Personal Income Tax in Macedonia
Revenues realized by natural persons, in the country and abroad, are taxed by Personal Income Tax (PIT). From 01.01.2008 the tax rate that the Personal Income Tax is calculated is 10%. The tax base for PIT calculation is different, depending on the kind of revenue realized or the activity performed by natural persons. The tax period for which the Personal Income Tax is assessed is the calendar year.
Particular revenues, realized during the calendar year, the taxpayers-natural persons have obligation to register in the Public Revenue Office and to submit appropriate advance payment tax return in the legal foreseen deadlines.
After the calendar year ends, and latest to 15th of March, the natural person is obliged to submit Annual tax return for PIT assessment, in which he will declare all revenues, realized by different bases during the calendar year.
More information in relation to taxation and tax stimulations of Personal Income Tax, select type of income:
Definition
Personal revenues are all revenues which will be realized by the taxpayer on the basis of employment, including the revenues by contract for temporary or periodically performing services of the state administration bodies, to domestic and foreign legal entities, as to the domestic and foreign natural persons which are performing independent activity, and are paid off in money, tickets, money receipts, shares, goods or some other type which has money value.
Types of Personal Income
- Salaries and allowances of salary from employment and payment on the basis of business success of the employer, determined with the Law on contributions from obligatory social insurance.
- Allowances of expenditures from employment, paid off over the amounts from article 6 of the Law on the Personal Income Tax and all other allowances of expenditures related to work determined with the Law on Labor Relations, the General Collective Agreement for economy in the Republic of Macedonia, branch collective agreements and regulations for the state administration bodies
- Pensions
- Revenues of the members of the administration bodies and supervision bodies of the trade associations
- Revenues of the high officials, members of the parliament, counselors and other carriers of public functions
- Revenues of the professional sportsmen (premiums, transfers etc.)
- Allowance for top sportsmen
- Sick allowance
- Allowance for absence of work
- Allowance for the work of the judges jurymen, skillful persons and bankruptcy managers, who do not have attribute of employed persons in the appropriate institutions or associations
- Allowance of the MASA members
- Realized salary with work abroad on the basis of employment founded in the country and
- Each separately realized income on the basis of contract for temporary or periodically performing services of the legal entities and natural persons.
As personal revenues are considered also other revenues, which instead of money are given in tickets, money receipts, shares, goods or some other type which has money value.
Tax base
- Revenues on the basis of realized salary and the allowance of the salary from employment and payment on the basis of employer business success, determined by the Law on contributions from obligatory social insurance, reduced for the contributions and personal tax free for the month for which the salary is paid off.
- Amount of the allowances of expenditures from employment paid off over the amounts from article 6 of the LPIT and all other allowances of the expenditures related to work determined by the Law on Labor relations, General Collective Agreement for the economy in the Republic of Macedonia, branch collective agreements and regulations for the state administration bodies.
- Revenues on the basis of pensions – realized pension reduced for the contributions and personal tax free. The calculated Personal Income Tax on the basis of pensions and invalid is given to the Fund for pension and invalid insurance.
- Revenues of the members of the management bodies and supervising bodies of the trade associations – income amount, the allowance.
- Revenues of the high officials, members of the parliament, counselors and other carriers of the public functions – income amount, the allowance.
- Professional sportsmen revenues – income amount, the allowance.
- Allowance for the work of the judges jurymen, skillful persons and bankruptcy managers, who do not have attribute of employed persons in the appropriate institutions or associations – income amount, the allowance.
- Allowance of the members of the MASA – income amount, the allowance.
- Income on the basis of contract for temporary or periodically performing services of the legal entities and natural persons – income amount, the allowance.
- The realized salary and allowance of salary from employment and payment by business success of the employer for foreign natural person – non resident who realize from work at resident of the Republic of Macedonia determined by Law on contributions for obligatory social insurance, reduced for the contributions and personal tax free for the month for which salary is paid off.
- Amount of the expenditures from employment paid off over the amounts from article 6 of the LPIT and all other allowances of the expenditures related to work of the foreign natural person – nonresident from employment of resident of the Republic of Macedonia determined by the Law on Labor Relations, General Collective Agreement for the economy in the Republic of Macedonia, branch collective agreements and regulations for the state administration bodies.
- The realized salary and allowance of the salary from employment and payment by business success of the employer who realize the resident of the Republic of Macedonia who work in foreign diplomatic and consular representations and international organizations in the Republic of Macedonia determined by the Law on contributions for obligatory social insurance, reduced for contributions and personal tax free for the month for which the salary is paid off.
