FYR Macedonia: FYR Macedonia changes tax treatment of uncollected loans

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

FYR Macedonia: FYR Macedonia changes tax treatment of uncollected loans

kostovska.jpg

Elena Kostovska

The corporate income tax system in FYR Macedonia – since its groundbreaking revamping in 2011 – has been mostly concerned with the unrecognised (non-deductible) expenses of a company for the purposes of determining its tax base, as opposed to the actual profit of a company. However, within the past three years of the validity of this novel corporate income tax regime, and due to the resulting shrinking of the tax base of companies, the government and tax authorities are finding themselves in a constant loop of amendments aimed at widening the tax base by effectively introducing new categories in the so-called unrecognised expenses list.

Early in 2014, a change in the tax treatment of uncollected loan amounts was introduced. From January 31 2014, outstanding receivables' balances on loans granted from one resident entity to another, which haven't been collected within the same year that they were extended, are to be considered as written off during the year in question and to be thus regarded as unrecognised expenses for the loan-granting entity. Consequently, this results in the increase of the company's corporate income tax base. Thus, all inter-company loans extended after January 31 2014 are now subject to this change, with older loans not impacted by the amendment in any way.

It is worth noting that this change is only applicable to companies which are taxpayers in the sense of the standard corporate income tax regime (with 10% imposed on a tax base consisting of unrecognised expenses plus understated revenues plus any distributed profits) and does not impact companies which, due to their size, have opted to pay corporate income tax on a tax base of total revenue (at the rate of 1% on total revenues). Additionally, the above change impacts all inter-company loans, regardless of whether they are extended between related or unrelated entities.

One should keep in mind that, in addition to increasing the tax base in the year in which the loan receivables were not collected (thus increasing the amount of corporate income tax due), during the year in which loan receivables will in fact be collected, the tax base is to be decreased by the amount of the collection, thus enabling the taxpayer to pay less corporate income tax in the periods when they actually collect the loan amounts.

Elena Kostovska (elena.kostovska@eurofast.eu)

Eurofast Global, Skopje Office

Tel: +389 2 2400225

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

The tax technology company will be providing a free demonstration of its OTP software and offering best practice advice on whether to ‘buy or build’ on September 8
Johanes Glorinus Saragih of Indonesia’s Directorate General of Taxes outlines the nation’s delicate geopolitical situation, as it sits between a rock and a hard place with the US and pillar two
The law firm’s head of tax, trade and wealth management likens tax legislation to a complex puzzle, recommends a sturdy coffee mug, and explains why acronyms make tax cool
The global tax and accounting firm has appointed two experienced TP advisers from a New Jersey-based boutique
A lack of commitment from major jurisdictions and the associated compliance burden are obstacles facing the OECD initiative
Richard Gregg is no longer fit and proper to be a tax agent, said the TPB; in other news, MHA completed its acquisition of Baker Tilly South-East Europe
Recent Indian case law emphasises the importance of economic substance over mere legal form in evaluating tax implications, say authors from Khaitan & Co
PepsiCo was represented by PwC, while the ATO was advised by MinterEllison, an Australian-headquartered law firm
Three tax experts dissect the impact of a 30% tariff that has shaken up trade relations between South Africa and the US
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 Americas Tax Awards
Gift this article