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On 16.12.2019 in Hotel ” Porta ” – Skopje, Knigoprima Consulting held a workshop on the topic: Implementation of the news items contained in the tax regulations and Inventory of assets and liabilities for 2019.
The articles of the Personal Income Tax Law which came into force on 1 January 2019 were discussed as part of the tax regulations. Previously, this matter was regulated by the Personal Income Tax Law, according to which citizens’ income was taxed at a rate of 10% irrespective of the amount of income earned. The legislator’s main intention in passing the Personal Income Tax Law was the change of the flat tax rate and introduction of a progressive tax rate.
In accordance with the current articles of the Law on Personal Income Tax, income from work, income from independent activity, income from copyright and related rights and income from the sale of own agricultural products, the income tax is payable at progressive rates as follows:For income up to 1.080.000 MKD per year, the tax rate is 10% .
For income above 1.080.001 MKD annually is paid 108.000 + 18% of the part of income above 1.080.000 MKD.
While for industrial property rights income, lease and sublease income, capital income, capital gains, gambling gains, insurance income and other income, the tax is payable at a single rate of 15%.
In advanced taxation, income tax rates are applied depending on the amount of the individual payment. However, if the annual level of income exceeds the amount of 1,080,000 MKD, for the difference above this amount the income tax will be paid by the natural person earning the income.
At the same time, with the adoption of the new law,
the increase of the amount of tax deduction for salaries and pensions to 96,000 MKD per year, that is to say 8,000 MKD per month was determined,
reduction of the standardized costs that are taken into account when determining the tax base for certain types of income was performed, that is, approximating of their level to the level of these costs in the countries of the region and a great deal of the legal articles of the previous regulation were further specified.
But only after eleven months of applying the progressive tax rate, the Ministry of Finance announced an amendment to the Law on Personal Income. The parliamentary procedure for their adoption is ongoing.
The amendments provide the following:
-for capital gains income from the sale of government securities and shares issued by an investment fund, the tax shall be payable at the rate of 15% if the holder has owned it for up to one year, that is to say, at the rate of 10% if he/she has owned it for a period from 1 to 10 years.
-for capital income on the basis of interest on time deposits, the tax is payable at a single rate of 10%.
-new tax deductions are determined for capital gains realized from the sale of government securities and shares issued by an investment fund if the holder has owned them for a period longer than 10 years and reimbursement of hotel accommodation costs (up to four-star category) up to 6.000 MKD per day and expenses for transport of persons who are not employed by the payer, but are engaged in the business activity of the payer (in the country and abroad), based on documented evidence of costs incurred, engagement report and engagement substantiation documents (invitation, agenda, program, contract, work order, etc.) and with a confirmed timetable between placement, transportation and work performed;
-taxation of interest on time deposits and taxation of capital gains from the sale of government securities and shares issued by an investment fund shall apply from 1 January 2023
-calculation and payment of income tax from work, income from independent activity , income from copyright and related rights, income from the sale of own agricultural products, income from industrial property rights, income from leases and sub-leases, income from capital, capital gains , insurance income and other income for 2020, 2021 and 2022 will be performed at a rate of 10% and
-income tax will not be paid for capital gains gained from the sale of government securities, which are acquired through issuance of government securities realized as initial public offer.
The Law on Partial Value Added Tax Refund to Natural Persons entered into force on 1 July 2019.
The right to a VAT refund is exercised by reporting the data from the bar code on the fiscal receipt through an application software for this purpose of the Public Revenue Office.
The individuals who qualify for the right of a VAT refund and are registered on the e-Personal tax system, it is necessary to download the application “My VAT” on their device, which by scanning the barcode on the fiscal receipts enables exercising of the right to a VAT refund.
The right to a VAT refund can be exercised only once for a fiscal receipt.
The natural persons that have the right to a partial VAT refund are the ones who:
– have turned 15 years old;
– possess a valid ID document– an identity card or a passport issued by a competent authority in the Republic of North Macedonia;
– are registered on the e-Personal tax system of the Bureau of Public Revenues and
– possess a transactional account at a holder with payment operations in the Republic of North Macedonia.
The provisions of the Law on Partial Value Added Tax Refund do not refer to the fiscal receipts which are issued by entities performing continuous turnover and for which the subsequent payments are foreseen, i.e. bills for electricity, water, telephone services, heating, cooling etc.
The right to a VAT refund does not refer to the fiscal receipts for which a sales slip, an invoice or other document to a legal entity is issued, a sole proprietor performing an independent activity or a natural person registered for VAT purposes.
Furthermore, the right to a VAT refund for the fiscal receipts over 30,000 denars and the canceled receipts cannot be exercised.
The tax refund, pursuant to the provisions of the Law, is in the amount of 15% of VAT expressed in the fiscal receipt.
Example: For a fiscal receipt of 1,000.00 denars, in the amount of VAT rate of 18% the tax refund is in the amount of 27 denars.
The tax refund is performed within 60 days after the end of the calendar quarter in which the fiscal receipt was issued. For example, for a fiscal receipt from 15 January, the tax refund should be performed not later than 31 May.
The minimum amount for the VAT refund for one quarter is 50 denars. If the amount of the refund is less than 50 denars, it is transferred for a refund in the following quarter.
The refunded amount of the VAT does not constitute an income which is subject to taxation with a personal income tax.
Pursuant to the provisions of the Law, a fine of 250 euros in denar equivalent is foreseen for natural persons who shall report fiscal receipt which does not refer to the right to a VAT refund (fiscal receipts for which a sales slip, an invoice or other document, and bills for electricity, water, telephone service, heating, cooling, etc. is issued.)
A fine in the amount from 250 to 1,000 euros in denar equivalent for the issuer of the fiscal receipt who shall not report a cancelled fiscal receipt in the Public Revenue Office is foreseen. Also, a fine is foreseen for the responsible person in the legal entity in the amount of 150-250 euros in denar equivalent for the same infringement.