The Macedonian Government has introduced a new economic measure for financial support for payment of salaries, effective as of 28 April 2020. It should be noted that the financial support for payment of salaries effective as of 7 April, which we discussed in our earlier alert, ceased to exist.
Financial support for payment of salaries
Further to the new ordinance, 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 (approx. EUR 230) per employee per month provided that the following conditions are met:
- 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 excluding any one-off revenues that are not generated as a result of the regular business activity of the employer;
- 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 28 April 2020 and the date of payment of the salary for May 2020;
- At most 10% of the employees of the company may have a net salary that exceeds the amount of MKD 120.000 (approx. EUR 1.900) per employee in the month financial support is granted.
- The number of employees should not be reduced until July 2020 in comparison with the number of employees in March for more than:
- 15% for the employers that have up to 50 employees in the month the financial support is granted;
- 10% for the employers that have 51-250 employees in the month the financial support is granted; and
- 5% for the employers that have more than 250 employees in the month the financial support is granted.
The employer is not eligible to apply for the financial support for the employees:
- That have received a monthly net salary exceeding the amount of MKD 39.900 (approx. EUR 650) for the last three months;
- When the employer is subsidized for social security contributions during the state of emergency. This condition does not apply for the companies that perform business activity in tourism, hospitality and transport sector which may apply for both economic measures (subsidies for social security contributions and financial support for salaries) provided that they meet the following criteria:
- Have been in a profit position in the last two years (2018 and 2019);
- Are not on the list of debtors in accordance with the last published List of debtors nu. 3/2020 for overdue and unpaid debts issued by the Public Revenue Office;
- With status as of 29 February 2020, should not have unsettled loan liabilities more than 90 days overdue.
- 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; and
- For part time employees that are already fully employed with another employer.
The financial support for payment of salaries should not be paid back and will be considered as a grant for employers that have up to 250 employees under the following criteria:
- Have been in a profit position in the last two years;
- Are not on the list of debtors in accordance with the last published List of debtors for overdue and unpaid debts issued by the Public Revenue Office on the day of filing of the request;
- With status as of 29 February 2020, should not have unsettled loan liabilities more than 90 days overdue;
- Will prove that the financial support in the amount equal to or greater than received amount of financial support have been used for:
- investments in employees, such as training of employees or management of the company in areas of marketing and branding, financial management, production improvement, research and development, etc.;
- operational improvements of the company, such as procurement related to upgrade of production process, marketing and branding, change of business model, digital transformation, new market expansion, development of a new product, etc.;
- productive capital, such as procurement of equipment and other assets for improvement of the efficiency and productivity of operations, computers and other appropriate equipment, etc.
- Procurement for the purposes of the company's regular business activities will not be considered as an investment.
Provided that the companies meet the above criteria and perform the investment until the end of 2020, may submit a request for conversion of the financial support to a grant not later than the deadline for submission of the financial statement and CIT return for 2020 which is 15 of March.
The application for 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 is open as of 29 April until 15 May 2020. 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.
Should you have any questions please do not hesitate to contact us.