Law and regulation of Covid-19 tax relief in North Macedonia

Postponing of submission of VAT returns and payment of VAT obligation

• The deadline for submission of VAT returns and payment of VAT obligations by monthly VAT taxpayers will be postponed during the State of Emergency, as follows:
  • The VAT obligation of the monthly VAT taxpayers for February and March 2020 should be reported and paid until 30 April 2020;
  • The VAT obligation of the monthly VAT taxpayers for April 2020 should be reported and paid until 31 May 2020. 
• The deadline for submission of VAT returns and payment of VAT obligations by the quarterly VAT taxpayers will also be postponed during the State of Emergency. The VAT obligation of the quarterly VAT taxpayers for the period from 01 January until 31 March 2020 should be reported and paid until 30 April 2020.

Option for issuance of invoices in electronic form for VAT purposes

• The Government provided an opportunity for the suppliers to issue invoices in electronic form as an alternative to issuing hard copy invoices for VAT purposes. The electronic form invoice (pdf or other electronic format) should contain all mandatory elements according to the VAT Law and should be provided to the purchaser via electronic means. 
• In order for the electronic form invoice to be duly issued, the issuer should provide prior notification to the recipient that he intends to issue an invoice and other relevant documents for VAT purposes in electronic form and the recipient should not object by the prescribed deadline.

VAT relief for donations for mitigating the impact of Coronavirus COVID-19

• VAT relief is applicable for donations of goods and services granted to a state budget user for mitigating the impact of the Coronavirus COVID-19. For this purpose, the state budget user should provide a confirmation of receiving the donation. 
• VAT relief is also applicable to purchases of goods and services undertaken by a state budget user with donated funds for the purposes of mitigating the impact of the Coronavirus COVID-19. In order to use this relief, the state budget user should provide a statement confirming the above condition to the supplier of goods and services. 

Corporate Income Tax relief for monthly advance payments

• Trade companies which have suffered damages due to spreading of the coronavirus will be entitled to tax relief for the advance payments of Corporate Income Tax (PIT) for months March, April and May 2020.
• The above relief could be used by trade companies which work in certain industries (i. Hospitality; ii. Tourism; and iii. Transport) if they fulfill the following cumulative conditions: 
  • to not pay dividends to the shareholders, awards for business successfulness or any other annual award to the employees or the members of the managerial and supervision bodies of the taxpayer as of the day of entering into force of this measure until the last day of the this relief (15 June 2020); and 
  • to not decrease the number of employees as of the day of entering into force of this measures is prescribed and three months following its termination, except in cases of death, retirement and termination of employment by the employees.
• Furthermore, other taxpayers may also use this relief if they fulfill the above two cumulative conditions and one of the following conditions:
  • Total revenues of the taxpayer are decreased at least 40% in the current month compared with February 2020 or the total revenues in 2020 are decreased for more than 40% compared with the same period last year; or
  • Number of employees who don’t go to work i.e.  do not contribute to the  business activities of the taxpayer-employer due to enforcement of the measures for combating the coronavirus is at least 25% of the number of all employees in February 2020; or
  • The taxpayer has closed at least 50% of its point of sale through which he conducts his business (branches, stores).

Funding of payment of Social Security Contributions (SSC) for employees who work in sector tourism, transport, catering services and other affected industries

• The Government would fund the payment of SSC for April, May and June 2020. Namely, the employer could obtain a subsidy for each employee for April, May and June 2020 that funds 50% of calculated SSC. The subsidy could be provided in maximum amount of 50% of the SSC on the average gross salary of an employee in R. N. Macedonia according to the National Statistics Office information published in January 2020 (“Subsidies”). 
• In order to use the above measure, the employer should fulfill the following conditions:
  • Monthly revenue for April, May or June 2020 to be decreased by more than 30% compared to the average monthly revenue generated in 2019;
  • Employers incorporated after March 2019 should have their monthly revenue for April, May or June 2020 decreased by at least 30% compared to the average monthly revenue generated from the day of incorporation in 2019 and the months January and February 2020;
  • For employers whose business has a seasonal character, the decrease of the average revenue for the last seasonal period of 4 months should be decreased by more than 30% compared to the revenue earned in the comparative four months of the previous year;  
  • The number of employees (including the number of employees engaged with the temporary employment agencies) who apply for this measure should not be fewer in April, May and June 2020 than on 31 March 2020, excepting for retirement or death; 
  • The employer should not pay dividends to the shareholders, bonuses to members of managerial or supervisory bodies or the employees after 6 April 2020 (the day when this measure has entered into force) until the day the annual account or financial statements for 2020 is submitted.
• The subsidies cannot be performed if the employer uses financial support for payment of the net salary in the amount of MKD 14,500 per month per employee for April and May 2020.

Personal Income Tax relief for income from self-employment

• The individuals who earn income from self-employment and have suffered damages due to spreading of the coronavirus will be entitled to tax relief for the advance payments of Personal Income Tax (PIT) for months March, April and May 2020.
• The above relief could be used by taxpayers who earn income from self-employment in certain industries (i. Hospitality; ii. Tourism; and iii. Transport) if they do not decrease the number of employees as of the day of entering into force of the Decree with which this measures is enacted and three months following its termination, except in case of death, retirement and termination of employment by the employees. 
• Additionally, taxpayers who earn income from self-employment in other industries  may also be eligible to use this measure if they: (i) have suffered damages related to their business activities; (ii) do not decrease the number of employees (except in cases of death, retirement and termination of employment by the employees) as of the day of entering into force of the Decree with statutory power in which this measures is prescribed and three months following its termination; and  (iii) fulfil one of the below conditions:
  • Total revenues of the taxpayer are decreased at least 40% in the current month compared with February 2020 or the total revenues in 2020 are decreased for more than 40% compared with the same period last year; or
  • Number of employees who don’t go to work i.e.  do not contribute to the  business activities of the taxpayer-employer due to enforcement of the measures for combating the coronavirus is at least 25% of the number of all employees in February 2020; or
  • The taxpayer has closed at least 50% of its point of sale through which he conducts his business (branches, stores).

Tax incentive for donations and sponsorships in public activities during the State of Emergency

• For using the available tax incentives for donation and sponsorship in public activities, the public interest for such  donation or sponsorship should be confirmed with a Resolution of the Ministry of Justice of R. N. Macedonia. The public interest for donations in funds, goods and services granted to state budget user for mitigating the impact of the Coronavirus COVID-19 in N. Macedonia will be considered as determined and no separate procedure for determination of a public interest should be conducted.  

Other Measures

• Government of N. Macedonia enacted a decrease of the statutory daily penalty interest for public duties from 0.3% to 0.015%. 
• The Public Revenue Office is obliged to not publish list of debtors with overdue and unpaid public duties for months April, May and June 2020.
• Decrease of the statutory penalty interest for 50% (from 10% to 5% in transaction between entities and from 8% to 4% in the transaction in which one of the parties is a natural person).

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