North Macedonia Tax Regime

North Macedonia operates a low flat-rate corporate income tax combined with a flat personal income tax, making the jurisdiction one of the more straightforward tax regimes in South-East Europe. Corporations are taxed at a headline 10% rate on accounting profit adjusted for non-deductible items, with a simplified turnover-based regime available to qualifying small companies. As an EU candidate country, North Macedonia continues to align elements of its tax and customs framework with EU acquis, and enacted domestic Pillar Two (global minimum tax) legislation in December 2024, applied retroactively from 1 January 2024 for in-scope multinational groups. Administration is centralised in the Public Revenue Office, with electronic filing standard for most obligations.

1.1 Sources

Primary legislation includes the Corporate Income Tax Law, the Personal Income Tax Law, the Value Added Tax Law and the Law on Minimum Global Corporate Income Tax.

1.2 Recent developments

The Law on Minimum Global Corporate Income Tax, aligned with the OECD/G20 GloBE Rules, was enacted on 27 December 2024 and applies retroactively to tax periods beginning on or after 1 January 2024 for groups within the EUR 750 million consolidated revenue threshold. The corporate income tax rate remains 10%, and the simplified 1% turnover-based regime for companies with overall annual income between MKD 3 million and MKD 6 million continues, alongside a full exemption for overall annual income up to MKD 3 million under that regime. Non-profit organisations remain taxed at 1% on business-activity revenue exceeding a MKD 1 million exemption. North Macedonia continues to expand automatic exchange of information and treaty relief consistent with its EU accession process.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

2.1 Rates and residence

Resident legal entities are taxed on worldwide income at a flat corporate income tax rate of 10%. Non-resident entities operating through a permanent establishment are taxed on profit attributable to that PE. The tax base is the profit realised for the current year as determined under applicable accounting standards, adjusted for non-deductible expenses incurred during the fiscal year. There is no separate municipal or local government tax levied on corporate income. CIT on dividend income already taxed at the level of the distributing domestic company is not payable again by the receiving domestic company, avoiding cascading taxation within domestic corporate chains.

Companies (other than banks, financial and insurance companies, and gaming and entertainment operators) with overall annual income between MKD 3 million and MKD 6 million may elect a simplified regime, paying 1% CIT on total annual income from all sources rather than on net profit; companies with overall annual income up to MKD 3 million are fully exempt under that regime. Once a company qualifies and remains within the income band for the following three years, it cannot opt out of the simplified regime.

2.2 Dividends and participation exemption

Dividends received by a North Macedonian resident company from another domestic taxpayer are not subject to further corporate income tax provided the distributed profit was already taxed at the level of the paying company, functioning as a domestic participation exemption. Dividends distributed to non-resident shareholders are subject to withholding tax, reduced under applicable double tax treaties. A 10% CIT charge also applies where revaluation reserves on tangible and intangible assets are transferred into accumulated profit, calculated on the transferred amount less depreciation of the revalued portion accrued since 1 January 2019 until disposal or write-off.

2.3 Income determination and deductions

Taxable profit begins with the accounting result under applicable financial reporting standards, adjusted for statutory non-deductible items such as unsubstantiated expenses, certain provisions, penalties and fines, and representation costs above prescribed limits. Depreciation for tax purposes generally follows prescribed rates by asset category; excess accounting depreciation above the tax-permitted rate is added back as a non-deductible expense. Losses accumulated in the transitional period between fiscal years 2009 and 2013 under the former dual-base CIT system remain subject to taxation at the point of distribution or use to offset accumulated losses, and must be cleared before further profit distribution.

2.4 Interest limitation

Interest paid to related parties is subject to thin-capitalisation-style restrictions; interest on related-party debt exceeding prescribed debt-to-equity parameters may be treated as a non-deductible distribution rather than a deductible financing cost. Arm's-length pricing of related-party loans is required, and interest on non-arm's-length terms is subject to adjustment. North Macedonia does not currently apply a general EU ATAD-style 30%-of-EBITDA fixed ratio rule outside of its Pillar Two regime.