- The amount of allowances of expenditures from employment paid off over the amounts from article 6 of the LPIT and all other allowances of expenditures related to work determined by the Law on Labor Relations, General Collective Agreement for the economy in the Republic of Macedonia and regulations for the state administration bodies, which are paid off to a resident who works in foreign diplomatic and consular representations and international organizations in the Republic of Macedonia.
- Revenues which instead of money are paid off in tickets, money receipts and securities their nominal value.
- Revenues which instead of money are paid off in goods – the price which will be reached with the sale of the good.
Tax rate
- for 2007 – the tax rate was 12%
- from 01.01 2008 – the tax rate is 10%
Allowances of employment which are not subject to taxation with the Personal Income Tax
- Allowance for expenditures for official traveling, per diem travel allowance (accommodation and food) or separated life from the family of the employed persons in amount of the lower amount determined with the General Collective Agreement for the economy of the Republic of Macedonia i.e. for the employees in non economy in amount determined with the regulations for the administration bodies.
- Allowance in case of employee’s death and of the family member, to the prescribed amount.
- Leaving payment which is given by leaving in pension in amount of two monthly average net salaries per employee, paid off in the Republic of Macedonia in the last three months.
- Allowances of expenditures for using own automobile for the employer’s needs in amount of 30% of the price of liter fuel, which the automobile use for each passed kilometer, most to 3500 denars per month.
- Aid for undergo damages from natural disasters to the lower amount determined with the General Collective Agreement of economy in the Republic of Macedonia i.e. for the employees in the non economy in amount determined with the regulations for the state administration bodies.
Advanced payment assessment
Advanced payments of the personal income calculates and pay in the personal income payer, by deduction for each taxpayer and for each separately paid off amount.
Payer’s obligations by salary payment and salary allowance
- Advanced paid – The taxpayer for calculation and the Personal Income Tax of salary payment, salary allowance and pay off by business success of the employer, is obliged to perform the monthly account, separately for each taxpayer for the appropriate month payment and the data for the calculated salary or the part of salary, salary allowance and payment by business success, to submit to the Public Revenue Office latest to 10th in the current for the previous month by electronic way on a Monthly calculation for integrated collection (form “MCIC”).
- Annual – The personal income payer should deliver: form “PIT – AR”, to the competent office of the PRO on which territory is his seat, latest to 15th of February the following year.
Definition
Revenues from property and property rights are the revenues which the taxpayer realizes from the lease or under lease of the land, housing or business storage, garages, premises for rest and recreation, equipment, means of transport and other types of property.
In the revenues from property and property rights are included and the values of all giving and services of which the lessee was obliged i.e. under lessee to perform in name of the lesser (adaptation, renovation, servicing, corrections, appropriate equipment building, installations etc.).
Taxpayer
Natural person who realizes income from leasing or under lease of land, housing or business storages, garages, premises for rest and recreation, equipment, means of transport and other types of property.
Tax base
The net income which is assessed when the annual amount of the realized income in the year for which the tax is assessed is reduced for:
- The expenditures of maintaining and managing
- Annual amortization
- Other expenditures which have been needed for income realization
If the lease is collected for more years ahead, the tax base presents proportion part of the lease which has been revaluated with the rate of the retail prices increase, by the data of the State Office for Statistics.
Tax rate
- for 2007 – the rate was 12%
- from 01.01.2008 – the rate is 10%
Advanced payment assessment
Advanced payment of the Personal Income Tax from property and property rights is performing:
- by deduction, if the income payer (lease recipient) keep a record of business books
- by decision of PRO, if the lease recipient and leaser are natural persons
The advanced payment of the Personal Income Tax from property and property rights on which the income tax is paid by deduction, calculates the payer for each taxpayer and for each separately paid off income. The advanced payment of the Personal Income Tax from property and property rights, for which is not paid tax by deduction, is assessed by the PRO with decision on the basis of the data from the Tax Return “PIT – API/IP” which the taxpayer is submitting by himself i.e. with the comparison of the lease for similar buildings which are leased in lease under roughly equal conditions and by other data which are important for tax obligation assessment.
Natural person’s obligations
- Advanced paid – the natural person should submit the form “PIT – API/IP”, in a period of 15 days from the day of income realization to the PRO office, on which territory the property is located. To the tax return should be subscribed and the Contract for lease.
