Analysis
Summer 2017 / Issue 54
Analysis
New Clarity on Tax Treatment of Consultant-related Expenses + New Donation Incentives
Fair and simple tax regulations are central to a vibrant economy built on trust and integrity of markets , dynamic companies and communities where business and people thrive . Such regulations enable businesses to grow while making a fair contribution toward public services . Though there are a number of benefits to the last amendments , it will be interesting to see , nonetheless , whether this is the beginning of a trend toward greater clarity resulting from enhanced cooperation between the government and business community .
At the end of 2016 , the Government amended the Corporate Income Tax ( CIT ) Law , effective as of January 1 , 2017 . We will highlight two of these changes , of particular interest and potential benefit to all companies working in Macedonia .
Accommodation & Transportation of Consultants
In March this year , the Ministry of Finance amended the rulebook ( bylaw ) on calculating corporate income tax and avoiding double taxation related to expenses for accommodating and transporting consultants and other non-employees who perform work for a company . This was a welcome development , since , for some time now , there has been confusion and inconsistency in the treatment of such expenses in practice .
The change came about in response to calls from the business
Maja Filipceva , Tax and Outsourcing Service Leader at Grant Thornton Consulting Skopje
Sanja Risteska , Tax and Outsourcing Supervisor at Grant Thornton Consulting Skopje community and particularly from foreign investors who have recently entered and are expanding their operations in Macedonia . Such companies routinely require professional and logistics support from non-employee experts for management services , know-how transfer , business advisory , training , specialized services from engineers , architects and the like .
The following key tips on applying the new rules require attention :
• The services provided by the non-employee must be thoroughly documented to ensure their proper tax treatment ;
• The new rules apply to expenses related to both citizens and non-citizen consultants equally ;
• These expenses will still be subject to a 10 % personal income tax .
Donation Incentives for Sports
The late 2016 amendment also included a number of new tax incentives for company donations to various sports organizations and athletes , as follows :
• Up to a 40 % reduction of the calculated tax of the given donation to the sports federation and Macedonian Olympic Committee ;
• Up to a 50 % reduction of the calculated tax of the given donation to football ( soccer ) clubs ;
• Up to a 40 % reduction of the calculated tax of the given donation to basketball clubs ;
• Up to a 40 % reduction of the calculated tax of the given donation to handball clubs ;
• Up to a 35 % reduction of the calculated tax of the given donation to other sports clubs and other sports ;
• Up to a 10 % reduction of the calculated tax of the given donation to an active Olympic athlete ;
• Up to a 5 % reduction of the calculated tax of the given donation to an active athlete in non-Olympic sports ; and
• Up to a 5 % reduction of the calculated tax of the given donation to a sports club that isn ’ t in an organized national league .
AmCham Macedonia Magazine 23