All domestic legal entities and domestic physical persons that are registered for carrying out an activity, as well as foreign legal entities or physical persons that are non-residents but have a PE in North Macedonia, are obligated to withhold tax when paying certain types of income towards a foreign legal person and to pay the tax withheld to a respective suspense account simultaneously with the payment of the income.
The WHT rate is 10% and is applied on the following forms of incomes payable abroad:
- Income from entertainment or sporting activities in North Macedonia.
- Income from management, consulting, financial services, or services related to research and development.
- Income from insurance or reinsurance premiums.
- Income from telecommunications services between North Macedonia and a foreign country.
- Income from the lease of immovable property in North Macedonia.
As an exception, WHT is not applicable to the following forms of income:
- The after-tax profit of a PE transferred to its foreign headquarters.
- Interest from bonds issued or guaranteed by the government.
- Interest on deposits in banks located in North Macedonia.
- Income from transactions in state securities on the international financial markets.
If a DTT is in place, WHT shall be payable in accordance with the provisions from the DTT. Taxpayers are obligated to obtain approval from the Macedonian tax authorities prior to applying the tax rates from the DTT.
North Macedonia has signed DTTs with the 49 countries listed in the chart below:
|Bosnia and Herzegovina (2)||5/15||10||10||0|
|Czech Republic (2)||5/15||0||10||0|
|Denmark (2, 3)||0/5/15||0||10||0|
|Federal Republic of Yugoslavia (2, 5)||5/15||10||10||0|
|India (11, 12, 13)||10||0/10||10||0|
|Israel (4, 14)||5/15||10||5||0|
|Latvia (1, 7)||5/10||5||5/10||0|
|Saudi Arabia (16)||5||0/5||10||0|
|United Arab Emirates (15)||0/5||0/5||0/5||0|
|United Kingdom (9, 10)||0/5/15||0/10||0||0|
|Vietnam (4, 14)||5/10/15||10||10||0|
- The lower rate applies to dividends paid out to a foreign company that controls at least 10% of the share capital of the payer of the dividends.
- The lower rate applies to dividends paid out to a foreign company that controls at least 25% of the share capital of the payer of the dividends.
- The zero rate applies to dividends paid out to pension funds.
- These DTTs are still not in force.
- The DTT with Federal Republic of Yugoslavia now applies both to Serbia and Montenegro.
- The zero rate applies to dividends paid out to recognised pension funds and to foreign companies that continuously control at least 25% of the share capital of the payer of the dividends for 12 months before the dividends payment. The 5% rate applies to dividends paid out to foreign company that controls at least 10% of the share capital of the payer of the dividends. The 10% rate applies to dividends paid out in all other cases.
- The tax rate of 10% for royalties payments applies only for utilisation or right to utilise cinematographic films and films or tapes for radio and television transmission. The 5% rate applies on all other cases.
- The DTT concluded by the Socialist Federal Republic of Yugoslavia (SFRY) is still applicable for North Macedonia.
- The zero rate applies to dividends paid out to pension schemes and to foreign companies that continuously control at least 25% of the share capital of the payer of the dividends for 12 months before the dividends payment. The 5% rate applies to dividends paid out to foreign company that controls at least 10% of the share capital of the payer of the dividends. The 15% rate applies to dividends paid out in all other cases.
- The zero rate applies on interest paid on loans or prolonged credit paid from one enterprise to another enterprise and, on interest paid to the other contracting state, to one of its political divisions or municipalities or public entities of that state.
- The zero rate applies in case the beneficial owner of the interest is the government, political or municipality subdivision; the Indian Reserve Bank, the Indian Export-Import Bank, and National Housing Bank; or any other institution based on additional agreement via exchange of letters by the authorised institutions.
- The 10% rate applies on gross income from royalty or income from technical services (compensation for managerial, technical, and consulting services, income from services of technical and consulting personnel that is different from the income derived under article 14 and article 15 of the DTT).
- The zero rate does not apply to income from lottery, races and horse races, card games, and other games of chance.
- The 5% of the gross amount of dividends applies if the beneficial owner directly holds at least 70% of the share capital of the company paying the dividend. 10% applies if the beneficial owner directly holds at least 25% but less than 70% of the share capital of the company paying the dividend. 15% applies in all other cases.
- Interest, royalties, and dividends paid to a resident of the other contracting state shall be taxable only in the other contracting state if the beneficial owner of the income is that other state itself, local government, local authority or the Central Bank thereof, Abu Dhabi Investment Authority, Abu Dhabi Office, International Petroleum Investment Company, Abu Dhabi Investment Council, Dubai Investment Company, Mubadala Development Company, United Arab Emirates (UAE) Investment Authority, Al Dafra Holding Company, or any other institution created by the government, a local authority, or a local government of that other state.
- The interest tax rate under the DTT would be 0% in case the payer or the beneficial owner of the income is the government, an administrative subdivision, a local authority, the Central Bank, or any other financial institution wholly owned by the government.