- Annual – the natural person should submit the form “PIT – ATR”, latest to 15th of March following year, to the PRO office on which territory is located his residence.
From 1st of January 2006 was introduced taxation of the capital gains realized from securities sale. According to the provisions of the Law on the Personal Income Tax, subject to taxation are the revenues which the citizens acquires on the basis of the capital gains.
Definition
Capital gain is the income which the taxpayer realizes from the securities sale, participation in the capital and real estate. The capital gain presents the difference between the securities’ selling price, participation in the capital and real estate and the purchase (original) price.
Taxpayer
Taxpayer is natural person who realize profit from securities’ sale, from the participation in the capital and real estate.
Tax base
Base for calculation of the Personal Income Tax from the capital gains presents the difference between the selling price of the securities, participation in the capital and real estate and original (purchase) price.
The capital gain realized with securities sale, participation in the capital and real estate is put in the tax base in amount of 70% from the difference.
Tax rate
- for 2007 – the rate was 12%
- from 01.01 2008 – the rate is 10%
Advance payment assessment
The PRO on the basis of the data from the tax return for the realized income will assess the advanced payment of the Personal Income Tax with temporary decision.
Natural person’s obligations
- Advanced paid – to the PRO the natural person should submit the form “PIT – API/CG”, in a period of 15 days from the day of income realization.
- Annual – to the PRO the natural person should submit the form “PIT – AIT”, latest to 15th of March the following year, by his residence.
Definition
Income from copy rights and rights from industrial property is the allowance which the taxpayer realizes from the copy rights and rights from industrial property.
Copy right is the unique right and inseparably from the author’s deed, which contains strictly personally – legal authorizations (ethical rights), strictly property – legal authorizations (material rights) and other authorizations of the author (other rights).
Rights from industrial property are: patent, industrial design, trade mark, origin mark and geographical mark.
Taxpayer
- Natural person – who realize allowance from the copy rights and rights from industrial property
- Natural person – inheritor or carrier of the copy rights and rights from industrial property
Tax base
- Base for calculation of the Personal Income Tax for the revenues from the copy rights and rights from industrial property, is the net income which is get when from the realized income, will be deducted the expenditures which were needed for its realization.
- The tax base for calculation of the Personal Income Tax from the copy rights and rights from industrial property, which the taxpayer realized from the deed which he was creating longer than one year, presents the proportional part of the net income.
- By the net income assessment, revenues are shared on the taxpayer’s request, on so many equal parts as the number of years he was creating the deed, but maximum for five years.
Tax rate
- for 2007 – the rate was 12%
- from 01.01 2008 – the rate is 10%
Advanced payment assessment
By deduction, the income payer calculates the Personal Income Tax for each taxpayer and for each separately paid income, at the moment of payment.
Annual obligation of the natural person
The natural person has obligation to submit to the Public Revenue Office, Annual Tax Return (form “PIT – ATR”), latest to 15th of March the following year, by his residence.
Definition
As income from the capital is understood:
- dividends and other income realized from participation in the profit to the legal entities and natural persons
- interests by credits given to the natural persons and legal entities
- interests by loan stocks and other securities and
- interests on time saving and other deposits
Taxpayer
Taxpayer of the Personal Income Tax for Income from capital, is natural person who realize income on the basis of:
- dividends and other income realized with participation in the profit to the legal entities and natural persons
- interests by credits given to the natural persons and legal entities
- interests by loan stocks and other securities and
- interests on the time saving and other deposits
Tax base
- For the dividends and other income realized from participation in the profit to the legal entities and natural persons, the base presents gross dividend i.e. income from the participation in the profit allocated to the taxpayer.
- For interests by loans given to the natural persons and legal entities, interests on the loan stocks and other securities and interests on the time savings and other deposits, the base is the amount of the calculated interest.
- Interests taxation on the time savings and other deposits will be applied from 1st of January 2011.
Tax rate
- for 2007 – the rate was 12%
- from 01.01 2008 – the rate is 10%
Assessment of the advanced paid tax
By deduction, income payer calculates the Personal Income Tax for each taxpayer and for each individually paid income at the moment of payment.
Annual obligation of the natural person
The natural person to the Public Revenue Office should submit Annual Tax Return (form “PIT – ATR”), latest to the 15th of March the following year, by its residence.
Definition
Profit from the games of chance and other prize games, are the revenues which the taxpayer realizes from the games of chance and other prize games, which can be realized in money, securities, in kind or some other type.
