Macedonia: Macedonia introduces progressive personal income tax while increasing corporate tax rate

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Macedonia: Macedonia introduces progressive personal income tax while increasing corporate tax rate

Sponsored by

Eurofast Macedonia
intl-updates-small.jpg

After 10 years of a flat personal income tax rate of 10% in the FYR Macedonia, the Ministry of Finance introduced a progressive personal taxation rate (Law on Personal Income Tax), effective January 1 2019. Aimed at the creation of a fairer tax system, the new provisions result in the following changes for companies doing business in the country.

Introduction of two tax brackets

A personal income tax rate of 18% will apply to incomes exceeding MKD 90,000 per month ($1,660). Incomes up to that amount will continue to be taxed at 10%. Effectively, the tax reform introduces an additional tax bracket.

It is expected for most citizens, the tax rate will remain 10% due to the relatively high threshold for additional personal tax. The ministry noted that the threshold was selected as it only affects the highest earners (1%) among the total population.

However, high-earning employees across a wide range of sectors have loudly voiced their concerns and requested that employers harmonise net earnings with the old system, effectively raising the payroll expenditures of companies who have decided to keep net earnings the same.

Our advisors have observed a definite trend in companies (who are facing revolt from employees difficult to replace) increasing the gross salaries of skilled employees with high earnings in order to maintain their net earnings.

Property rights, rent and capital income taxation

Income from industrial property rights, rent (lease) and subleases, as well as income from capital, capital gains, gains from games of chance, insurance, and other income will be taxed at 15%, as opposed to the current tax rate of 10%. The new rate affects companies that pay such rights/lease/sublease amounts to individuals (as per the law). The payment of personal income tax for the aforementioned income is the obligation of the paying company.

Introduction of a tax on interest

Following several delays in the introduction of tax on bank interest, interest from deposits exceeding MKD 15,000 a year will be taxed at 15%. However, this provision will only apply from January 1 2020 and there are still several unanswered questions regarding how it will be implemented. Also, a 15% tax will be levied on income from securities from 2020.

Tax base deductions for rental income

Currently, a deduction of 30% of the gross rental income tax base (for furnished units) and a deduction of 25% (for unfurnished units) applies. Respectively, the percentages are lowered to 15% and 10% from 2019. This change also affects companies leasing real estate from individuals.

We advise businesses active in the FYR Macedonia to seek professional advice to ensure compliance with the changes. The amendments will affect many active businesses with employees as it will impact payroll processing and may require HR-related advisory to make sure employment documents are up-to-date. Companies leasing office space from individuals will also be affected, and should carefully review existing lease agreements to evaluate the additional tax burden the amendments may create.

more across site & shared bottom lb ros

More from across our site

Thanks to operational slickness and sheer force of will, A&M Tax will continue hoovering up talent across the globe
Setu Kamal became the first practising barrister to be added to the UK’s tax avoidance promoter list; in other news, UHY expanded its network in Canada
US President Donald Trump’s tariffs may get thrown out by courts in the future and taxpayers should already be planning for that possibility, BDO’s Dustin Stamper tells ITR
Awards
ITR is delighted to reveal the first shortlisted nominees for the Middle East Tax Awards
The firm has appointed Deloitte’s former tax leader for Thailand to lead the new operation, which builds on considerable Asian investment in recent months
The Donald Trump administration could use legislation from 1930 if the Supreme Court blocks its tariffs; in other news, China has updated its VAT refund procedures
Braun gives ITR an exclusive insight into WTS Digital’s UK launch of its AI product, which can free up more than 1,500 hours per month by reducing routine tasks
Long tells ITR about her varied role, why curiosity is a key characteristic for the tax professional, and what she’d be doing if she wasn’t working in tax
The choice facing governments is not whether to adopt AI in taxation, but how to do so in a way that upholds the principles of tax fairness, writes Neil Kelley
As ITR’s client data reveals discontent with German tax advisers’ cost management, Grant Thornton’s local TP head insists it’s a two-way street
Gift this article