Doing Business in North Macedonia
In order to make North Macedonia more business oriented, the Government of the Republic of North Macedonia made crucial reforms in the past few years to attract foreign investors. After these reforms the World Bank described North Macedonia in its report to establish a company as one of the leaders at the question of business climate.
This is mainly due to the total tax rate, which North Macedonian legislation provides for the companies within the territory and the freed zone established as separate units.
The other reforms mainly were amendments of the regulation of fast company registration, modernized electronic Real Estate Cadastre- electronic Cadastre and the Regulatory Guillotine project - cutting red tape-Regulatory Guillotine.
Tax rate and incentives
North Macedonia has a flat tax rate of 10% related to company profit and personal tax. Furthermore it has 0% tax on retained earnings, in addition to several incentives for the companies eligible to invest in the free zones in North Macedonia such as:
10 YEAR TAX HOLIDAY - Investors in the free zones are entitled to profit tax exemption and 100% reduction of personal income tax for a period of up to 10 years, so that the effective rate of personal income tax will amount 0%. Investors are exempt from payment of value added tax for goods, raw materials, and equipment. Additionally, investors are exempt from payment of customs duties for equipment, machines and spare parts.
The land in the free zones in North Macedonia is available under long-term lease for a period of up to 99 years at concessionary prices.
Investors are exempt from paying utility taxes to the local municipality and fees for land building permits.
Free connection to the natural gas, water and sewage System.
Company Foundation
North Macedonian company law is based on the EU acquits and on commercial law in other Central European countries.
It regulates the manner of creation, shareholder structure and the corporate governance of few forms of trade companies, the partner of shareholder liability, the process of transforming the company from one form to another, statues changes of the company and termination procedures.
The law defines five forms of companies: General Partnership, Limited Partnership, Limited Liability Company, Joint Stock Company and Limited Partnership by Shares.
The most common way to run a business in North Macedonia is by create a Limited Liability Company, meaning that there is no liability for shareholders in terms of operation of the company; and the manager/s may be either foreign or domestic person/s.
The Corporate Governance bodies in LLC include shareholder meetings, the manager/s and the supervisory board or controller (which is not mandatory), where the Article of Association is the main company charter, that regulates the terms and manner of decision-making procedures.
The Trade registry maintained by the Central Registry is the official institution for registration of the Company, and the same register the shareholder/s share management structure and other relevant information of the Company.
This information is public available in both electronic and hard form.
The minimum registered capital is 5.000 euro that may be paid at the day of foundation or within one year of creation of the LLC.
The company registration does not take more than 1 (one) day, once all the documents are being filed through the electronic system without charge of any administrative fees for such creation.
Main reforms and facts about doing Business in North Macedonia
- One stop shop system- one business day to register the company;
- Electronic one stop shop for custom permits and licenses;
- Liberalization of real estate marker, where the is allowed foreigners free to purchase real estate and construction land;
- Simplification of procedures for obtaining a construction permit;
- Labor law, prepared in accordance with the EU standards, provides increased flexibility of the labor market by offering and promoting flexible and different employment contracts and flexibility of working time;
- Digital Cadaster covering 99% of the real estate in North Macedonia.
- 18 % Value added tax;
- Average monthly salary is €525, This amount includes the net salary, personal income tax and social contributions for pension and disability insurance, health insurance and employment insurance;
- FTAs with EU, EFTA, CEFTA countries; Turkey and the Ukraine; providing access to over 650m customers;