2.5 Losses

Tax losses may be carried forward for a limited period (generally up to three years) to offset future taxable profits, with no carryback available. Utilisation of carried-forward losses can be restricted where there is a substantial change in ownership or where the loss-making activity is discontinued, consistent with general anti-avoidance principles applied by the Public Revenue Office.

2.6 Group taxation

North Macedonia does not operate a formal consolidated group taxation or fiscal-unity regime; each legal entity is assessed separately for CIT purposes even within a wholly-owned corporate group. Intra-group profits and losses cannot be pooled through consolidated filing, so groups typically manage tax efficiency through arm's-length intra-group pricing, financing structures and dividend planning within the domestic participation exemption described in section 2.2.

2.7 Controlled foreign companies

North Macedonia does not operate a standalone controlled foreign company attribution regime of the EU ATAD type. Anti-avoidance affecting outbound structures is addressed primarily through transfer pricing rules, withholding tax on outbound payments, and general anti-abuse principles, with further alignment anticipated as part of continued EU accession-related legislative reform.

2.8 Transfer pricing

Related-party transactions must be conducted on an arm's-length basis under the Corporate Income Tax Law, with the Public Revenue Office empowered to adjust the taxable base where pricing deviates from market conditions. Taxpayers engaging in material related-party dealings are expected to maintain transfer pricing documentation broadly consistent with OECD Transfer Pricing Guidelines, including a description of intra-group transactions and comparability support, though formal country-by-country reporting obligations apply primarily to constituent entities of large multinational groups within Pillar Two scope.

2.9 Incentives

Investors in Technological Industrial Development Zones (TIDZs) benefit from a ten-year corporate income tax holiday on qualifying activity within the zone, together with VAT and customs duty relief on equipment and construction materials, and reduced personal income tax and social contribution burdens for employees in some zones. Additional incentives support agricultural production, R&D expenditure, and employment of vulnerable categories of workers through payroll tax and contribution reliefs. The simplified 1% turnover regime described in section 2.1 also functions as a significant compliance and cost relief for qualifying small companies.

2.10 Pillar Two

The Law on Minimum Global Corporate Income Tax, enacted 27 December 2024, transposes the OECD/G20 GloBE Rules and applies retroactively to fiscal years beginning on or after 1 January 2024 for constituent entities of multinational groups with consolidated revenue of at least EUR 750 million in at least two of the four preceding fiscal years. The regime is expected to operate with an income inclusion rule and a qualified domestic minimum top-up tax, consistent with the OECD model, with transitional CbCR safe harbours available for the initial implementation years. In-scope groups with North Macedonian constituent entities face registration and top-up tax return obligations even where the domestic effective rate, combined with the 10% headline CIT, results in no top-up liability.

2.11 Branch income and reorganisations

A North Macedonian branch or permanent establishment of a foreign company is taxed at the standard 10% rate on profit attributable to the PE, determined on a separate-entity basis; there is no additional branch remittance tax. Domestic reorganisations — mergers, divisions and changes of legal form — can generally be undertaken with continuity of tax attributes, including loss carryforwards, where statutory conditions on business continuity are met. Cross-border reorganisations involving the transfer of assets or functions out of North Macedonia require assessment of ordinary capital gains taxation, as no formal ATAD-style exit tax regime currently applies.

3.1 Residence and rates

Resident individuals are taxed on worldwide income; non-residents on North Macedonia-source income only. Since 1 January 2023, a flat 10% personal income tax rate applies to income from employment, self-employment, royalties and industrial property rights, sale of own agricultural products, rental income, capital income, capital gains, insurance income and other categories of taxable income not separately classified in the legislation. The flat-rate structure simplifies payroll withholding and self-assessment alike, with limited progressivity introduced only through targeted allowances and exemptions rather than rate bands.

