Generally, all resident and non-resident legal entities operating through a permanent establishment (PE) are liable to pay CIT in North Macedonia.
Macedonian resident entities are taxed on their worldwide income. Non-resident entities are taxed on the profit realised through their PE in North Macedonia.
Non-profit organisations (including non-governmental organisations, religious and humanitarian organisations, trade unions, political parties, etc.) are taxed on income from their business activities (if any) if their total annual revenues are higher than MKD 1 million. The CIT would be calculated as 1% of the total annual revenues from business activities, decreased by the prescribed tax exemption of MKD 1 million.
The CIT rate is 10%.
The tax base for CIT is the profit realised for the current year, as determined according to the applicable accounting standards, adjusted for the amount of non-deductible expenses incurred during the fiscal year (FY).
Under the previous CIT legislation, there were two separate tax bases for CIT, which were subject to filing of two separate tax returns. In the period between FY 2009 and FY 2013, CIT was payable separately on non-deductible expenses (on an annual basis) and on financial profit (only if distributed). By means of the applicable CIT Law, the accumulated profit realised for the period FY 2009 to FY 2013 is subject to taxation at the moment of distribution or at the moment it is used to off-set accumulated losses. Taxpayers are obligated to cover the losses from previous years prior profit distribution.
CIT is not payable on received dividend income from domestic taxpayers, under condition that such income was taxed at the level of the payer.
Also, according to the new amendments in the CIT Law, 10% 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. CIT is payable by way of submitting a specific CIT return by the taxpayer.
Simplified tax regime for companies
Companies (except companies that provide banking, financial, and insurance services, as well as services in the field of games of chance and entertainment games) can choose to benefit from the simplified tax regime based on their overall annual income. Provided other criteria prescribed in the CIT Law are met, companies will qualify for the simplified tax regime if their overall annual income from all sources is between MKD 3 million and MKD 6 million, excluding 2020 where the range is between MKD 5 million and MKD 10 million. These companies will pay 1% CIT on their overall income from all sources as stated in their income statement and financial statements for the respective calendar year.
Provided their overall annual income in the following three years is within the above range, companies under the simplified tax regime cannot request to be excluded from the simplified tax regime.
Under the simplified tax regime, exemption from CIT is available for companies with an overall annual income from all sources of up to MKD 3 million, with the exception of 2020. In 2020, companies that achieved overall annual income from all sources of up to MKD 5 million are fully exempted from paying CIT.
The exemption is not applicable for companies that perform banking, financial, and insurance activity or activity in the field of games of chance and amusement games.
Local income taxes
There are no municipal or local government taxes levied on corporate income.