North Macedonia

Corporate - Deductions

Last reviewed - 28 February 2024

The CIT Law exhaustively lists the expenses that are not recognised for CIT purposes and are part of the CIT base.

Hidden profit distribution

The following transactions with shareholders or their related parties are considered as hidden profit distribution subject to CIT:

  • Sales of goods/services on terms below the market price.
  • Purchase of goods/services on terms above the market price.
  • Providing loans with an interest lower than the market one.
  • Arrangements under which gains are realised by the shareholders or their related parties.

Some of the transactions above may be regulated under the transfer pricing provisions in the CIT Law as well. It seems that the purpose of these provisions is to tax the non-fair transactions with shareholders and their related parties that, based on their value or related party definition, fall out of scope of the specific transfer pricing rules of the CIT Law.

Unjustified shortages

Unjustified shortages are taxable if not reimbursed from the salary of the responsible person.

Non-business-related expenses

Expenses that are not related to the business activity of the taxpayer are taxable.


Under the CIT Law amendments applicable as of 1 January 2019, the expenses for depreciation of the re-valuated amount of tangible and intangible assets are deemed as tax non-deductible expenses.

CIT is payable in case revaluation reserves of tangible and intangible assets are transferred into accumulated profit. The tax base is the transferred amount into accumulated profit less the amount of depreciation of the revaluated value of assets from 1 January 2019 until the date of write-off or disposal of the assets. 

The depreciation expenses of assets are tax deductible if calculated within the statutory-prescribed depreciation rates and rules. Taxpayers should include in the tax base the portion of depreciation that exceeds the amount calculated based on the prescribed tax rates. At the end of December 2019, the government has published the Guidelines for depreciation rates and the methodology for calculating the depreciation for tax purposes. 

On the other hand, based on the recent amendments, the taxation of depreciation became a temporary difference. Taxpayers are allowed to decrease the tax base in the following year for the amount of taxed depreciation in the previous tax period.

Furthermore, the write-off of the residual value of assets that can no longer be used is tax deductible, following an approval issued by the Macedonian tax authorities. Such approval is subject to submitting a request by the taxpayer by 31 January of the following year.


There are no specific provisions in the tax legislation with regard to goodwill.

Start-up expenses

There are no specific provisions in the tax legislation with regard to start-up expenses.

Interest expenses

Interest paid on non-business related credits of the taxpayer, as well as interest on credits for purchase of passenger vehicles, furniture, carpets, works of art, and decorative objects, is a taxable expense. Interest on business-related credit is also taxable, provided it falls under the thin capitalisation or transfer pricing rules (see Thin capitalisation or Transfer pricing in the Group taxation section for more information).

Uncollected receivables from loans

Uncollected receivables arising from loans (or transactions that are considered loans in their economic substance) that are not repaid in the year of granting are considered as taxable expenses. On the other hand, taxpayers are allowed to reduce their tax base in the tax period when such receivable is partially or fully collected. According to the recent amendments, the uncollected loan receivables from resident legal entities are not taxable.

Impairment and write-off of receivables

Impairment of receivables is not taxable for banks, saving institutions, and insurance companies if impaired in accordance with the methods prescribed by law. As to other corporate taxpayers, impairment of receivables is a taxable expense, excluding the receivables from entities under bankruptcy or liquidation procedure (if confirmed within these procedures).

Write-off of receivables is a taxable expense for all corporate taxpayers.

On the other hand, taxpayers are entitled to decrease the tax base for the amount of collected receivables (taxed in previous years) in the year of collection.

Charitable contributions

Donations and sponsorships expenses are taxable if not pursuant to the manner, the conditions, and the procedure set forth in the Law on Donations and Sponsorships in Public Activities. If compliant with the law requirements as per above, donations in public activities are taxable if the annual amount borne by the taxpayer exceeds 5% of its overall revenue, whereas sponsorship expenses are taxable if above 3% of the overall revenue of the taxpayer.

The above incentive could be utilised by meeting certain statutory-prescribed criteria.

Compensation expenses

Employees’ related expenditures (e.g. organised transportation to/from work, canteen, business trip allowance, field allowance, family separation allowance, one-off severance payment, retirement allowance, annual holiday allowance, anniversary awards) are taxable on the part exceeding the amount prescribed by law and collective agreement. According to the latest amendments, the taxation of these expenditures is not linked to their payment. However, taxpayers are allowed to decrease the tax base if the provisions for these expenses are cancelled in future tax periods for the amount of recognised revenue due to such cancellation.

Voluntary pension insurance contributions are taxable if their annual amount per employee exceeds two average monthly gross salaries paid out in the country for the previous calendar year.

The monthly allowances and expenses for the managing board members are tax-deductible, up to 50% of the average gross monthly salary paid out in the country for the previous year.

Expenses made for accommodation (up to 4 star hotels and in the daily amount of up to MKD 6,000 per person) and transport of non-payroll employees engaged at the taxpayer for the purposes of its business activities are tax deductible, provided they are properly documented.

Depending on the period of the internship contract, the tax-deductible internship allowance could be in the range between 42% to 100% of the minimum net monthly salary paid out in the country.

The monthly allowance for practical trainings of students is tax deductible up to MKD 8,000 per person. 

Insurance expenses

Voluntary health insurance premiums are taxable if their annual amount per employee exceeds one average monthly gross salary, paid out in the previous calendar year.

Voluntary pension contributions paid to the private pension fund are taxable if their annual amount per employee exceeds two average monthly gross salaries, paid out in the previous calendar year.

Other insurance premiums paid for members of the management board and the employees (if not paid out from their salary) are taxable expenses. Only the collective insurance of the employees for work-related injuries is a non-taxable expense for corporate taxpayers.

Entertainment expenses

Expenses for gifts, business dinners, recreation, and entertainment are taxable, up to 90% of the annual amount borne by the taxpayer.


Expenses for scrapping exceeding the standards for the particular industry set forth in the rulebook on the standardised amounts of debris, scrap, waste, wreckage, and scattering of goods and specific products are taxable. Scrapping expenses caused by vis major or an uncontrollable event are not taxable.

Fines, penalties, and taxes

Fines and tax penalties, penalty interest on unpaid public duties, and expenses for enforced payments, as well as withholding tax (WHT) borne by the taxpayer on behalf of third parties, are taxable.

Net operating losses

The CIT Law stipulates that the loss realised in the income statement for the year, adjusted for the amount of non-deductible expenses, can be carried forward against future profits for a maximum period of three years as of the year when the profit has been realised.

On the other hand, the loss realised for 2020 and 2021 can be carried forward against future profits for a maximum period of five years as of the year when the profit has been realised.

Loss carrybacks are not allowed under the Macedonian tax legislation.

Payments to foreign affiliates

There are no specific provisions in the tax legislation with regard to payments towards foreign affiliates.