Taxpayer
- Natural person who has realized profit from the games of chance and other prize games
- Non resident/foreign natural person who has realized profit from the games of chance and other prize games
Tax base
Base for the Personal Income Tax from games of chance and other prize games calculation, presents each particular profit realized from games. When the profit from the games of chance is contained of objects, the Personal Income Tax base presents the market value of the objects at the moment of profit realization.
The Personal Income Tax for the profit from games of chance and other prize games, shouldn’t be paid if the particular profit does not exceed the amount of 10 000 denars.
Tax rate
- for 2007 – the rate was 12%
- from 01.01 2008 – the rate is 10%
Assessment of the advanced paid tax
Advance payment of the Personal Income Tax for the profit from the games of chance, calculates the payer for each taxpayer (natural person – participant in the game) and for each particularly paid off income.
Example: If the participant paid in slip from 1000 denars for one ticket, and the summary coefficient on the concrete slip is 11, then the profit will be 11 000 denars and the payer (sports betting shop) calculates and withhold the Personal Income Tax (10%).
Account:
| Gross profit | 11.000 denars |
| Personal Income Tax (11.000 х 10%) | - 1.100 denars |
| For payment (11.000 – 1.100) | 9.900 denars |
Annual obligation of the natural personThe natural person to the Public Revenue Office should submit Annual Tax Return (form “PIT – ATR”), latest to 15th of March the following year by his residence.
* Beside the profit from the games of chance, taxable categories by the LPIT are also the other prize games. Subject to taxation are all gains which are realized in money, securities, in kind or some other type. That means, the gains in goods (example: TV), i.e. other services (example: trip to Cuba) by the participation in the prize game, are the subject to taxation with the Personal Income Tax.
Definition
- Income from independent activity – are the revenues realized in the economic activity, of providing professional and other intellectual services, same as the revenues of the agriculture activity and other activities, which permanent goal is revenues realization.
- Income from economic activity – are the revenues of productive, service, trade, catering, transport and other similar activity.
- Income from professional and other intellectual services – revenues from health activity, veterinary, lawyer’s, notary, consulting, audit, engineer, architectonic, journalistic, sport, cultural and other intellectual activity.
- Revenues from the agriculture activity are the revenues from production, finish, processing and marketing of own agriculture products, as stock farming and other economic – useful animals and their products marketing.
Taxpayer
- Sole proprietor (natural person – trader who individually in kind of profession, performs some of the activities assessed with the LTA)
- Natural persons who are entertaining with agriculture activity and are keep a record of a business books
- Natural persons who are entertaining with craft activity and are keep a record of a business books
- Natural persons who are providing services or free occupations, who are realizing income from performing activities (attorneys, notaries, doctors, veterinaries, engineers, architects, accountants, auditors, journalists etc.) who are not considered as traders.
Tax base
Base for calculation of the Personal Income tax from the independent activity presents the net income (difference between the total income and total expenditures of the taxpayer) assessed in the Tax Balance.
Tax rate
- for 2007 – the rate was 12%
- from 01.01 2008 – the rate is 10%
Assessment of the advanced paid tax obligations for the self employed (SE)
Advanced payment of the Personal Income Tax for the revenues from the independent activity is assessed with decision by the Public Revenue Office:
- on the basis of the data from the tax return “PIT – AIT/SE” (when the taxpayer for the first time starts to perform independent activity)
- on the basis of the data from the Tax Balance
- business books and
- other data
Self – employed people’s obligations (SE)
- Advanced paid – to the Public Revenue Office should submit the form “PIT – APT/SE”, in a period of 15 days from the day of performing activity starts, on which territory the natural person is registered for performing activity.
- Annual – to the Public Revenue Office and the Central Register should submit Balance of income and expenditures (form “B”), and also Annual Tax Balance (form “PIT-TB”), latest to 15th of March the following year.
Definition
- Other revenues are all revenues which are not paid off as personal income; income from independent activity; income from property and property rights; income from copy rights and rights from industrial property; income from capital; capital gains; gains from games of chance and other prize games and other income, they are not even relived from the obligation for taxation (income assessed with article 6 of the Law on Personal Income Tax)
- As other revenues, can appear different types of aids realized on the taxpayers request – natural person (for treatment, supply of instruments for handicapped persons, education, participation in different sport, cultural and other manifestation etc.), given in money, in kind, securities or some other type.
