Effective 1 January 2021, the North Macedonian VAT regime has
been amended to include a new tax rate of 10%, in addition to the
previously prescribed standard rate of 18% and reduced rate of 5%.
This is the first time a new rate has been introduced since the VAT
Law has been in effect.
The newly added article 30a stipulates the application of a 10%
rate to a number of categories of supply related to the serving of
food and beverages. These include:
- Supply of food and beverages (except alcoholic) for immediate consumption at the place of supply
- Catering services (except alcoholic beverages)
As such, this novelty will effectively reduce the current tax
rate for the restaurant and catering services in order to assist
the hospitality sector and improve liquidity.
It is expected that the Government will publish further details
on the categories affected. By way of background, the sale of food
items in North Macedonia (including home delivery of food) is
subject to the reduced rate of 5% but the supply of prepared food
and non-alcoholic beverages which are being consumed at the
location where the supply is made (eg. restaurants) as well as
catering services were so far subject to the standard rate of 18%
as they are considered a service supply. The new rate introduces a
sort of middle- ground but it remains to be seen whether it will be
void of the confusion typically present in this sector's
taxation.
Alcoholic beverages will continue to be taxed with 18%
regardless of the manner of their delivery/supply.
We advise affected sector companies to closely follow the
developments in this area in order to ensure compliance and to
benefit from the amendments.
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