AmCham Macedonia Spring 2015 (Issue 45) | Page 18

ANALYSIS ... Social Contributions Fiasco continued from page 17 In January, the Government began tweaking these policies again. They doubled the amount of contributions-free monthly freelance income to about 300 euros per month and proceeded to completely remove the ~3.000 euro cap on gross salaries above which social contributions were not owed. The latter move met with uproar from the business community and prompted a third change, returning the cap to 6.100 euros. AmCham Macedonia made an official request to the Public Revenue Office inquiring as to how many people in Macedonia collect a monthly gross salary higher than 6.100 euros, but has not received a response. Informed estimates range from about 20 – 50 people in total. Today, 5 months after the first changes came into force, and after 3 legislative amendments and the delayed release of detailed instructions and procedures by the responsible state institutions, the dust seems to be settling on this issue. Companies are now required to report on all payments made to contractors on a monthly – rather than an annual – basis. They are not required to make social contribution payments on their contractors’ behalf, as initially feared. Unfortunately, contractors who have paid social contributions on their non-employment related income have yet to receive any official statement from the Pension Fund confirming the existence and status of their accounts. Starting in January this year, the Pension Fund began issuing regular contributions reports to all payers (employers and individuals). Unfortunately, the first reports unleashed a wave of complaints due to their inaccuracy. The Fund recently announced that its next reports – due out in June – will be better, since in the meantime it worked to improve its reporting system. Other impacts –such as those promised by officials and those feared by protestors from the beginning – are still unclear. However, it is telling that a number of government programs now release employers from the obligation to pay social contributions on their employees’ behalf (e.g., the Employment Services Agency program encouraging employment of 18-25 year olds). Thus, indirectly, they recognize that paying 24% of every salary toward social contributions can actually discourage legitimate employment. Unfortunately, the social contributions fiasco is part of an increasing trend of laws being adopted with substantial financial impact on companies accompanied by little or no public consultation or warning. While officials probably anticipated a big reaction to this change, it didn’t have to be so painful. Most business people accept that tax rates are a political decision made by government in relation to state budget needs – this is the “why” part of the equation. Involving companies in the “how” part of la