 1 January 2024; do not apply the former Article 30-a voucher credit. (7) Reinvested profit audit trail — maintain a complete file linking prior year profit, investment decision, invoices, payment records, asset registers and evidence of use; review any disposal of an asset within five years or termination of a financial leasing agreement. (8) Commercial substance — record the commercial purpose and economic substance of material arrangements, especially cross-border and related party transactions, in light of the new anti-abuse rule. 

Frequently Asked Questions

What is the profit tax rate in North Macedonia?

The statutory profit tax rate is 10%. The final liability is calculated on the tax base after the accounting result is adjusted in accordance with the Profit Tax Law.

What are the latest amendments to the Profit Tax Law?

The latest amendments in the consolidated text were published in Official Gazette of the Republic of North Macedonia No. 199/2023 on 25 September 2023. Certain provisions — including the repeal of the sports donation voucher incentive — apply from 1 January 2024.

Must a transfer pricing report be submitted to the Public Revenue Office every year?

No. From 1 January 2024, the complete report is not routinely submitted each year. It must be prepared and retained for ten years and delivered within 15 days if requested by the Public Revenue Office. Where applicable, form P/TC is submitted with the form DB profit tax balance.

Is a shortened transfer pricing report available?

Yes. If the transfer pricing rules apply and the total value of transactions with related parties during the year does not exceed MKD 10,000,000, a shortened-form report is prepared and retained.

Are employer-paid life insurance premiums deductible for profit tax?

From 25 September 2023, the full amount of employer-paid life insurance premiums for employees is treated as a non-deductible expense for profit tax purposes. This does not affect voluntary pension contributions or voluntary health insurance premiums, which are governed by separate statutory limits.

Can profit tax still be reduced through sports donations?

The special Article 30-a voucher tax credit was abolished from 1 January 2024. Qualifying sports donations are now considered under the general donation rules, including the statutory expense recognition limit of 5% of total annual revenue.

What is the consequence of incorrectly using the reinvested profit exemption?

If the taxpayer cannot document that the exemption was used for qualifying assets for expansion of activity, the taxpayer owes five times the tax that would have been payable without the exemption. The same fivefold consequence applies if the tax is not determined and paid when the exemption conditions cease.

What is the general anti-abuse rule and how does it apply?

Article 42-a of the Profit Tax Law prohibits the use of tax benefits under the law or an applicable tax treaty for arrangements that are not genuine — that is, arrangements whose main purpose or one of the purposes is to obtain tax benefits and which were not established for valid commercial reasons reflecting economic reality. Where the rule applies, the tax liability is calculated under the standard rules without the relevant benefit. 

 Last updated: September 2026 

Legal basis: Consolidated Profit Tax Law including OG RNM No. 199/2023 and Public Revenue Office notice of 28 September 2023.

Note: The above does not constitute legal advice and in no way can be accepted or understood as an instruction to act in a specific case. Each legal situation has its own characteristics that should be reviewed at separately, and for that reason we recommend that you contact a professional – a lawyer – for legal advice.