Press release

6 Apr 2020 Skopje, MK

COVID-19 Economic measures

Press contacts

Naiden Kostadinov, FCCA, CPA

EY Bulgaria, N. Macedonia, Albania and Kosovo Tax Service Line Leader

Accounting, payroll and tax services expert. Father of two teenage sons. Loves swimming.

Svetlana Radenkovic

EY N. Macedonia, Global Compliance & Reporting Services, Senior Manager

Senior Manager at Tax Service Line. Mother of two children. Loves to travel.

Maja Veljanova

Senior Consultant, Business Tax Advisory (BTA)

COVID-19 pandemic has forced the affected countries, in addition to virus protection measures to adopt various other measures aimed to reduce the impact on the economy and businesses.

In this regard, the Macedonian Government has introduced the following economic measures which are effective as of 26 March 2020.

Zero interest financing

  • Direct financial support to micro, small and medium-sized companies that perform business activity in tourism, transport, hospitality sector, by the Development Bank of North Macedonia for a total amount of EUR 5.7 million in the form of 0% interest rate loans. The financing has maturity of 24 months with a 6-month grace period.

Each company, depending on the number of employees, can receive zero interest loans from EUR 3 thousand to EUR 30 thousand as follows:

  • Micro companies with 1 – 10 employees may apply for a loan in the range of EUR 3 thousand – EUR 5 thousand;
  • Small companies with 11 – 50 employees may apply for a loan in the range of EUR 5 thousand – EUR 15 thousand; and
  • Medium-sized companies with 51 – 250 employees may apply for a loan in the range of EUR 15 thousand – EUR 30 thousand.

CIT and PIT payment exemption

  • Companies affected by COVID-19 that perform business activity in tourism, transport, hospitality sector are exempt from paying corporate income tax (CIT) for a period of three months (April – June 2020) under the following conditions:
    • The company should not distribute any dividends during 2020 and provide bonuses or other awards to its employees and members of the management and supervisory boards from the date of enforcement of the regulation (26 March 2020) until 15 June 2020.
    • The number of employees as it stands as at the date of enforcement of the regulation should not be reduced until three months after the expiry of its validity (indicatively, 15 September 2020), except in cases of death, retirement or dismissal by employees.

In addition, the exemption from payment of CIT may apply to other taxpayers affected by COVID-19 measures, for the same period provided that the above conditions are met plus at least one of the following:

  • The taxpayer's total revenue is reduced for at least 40% in the current month compared to February 2020, or the total revenue for 2020 is reduced for at least 40% in comparison with the same period in the previous year, or
  • The number of employees who do not work or do not contribute to the economic activity of the taxpayer-employer, shall be at least 25% lower than the total number of employees in February 2020, or
  • The taxpayer has closed at least 50% of its points of sale (branches, retail facilities).

Self-employed income taxpayers in tourism, transport and hospitality sector will be exempt from paying personal income tax (PIT) advances for March – May 2020 under the following criteria:

The tax payer should not reduce the number of employees, as it stands as at the date of entry into force of this regulation until three months after the expiry of its validity, except in cases of death, retirement or dismissal by employees.

In addition, the self-employed income tax payers that do not perform one of the above-mentioned business activities may be also exempt from paying advance PIT payments for March – May 2020, provided that:

  • The taxpayer's total revenue is reduced for at least 40% in the current month compared to February 2020, or the total revenue for 2020 is reduced for at least 40% in comparison with the same period in the previous year, or
  • The number of employees who do not work or do not contribute to the economic activity of the taxpayer-employer, shall be at least 25% lower than the total number of employees in February 2020, or
  • The taxpayer has closed at least 50% of its points of sale (branches, retail facilities).

Other implemented measures

  • Extension of deadlines for scheduling and attendance of annual meetings of shareholders – all annual meetings of shareholders that are scheduled in the period of state of emergency will not be held;
  • Decrease of the late penalty interest for public debts from 0,03% to 0,015% per day;
  • Decrease of the reference interest rate from 2% to 1,75%;
  • Bankruptcy procedures should not be initiated during the period of the state of emergency and following the period of three months after the expiration of this period.
  • Deadlines defined in the Law on Administrative procedure will be extended after the period of emergency expires;
  • The companies are allowed to issue and send electronical invoices (pdf format) without electronic signature;
  • Exemption from customs duties for importation of flour, sunflower oil, white sugar, soaps, detergents, medical gloves and other medical supplies and equipment;
  • Public Revenue Office will not publish the list of the taxpayers that have unsettled tax debts;
  • Banks will extend the deadlines for settling of loans granted to citizens and companies affected by the crisis for a period of three to six months.

Announced additional economic measures, which may be implemented

  • Employers that perform business activity in tourism, transport, hospitality sectors and other affected companies, may be subsidized for social security contributions attributable to up to 50% of the average salary paid in 2019 per employee for April – June 2020.

The employers should fulfil the following conditions in order to be eligible for subsidies:

  • The number of employees should not be reduced below the number of employees recorded in February 2020;
  • The company should not distribute dividends during 2020; and
  • No bonuses should be paid to its employees after this measure comes into force.

The companies that have recorded profit during 2020 should pay back the subsidies in 2021 for a maximum amount of up to 50% of the realized profit before taxation.

  • No force collections of the tax debt and other public duties (fines, court stamp fines) will be issued by the Public Revenue Office.
  • Decrease of the legal penalty interest from 10% to 5% for legal entities and from 8% to 4% for individuals.

Summary

We will be issuing timely updates on the implementation of the above measures and any further changes expected to substantially impact the Macedonian businesses. Should you have any questions please let us know.