- As other revenues which are subject to taxation with the Personal Income Tax also are considered the revenues realized with securities acquisition and participation in the capital, without allowance, if the same are not taxed by the Law on the property taxes.
Taxpayer
- Natural person who realize income which according to the Law on the Personal Income Tax belongs to the group “other income”.
- Taxpayer of the Personal Income Tax for the other revenues realized with securities acquisition and participation in the capital, without allowance, if the same are not taxed by the Law on property taxes, is the natural person who acquires securities and participation in the capital.
Tax base
- Base for calculation of the Personal Income Tax for the other revenues for which the tax is assessed by deduction, presents the net income which is assessed with deduction of the standardized expenditures from the gross income in amount of 35%.
- Base for calculation of the Personal Income Tax for the other revenues, realized with securities and participation in the capital acquisition, without allowance, for which the tax is assessed with decision by the Public Revenue Office, presents the market value on the day of securities acquirement and participation in the capital.
* Under the market value is understood, the value of the securities and participation in the capital, assessed by the data from the Macedonian stock exchange of securities, if they are rated on the stock exchange i.e. the nominal value of the securities and the participation in the capital, for those which are not rated on the stock exchange.
Tax rate
- for 2007 – the rate was 12%
- from 01.01 2008 – the rate is 10%
Assessment of the advance payment
The advanced payment of the Personal Income Tax for the other revenues is assessed:
- by deduction – if the income payer keep a record of business books
- by PRO decision
Natural person’s obligations
- Advance paid – the natural person should submit to the PRO “form PIT – ATP/IT”, in the period of 15 days from the day of income realization.
- Annual – the natural person should submit to the PRO Annual Tax Return (form “PIT – ATR”), latest to 15th of March the following year, by his residence.
In the special procedures for the Personal Income Tax assessment, the Public Revenue Office assess if the person own a property or dispose with resources higher than the taxed, which are coming from the income on which the tax is not assessed or it is not enough assessed. If the PRO assess, that the property or the resources are higher than the taxed, brings decision for tax assessment of the non taxed income.
Base for tax calculation presents the difference between the property value and the proved amount of the resources for its acquirement. The tax of the non registered income is calculated by rate of 70%.
The Public Revenue Office assess the tax on the basis of the data in the tax return, from the business books, official data with which PRO dispose and on the basis of other data and proofs to which will come in the procedure for tax assessment.
Taxpayers who can be taxed by the lump-sum assessed net income
The taxpayers who because of some circumstances:
- Are not able to keep a record of business books
- Keeping a record of business books makes difficult performing activity
- Who are not employing other persons
- In which activity other persons do not invest and
- Are realizing net annual income from performing activity to two average annual salaries
have right to submit “Request for lump sum tax assessment” (form PIT – LS), to the body for Public Revenues, the tax from the income for the revenues from performing activities to pay by lump sum assessed net income.
Dead line for submission of the Request for lump sum payment of the Personal Income Tax
The Request for the lump sum payment of the Personal Income Tax is submitted to the Public Revenue Office by the taxpayer’s residence:
- To 31st December in the year which go before the year for which the tax is assessed and
- 15 days from the day of income realization from performing activity, for those who start performing activities during the year
The lump sum taxation is not recognized:
- The taxpayer who perform trade, catering and commission activity (except the taxpayer who perform trade activity strictly through the points of sale of organized green markets);
- Who employing other persons;
- In which activity other persons are investing and
- Whose net income in the year which go before the year for which is performed the tax assessment is higher than two annual average salaries.
If the Public Revenue assess, that conditions stopped on which basis to the taxpayer have been recognized the right to pay the tax, by the lump sum assessed net income, should obligate him to keep a record of business books.
Lump sum taxation of the income from agriculture activity
Taxpayers who can be taxed by the lump sum assessed net income:
- The taxpayer of income from agriculture activity, which total income in the year for which the tax is assessed do not exceed the amount of 1.300.000 denars, is taxed by the lump sum assessed income.
- As taxpayers of income from agriculture activity are considered the persons who are performing agriculture activity as additional occupation.
Dead line for submission of the Request for lump sum payment of the Personal Income Tax
The right on the lump sum taxation is realized on the basis of submitted Request to the Public Revenue Office, on which territory is the taxpayer’s residence, latest to the end of the year for which the tax is assessed.
Lump sum taxation is not recognized for:
The taxpayers of the income from the agriculture activity, which total income in the year for which the tax is assessed, exceed the amount of 1.300.000 denars.
