Press release

14 Apr 2020 Skopje, MK

COVID-19 Economic measures, Part II

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)

In addition to the economic measures effective 26 March 2020 which we discussed in our earlier alert, the Macedonian Government has introduced a second set of measures aimed to reduce the impact on the economy and businesses affected by COVID-19.

Financial support for payment of salaries

  • Effective as of 7 April 2020, the companies may apply for financial support for payment of salaries to their employees for April and May for an amount of up to MKD 14.500 per employee per month provided that the following conditions are met:
    • The company should not distribute any dividends and provide any bonuses or other awards to its employees and members of the management and supervisory boards between 7 April 2020 and the date of payment of the salary for May 2020;
    • The number of employees as it stands as at the date of enforcement of the regulation should not be reduced until July 2020;
    • The taxpayer's revenue for April or May is reduced for at least 30% in comparison with the average monthly revenue in the previous year;
    • At most 10% of the employees of the company may have a net salary that exceeds the amount of MKD 120.000 per employee in the month financial aid is granted.

The financial support will not apply:

  • For the employees that have received a monthly net salary exceeding the amount of MKD 39.900 for December 2019, January and February 2020;
  • When the employer is subsidized for social security contributions during the state of emergency;
  • For the employers who are exempt from payment of personal income tax and social contributions based on the Law of Employment and insurance against non-employment;
  • For non-fully employed employees that are already fully employed with another employer.

The companies that have recorded profit for 2020 should pay back the financial aid in 2021 up to a threshold calculated as 50% of the profit for 2020 increased for tax non-deductible expenses. Any subsidy exceeding this threshold will not be subject to repayment to the state. The payback should be performed in three installments in April, May and June 2021 with no interest applied.

  • As an alternative to the above measure, effective as of 6 April 2020, the companies may apply for subsidy for the amount of 50% of the social security contributions payable for April, May and June 2020 but not more than 50% of the social security contributions calculated on the average monthly gross salary published by the State Statistical Office of North Macedonia, under the following conditions:
    • The taxpayer's revenue is reduced for at least 30% in April, May or June in comparison with the average monthly revenue in the previous year;
    • The number of employees should not be reduced for April, May and June 2020 in comparison with the number of employees as at 31 March 2020 except in case of retirement or death of the employee;
    • The company should not distribute any dividends and provide any bonuses or other awards to its employees and members of the management and supervisory boards between 6 April 2020 and the date of submission of the annual accounts/financial statements for 2020;
    • This measure will not apply if the company is granted with financial support for salary payment for April and May 2020 or the company is subsidized for the social security contributions as a result of increasing of the salary based on the Law for subsidizing of social security contributions.

The companies that have recorded profit for 2020 should pay back the financial aid in 2021 up to a threshold calculated as 50% of the profit for 2020 increased for tax non-deductible expenses. Any subsidy exceeding this threshold will not be subject to repayment to the state. The payback should be performed in three installments in April, May and June 2021 with no interest applied.

Reduction of the installments and rescheduling of lending provided by financial and leasing companies effective as of 4 April 2020

  • It is envisaged the installments for agreements concluded until 31 March 2020 related to loans provided to individuals to be reduced during the period 1 April – 30 June 2020 for a maximum of 70% of each monthly installment. The maturity of such loans may be extended for additional 90 days.
  • Change of the terms of the agreements concluded until 31 March 2020 with the legal entities will be agreed per each particular case upon request by the company during the period 1 April - 30 June 2020. However, any new granted loans as of 1 April until 30 June 2020 will be with a grace period of 3 months.

Other measures

  • Employees that are working in the private sector should take the first half of the vacation (10 working days) for 2020 until 30 June 2020 and any remaining vacation for 2019 by 31 May 2020. This is effective as of 4 April 2020;
  • Effective as of 1 April, the Enforcement Law is suspended until 30 June;
  • The ban for scheduling of annual meetings of shareholders during the state of emergency period ceases to exist. This measure is effective as of 2 April 2020.
  • The legal penalty interest rate will be determined based on the reference interest rate published by the National Bank plus 5% (decreased from 10%) for legal entities or plus 4% (decreased from 8%) for individuals. This measure is effective as of 3 April.

Announced zero and low interest financing for micro, small and medium companies 

  • Direct financial support to micro, small and medium-sized companies by the Development Bank of North Macedonia for a total amount of EUR 8 million in the form of 0% interest rate loans. The financing has maturity of 36 months with a 12-month grace period. Each company, depending on its number of employees, can receive zero interest loans from EUR 3 thousand to EUR 90 thousand.
  • The Development Bank of North Macedonia will provide EUR 50 million as zero interest rate loans to the commercial banks. These loans will be provided to small and medium companies to support their financial liquidity with an interest rate of approx. 1,5%.

Summary

Should you have any questions please do not hesitate to contact us.