North Macedonia

1. A) Investment incentives according to the „Plan for economic growth“

The Government of the Republic of North Macedonia is committed to economic growth and development in the country. In that direction, economic support measures have been created, named as the "Plan for economic growth", divided into three pillars, whose main purpose is to encourage investment, to enhance technological development and to raise the competitiveness of North Macedonian companies.

The set of incentives is comprised of tax relief measures and/or cash grants for diferent purposes. The various supports may be combined.

The companies applying for the measures of the industrial policy on stimulating investments and competitiveness of the North Macedonian economy need to meet the following fundamental (and eligibility) criteria:

• the company must have growth in its incomes in the last year compared to the average of the last three years;
• the company must keep or to have growth in the number of employees in the last year compared to the average of the last three years;

The measures provide for the following incentives:

• FINANCIAL SUPPORT FOR CREATING NEW JOBS (full-time jobs) for citizens of the Republic of North Macedonia, in maximum amount of €4,400 anually per new work place created, for the period of up to 5 years as of the date of creation of the new job, whereas:
  • during the utilization period the beneficiary must have a growth in the income in its activity and must not lower the average number of employees;
  • at least 75 percent of the newly-employed with the beneficiary must be persons:

1. who were not employed at least 3 months before the employment; or
2. who are being employed for the first time; or
3. whose previous employment was terminated due to liquidation or bankruptcy procedure; or
4. immediately before the employment were employed with the public or state administration.
5. who were not employed by the user of the financial support or its affiliation in at the least six monthsThe support is realized annually using direct pay-out to the beneficiary after submitting the final statement for the previous year.

• SUPPORT FOR ESTABLISHING AND ENHANCEMENT OF THE COOPERATION WITH SUPPLIERS FROM THE REPUBLIC OF North Macedonia, in maximum amount of €300,000 annually per beneficiary, for up to 7 years as of the date of commencement of the measure’s usage, which refers to companies in the TIDZs and the industrial zones, to greenfield investors and lessees of a facility who will start a new activity. The measure includes financial support for establishment and enhancement of the business cooperation with suppliers registered in North Macedonia. This business cooperation will be measured in accordance with the percentage share of the procurement of production inputs from the suppliers (the inputs do not include procurements from public enterprises  - electricity, fuel, gas, water, utilities, telecom services, etc., as well as legal, accounting or consulting services). The beneficiary will receive financial support amounting to 1% of the value of the total procurements if during one year they procure at least 15% of production inputs from suppliers registered in the Republic of North Macedonia, where as:
  • during the utilization period the beneficiary must have a growth in the income of activities and must not lower the average number of employees;
  • the supplier must be a company registered in the Republic of North Macedonia which is not capital one or related to the beneficiary in any way and it must perform previous processes and operations over the production input;
  • must maintain the activity at least 3 years counting from the last year for which assistance was paid.

The payment of the assistance is performed annually after the submission of the final statement of the company for the previous years. The fulfilment of the criteria is proved using documents for the value of the production input and the total value of the procurements.

• SUPPORT FOR ESTABLISHING TECHNOLOGICAL DEVELOPMENT AND RESEARCH DEPARTMENTS, in maximum amount of 50% of the total justified costs for industrial research, but no more than €1 million per beneficiary (these 50% include 30% of the value of the newly purchased equipment in the beneficiary’s development department). The measure refers to financial support for establishing departments, centres or other forms of organization structure which will be used for sustainable research and development projects and will engage highly-qualified staff. The assistance refers to applied industrial research in the form of planned or critical research in order to gain new knowledge and skills for development of new products, production processes or services or to significantly improve the existing products, production processes and services, and it refers to research and development projects applied in the manufacturing activities.
  • The justified costs include the following:
    • costs for instruments and equipment up to a certain degree for the period for which they are used for the research project;
    • costs for buildings and land up to a certain degree for the period for which they are used for the needs of the research project;
    • costs for contractual research, technical knowledge and patents purchased or licensed by external markets on market prices, as well as costs for consulting services or equivalent which are used exclusively for research objectives;
    • additional costs incurred directly as a result of the industrial projects; and
    • other operative costs, including the costs for materials, purchases and similar products incurred directly as a result of theresearch activity.

The support is granted under the following criteria:

• during the utilization period the beneficiary must have grown in incomes of the activity and must not lower the average number of employees;
• the primary activity of the beneficiary must be manufacturing;
• to maintain the average number of jobs for which they used FINANCIAL SUPPORT FOR CREATING NEW JOBS on the net wages from the measure for a period of at least 3 years as of the last year for which assistance was paid.

The payment is performed annually after the company submits the final statement for the previous year and documents proving the amount of the incurred justified investment costs for industrial research.

• SUPPORT FOR INVESTMENT PROJECTS OF SIGNIFICANT ECONOMIC INTEREST FOR THE REPUBLIC OF North Macedonia, refering to support for investment projects of significant economic interest, where the beneficiary will gain up to 50% of the total justified costs in accordance with the Law on control of state aid and the by-laws referring to it.

