With the amendments to the Value Added Tax (VAT) Law, published in Official Gazette 199/23, North Macedonia has introduced a new concept through Article 9-b: the VAT tax representative. This significant change, effective from January 1, 2024, requires foreign entities conducting taxable transactions of goods and services within North Macedonia to register for VAT and appoint a VAT tax representative.

Obligations for Foreign Entities

Foreign entities without a permanent establishment or branch in North Macedonia, engaging in taxable transactions, must register for VAT and appoint a VAT tax representative. Unlike Macedonian entities, these foreign businesses are not exempt from VAT registration based on a minimum turnover threshold. They are required to register prior to commencing taxable activities within the country.

Appointment of a VAT Tax Representative

A foreign entity can appoint only one VAT tax representative. This appointment involves submitting a VAT registration application along with necessary documentation to the Public Revenue Office (PRO). The procedure, detailed in the Ministry of Finance’s Regulation published in Official Gazette 286/2023, involves submitting the “VAT-01/SL-DZ” form printed on white A-4 paper.

Required Documentation for VAT Registration:

1. A notarized agreement for the appointment of the VAT tax representative, including:
   • The name and address of the foreign entity.
   • The name and address of the VAT tax representative.
   • The VAT identification number assigned by the PRO to the VAT tax representative.
2. Proof of the foreign entity’s residence in its home country.
3. Proof of the VAT tax representative’s residence or business address in North Macedonia.
4. Proof that the VAT tax representative is not undergoing bankruptcy or liquidation (for legal entities) or has no criminal convictions (for individuals).

Responsibilities of the VAT Tax Representative

The VAT tax representative has several key responsibilities:

• Calculating the VAT due on taxable transactions.
• Submitting VAT returns on a quarterly basis, by the 25th day of the month following the end of the quarter.
• Paying the VAT and any associated interest for late payments.
• Maintaining records on behalf of the foreign entity.

Importantly, the VAT tax representative is jointly liable for the VAT owed by the foreign entity. This joint liability underscores the critical role of the VAT tax representative in ensuring compliance with North Macedonian tax regulations.

Registration and Appointment Process

The process for registering a foreign entity for VAT and appointing a VAT tax representative involves several steps. Upon receiving the VAT registration application and supporting documents, the PRO issues a decision on the registration and appointment. The appointed VAT tax representative then undertakes the tax compliance responsibilities on behalf of the foreign entity.

Steps for Registration and Appointment:

1. Submit the VAT registration application (“VAT-01/SL-DZ” form) and required documentation to the PRO.
2. The Public revenue office reviews the application and documents.
3. The Public revenue office issues a registration decision, confirming the VAT tax representative’s appointment.

Changing or Revoking a VAT Tax Representative

Circumstances may necessitate changing the VAT tax representative or ceasing taxable activities in North Macedonia. In such cases, the foreign entity must submit a new application to appoint a different VAT tax representative or request deregistration.

Situations for Changing or Revoking a VAT Tax Representative:

• Termination of the current VAT tax representative’s appointment for any reason.
• The cessation of taxable transactions by the foreign entity in North Macedonia.

The PRO then issues a decision on the change or revocation.

Qualifications for a VAT Tax Representative

To qualify as a VAT tax representative in North Macedonia, an entity or individual must meet certain criteria:

• Registered for VAT purposes for at least 12 months before the appointment.
• No outstanding unpaid tax liabilities at the time of appointment.
• For legal entities, not undergoing bankruptcy or liquidation.
• For individuals, no criminal convictions.

These stringent criteria ensure that the VAT tax representative is capable and reliable, safeguarding the interests of the foreign entity and the North Macedonian tax authorities.

Practical Implications for Businesses

The introduction of the VAT tax representative requirement aligns North Macedonia with international tax practices, enhancing transparency and compliance. For foreign businesses, this change necessitates careful selection of a qualified VAT tax representative to navigate North Macedonian VAT regulations.

Key Considerations for Foreign Businesses:

• Selecting a knowledgeable and experienced VAT tax representative.
• Ensuring timely and accurate submission of VAT returns.
• Maintaining comprehensive records of transactions.

The new VAT tax representative requirement in North Macedonia represents a significant shift in the country’s tax landscape. Foreign entities must now engage a VAT tax representative to handle VAT obligations, ensuring compliance with local regulations. This development not only enhances tax compliance but also provides a structured approach for foreign businesses operating in North Macedonia.

For businesses seeking to appoint a VAT tax representative in North Macedonia, it is crucial to understand the responsibilities and qualifications involved. A well-chosen VAT tax representative can facilitate smooth and compliant operations, allowing foreign entities to focus on their core business activities while ensuring adherence to North Macedonian tax laws.