I. Individuals
1.1 Personal Income Tax
Until the end of 2018, a flat tax rate of 10% was applicable. In 2019, North Macedonia introduced a progressive personal income tax approach but reverted back to the flat 10% as of 2020 and onwards. The 10% flat rate remains applicable. 1.1.1 Tax Exemptions
A monthly amount of MKD 10,270 is exempt from personal income tax paid in 2025, as personal allowance for individuals receiving salaries.
1.1.2 Deductible Expenses
| Individual income type | % |
|---|---|
| Mandatory social security insurance contributions for employment income | whole amount |
| Personal monthly tax exemption (see above) | MKD 10,270 per month |
1.2 Capital Gains
Capital gains from the sale of securities, movable and intangible property (with exceptions) are taxed with 10%. Gains from termed deposits will not be taxed until the country's accession to the EU.
1.3 Social Security Contributions
All contributions are mandatory, and paid concurrently with net salaries (once a month), payable by the employer on behalf of the employee (deducted from the gross salary of the employee). The contributions are levied on the gross salary tax base, with a ceiling amount equal to 16 national average gross salaries (currently the national average salary is MKD 63,154/month) and a minimum tax base of 50% of the national average monthly salary. Employers are not required to make additional contributions on top of the gross salaries unless specified by related law.
| Contribution type | Rate (% of gross) |
|---|---|
| Pension Fund | 18.8% |
| Health Fund | 7.5% |
| Unemployment Fund | 1.2% |
| Disability Fund | 0.5% |
| TOTAL | 28% |
It is worth noting that non-employment income such as service contract-based income, paid by a legal entity to an individual is only subject to personal income tax.
1.4 Submission of Tax Returns
As of 2019, individuals are no longer required to submit personal income tax returns. Rather, the tax authority prepares draft tax returns and sends to the individuals for their approval (typically during April of each year). Individuals are required to check and confirm the validity of the draft return and perform any corrections/additions if necessary. If not specific action is taken until the end of May of the year following the tax year in question, the draft return will be considered confirmed and final.
II. Corporate Taxation
2.1 Corporate Income Tax
The applicable corporate income tax rate is flat at 10%. The tax base for corporate income tax is equal to the corporate profit (revenues less expenses) plus unrecognized (non-deductible) expenses and any differences between the company's actual income and reported income.
2.1.1 Non-deductible Expenses
Expenses which are considered to be non-essential for the business activity are non-deductible. These include (but are not limited to):
| Expense type | Non-deductible amount |
|---|---|
| Expenses not related to the ordinary course of business | 100% |
| Allowances paid to employees above the legally prescribed amounts | 100% |
| Board members' expenses/allowances above the legally prescribed amounts | 100% |
| Hidden profit distribution payments | 100% |
| Representation | 90% |
| Donations' expenses exceeding 5% of the total annual turnover | 100% |
| Sponsorship expenses exceeding 3% of the total annual turnover | 100% |
| Loan interest expenses for loans not used for the company's main business activity | 100% |
| Insurance premiums paid for board members and employees | 100% |
| Penalties and interest for late payments to state authorities | 100% |
| Inventory shortages | 100% |
| Differences between transfer prices and arm's length prices in transactions between related entities | 100% |
2.1.2 Exempt Income
Exempt from payment of corporate income tax is the following categories of companies:
| Type | % |
|---|---|
| Companies registered as employers of people with disabilities | Under conditions defined in the Law for Employment of people with Disabilities |
| Business units located within corrective institutions (such as prisons) | 100% |
| Companies located in the technological industrial zones (free zones), during the first 10 years of their operations and under conditions defined in the Law on Technological Industrial Zones | 100% |
2.2 Capital Gains
Capital Gains are treated as ordinary income and subject to the same rules as other types of corporate income.
2.3 Withholding tax
Payments made to non-resident companies are subject to a final withholding tax on revenues stated in the table below. Subject to provisions of the applicable double tax treaty with the specific country, lower rates may apply.
| Revenue type | Withholding tax |
|---|---|
| Dividends, interest, royalties, entertainment/sports activities |
10% |
III. Indirect Taxation
3.1 Value Added Tax (VAT)
3.1.1 VAT Registration
| The turnover threshold for mandatory VAT registration | MKD 2,000,000/yr |
Voluntary VAT registration is also possible.
3.1.2 Rates
| Standard VAT Rate | 18% |
| The new rate introduced in 2021 is applicable to certain food services | 10% |
| Reduced VAT rate (food items, computers, computer components, software, thermal solar systems, the first sale of residential buildings, transportation of individuals and their baggage, accommodation services, etc.) | 5% |
3.1.3 VAT Periods
All VAT taxpayers are classified as quarterly or monthly VAT payers, with their VAT returns (and payments) due on the 25th of the month following the period in question.
3.2 Customs Duty
Customs duties are payable on the import of goods and products to North Macedonia. The customs rates are calculated on the basis of the custom value increased by related costs. Reduced or zero rates are applicable for import of goods from certain countries or goods with preferential tariff treatment.
3.3 Excise Duty
Excise amounts change frequently. A comprehensive list of excise duty amounts can be found here: https://customs.gov.mk/index.php/mk/biznis-zaednicamk/akcizi
IV. Local and Other Taxes
4.1 Property tax
| Property Tax | 0.1%-0.2% |
The property tax is a local tax and it varies between 0.1%- 0.2% depending on the municipality where the property is located. The tax base is the market value of the property, as defined by the municipality's committee based on a prescribed methodology.
4.2 Property Transfer tax
| Property Transfer Tax | 2%-4% |
A local tax with a variable tax rate between 2%-4% depending on the municipality, typically paid by the property seller. The tax base is the market value of the property.
4.3 Inheritance/Gift tax
| First degree relatives | 0% |
| Second-degree relatives | 2-3% |
| Third-degree relatives or not related | 4-5% |
The tax base is the market value of the property/gift. The exact tax rate is defined by each municipality.
V. Tax Calendar
| ACTIVITY | DEADLINE |
|---|---|
| VAT returns (and payment) for quarterly taxpayers | 25th of April, July, October, January (for the previous quarter) |
| VAT returns (and payment) for monthly taxpayers | 25th of each month for the previous month |
| Monthly MPIN calculation for gross salaries on the employer level | 10th of each month for the previous month |
| Monthly gross salary payment (including net and all contributions/taxes) | 15th of each month for the previous month |
| Personal income tax company tax return (for paid salaries and other incomes) | Abolished as of 2019 |
| Monthly advance payments for calculated corporate income tax | 15th of each month |
| Corporate income tax return | 15th of March for the previous year |
| Annual Financial Statements | 15th of March for the previous year if filed electronically |
| Individuals' personal income tax return | Confirmation of draft PIT return prepared by tax authority will be required by 31 May |
Administrative Penalties
Please note that the below listed fine/penalty amounts are only indicative as actual fines depend on a complex coefficient-based formula that takes many factors into account.
6.1 companies
| Non-compliance cases | Fine/Penalty |
|---|---|
| Delayed submission of VAT return | EUR 1,500 for the company + EUR 500 for the responsible person |
| Failure to submit VAT return | EUR 2,500 for the company + EUR 1,000 for the responsible person |
| Delayed submission or failure to submit corporate income tax return | EUR 2,000-3,000 for the company + EUR 500-1,000 for the responsible person |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