The investment project shall be considered as of significant interest if one of the following criteria is met:

1. Planned amount of investment of more than €20 million);
2. Planned amount of investment of at least €4 millin and at least 300 new jobs;
3. Other investment projects which the Government of the Republic of North Macedonia will assess, in pursuance with clearly defined criteria with a governmental act, ,

where the beneficiary must (shall) maintain the investment and the created jobs for at least 5 years after the completion of the investment project.

The state aid can be realized in the following forms:

1. Exemption from paying (or return of paid) income tax of the wages for the employees citizens of the Republic of North Macedonia, for 10 years as of the month when the employees’ wage was paid out, but no later than 1 year as of the year when the contract was executed;
2. Exemption from paying (or return of paid) income tax, for 10 years as of the date when the activity commenced i.e. no later than 1 year as of the year when the contract was executed;
3. Cash grant up to 10% of the planned amount of the investment foreseen with an agreement, but no more than €1 million, for 3 years as of the year when the contract was executed i.e. the year when the investment project commenced;
4. Cash grant per employee who has a wage of at least €292, for 4 years as of the year when the contract was executed i.e. the date when the investment project commenced, as it follows:

- 300 persons – €2.000 per position;

- 300 – 500 persons – €3,000  per position;

- 500-1000 persons – €3,500 per position,

- 1,000-2,000 persons – €4,000 per position.

The realization of the support stipulated in measures A, B and D is performed annually after the company submits the final statement for the previous year and documents proving the fulfilment of criteria, while the realization of the support stipulated in item C will be performed the following year after the investment was completed (maximum: €1 million).

• SUPPORT FOR INCREASE OF CAPITAL INVESTMENTS AND INCOMES, in maximum amount of 10 % of the realized investment, but no more than €1 million, for companies which realize initial or additional investments - purchase of new machines or equipment or for investments in the area of premises and land necessary for the activity of the beneficiary, for 5 years as of the date of commencement of the activity (or executing contract) for new companies i.e. 5 years as of the commencement of the investment project for existing companies, where as:
  • The beneficiary must not decrease the average number of employees and the incomes of the operation bellow the average in the previous 3 years or for a shorter period depending in the date on which the company was established or commenced its operation.
  • The beneficiary must maintain the investment for at least 5 years after full completion of the investment project.

The payment of the financial support is performed annually after the company submits the final statement for the previous year including documents which prove the value of the investment in the previous year and submit a list of invoices for the investments in the premise/premises, equipment and halls.

• SUPPORT FOR ACQUISITION OF COMPANIES THAT ARE FACING DIFFICULTIES, in maximum amount of 10% of the realized investment, but no more than €1 million, for companies which will commence investment project by purchasing assets of company in difficulties (after a bankruptcy or liquidation procedure). The company may apply for the measure after the renewal of the manufacturing process. The financial support is consisted of return of 10% of the value of the incurred investment costs that are born for purchasing machines, objects and liabilities of companies in bankruptcy or liquidation procedure, and the payment is one-time pay-out within 1 year as of the commencement of the new activity or restarting the previous activity, where as:
  • the beneficiary of the measure must commence or restart the activity of the company;
  • the beneficiary shall not be a company in any manner related to the company in bankruptcy or liquidation in the last 3 years before the bankruptcy or liquidation procedure commenced, with exception of relations established becouse of business cooperation;
  • the company in bankruptcy or liquidation was employing at least 50 employees before the respective procedure was initiated;
  • the beneficiary must maintain the investment for at least 5 years as of the date when the activity was commenced or restarted.

The assistance is one-time payment provided after the renewal of the manufacturing process. Documents are delivered proving the value of the purchased assets and prove the commencement or restarting of the activity.

1. B) Incentives for investments in Technological industrial development zones (TIDZ)

The aim of the TIDZ is to support the development of high modern technologies through an application of the highest environmental standards. The establishment, development and monitoring of the zones is carried out by the Directorate for Technological Industrial Development Zones. There are currently several operational TIDZs in North Macedonia – two in Skopje, one in Tetovo, Stip, Struga, Prilep, Kichevo and Rankovce. 

Investors in TIDZ are offered the following incentives:

• 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 to 0%.
• Investors are exempt from payment of value added tax for goods, raw materials, and equipment.
• 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 natural gas, water and sewage network.

The users of the TIDZ may also benefit from the incentives provided through the „Plan for economic growth“ if eligibility criteria are met and if the interested applicant is not user of the same type support thorugh any state aid scheme or other types of public resources suport.

1. C) Agreements on avoidance of double taxation

The Republic of North Macedonia has signed the agreements on avoidance of double taxation with 49 countries which refer to the laws that regulate corporate income tax, property tax and individual income tax. Depending on the particular country, it is provided to pay certain taxes only in one country, if the taxpayer is operating a business in two countries which have signed the agreement. There is the list of countries  in the following table.