3.2 Capital income and real estate

Dividends paid to individuals are subject to a flat 10% withholding tax on the gross amount, withheld by the paying company. Capital gains on the disposal of securities, real estate and other capital assets held by individuals are generally taxed at the standard 10% flat rate, with certain exemptions available for gains on the sale of a principal residence held for a minimum period. Interest income on bank deposits is subject to withholding at the standard flat rate, subject to limited exemptions for certain savings instruments.

3.3 Social security and payroll

Employers withhold personal income tax together with mandatory pension and disability insurance, health insurance and unemployment insurance contributions from gross salary, with combined employee contribution rates set annually and subject to a contribution base ceiling. Employers do not generally bear a separate employer-side social contribution in addition to the employee-side amounts withheld from gross salary, reflecting North Macedonia's gross-salary contribution model. Monthly payroll withholding and remittance is standard, with electronic reporting to the Public Revenue Office.

3.4 Inbound individuals

North Macedonia does not levy a net wealth tax. Inheritance and gift tax applies at the local (municipal) level, with exemptions typically available for transfers between spouses and direct descendants, and modest rates applying to more distant relatives and unrelated recipients. There is no dedicated statutory expatriate tax regime; foreign employees are taxed under the ordinary resident or non-resident personal income tax rules depending on residence status, with relief from double taxation available under treaty provisions and domestic foreign tax credit rules. Reduced personal income tax and contribution burdens may apply to certain employees of Technological Industrial Development Zone residents under zone-specific incentive programmes.

Domestic withholding applies to dividends at a flat 10% rate, and to interest, royalties and certain service fees paid to non-residents, generally also at 10%, subject to reduction under North Macedonia's double tax treaty network. Treaty relief requires the recipient to be the beneficial owner of the income and to provide a valid certificate of tax residence; anti-abuse scrutiny applies to arrangements lacking commercial substance. Refund procedures are available where withholding at the full domestic rate has been applied notwithstanding treaty eligibility.

North Macedonia's treaty network covers the large majority of its European trading partners as well as a number of Middle Eastern and Asian jurisdictions, typically eliminating or substantially reducing withholding on qualifying intra-group dividends, interest and royalties. Where no treaty applies, or where anti-abuse conditions are not satisfied, the flat 10% domestic withholding rate applies uniformly across dividend, interest and royalty payments, giving North Macedonia one of the more predictable withholding frameworks in the region.

5.1 General anti-abuse and hybrids

The Corporate Income Tax Law contains general anti-abuse principles enabling the Public Revenue Office to disregard or recharacterise arrangements lacking economic substance and entered into primarily to secure a tax advantage. A comprehensive statutory hybrid-mismatch regime equivalent to the EU ATAD rules has not yet been enacted; cross-border arrangements involving hybrid instruments or entities are addressed through general anti-abuse principles, transfer pricing adjustments and treaty-based beneficial-ownership requirements applied case by case.

5.2 Exit taxation and disclosure

North Macedonia does not operate a dedicated exit tax regime comparable to the EU ATAD exit taxation rules; the transfer of business assets or functions out of North Macedonia is addressed through ordinary capital gains taxation principles at the point of transfer. North Macedonia participates in international automatic exchange of information consistent with OECD Common Reporting Standard commitments and continues to align disclosure and reporting obligations with EU standards as part of its accession process, including registration and reporting obligations for constituent entities of groups within Pillar Two scope.

6.1 VAT

VAT is levied at a standard rate of 18%, with reduced rates of 5% (basic foodstuffs, pharmaceuticals, computers and computer equipment, and certain other categories) and 10% (specified goods and services including some hospitality and cultural supplies). Registration is mandatory once annual turnover exceeds the statutory threshold, with voluntary registration available below it. Returns are generally filed monthly or quarterly depending on turnover, with input VAT recoverable against taxable output supplies subject to standard restrictions on exempt and non-business use.

6.2 Transaction, payroll and other taxes

Property tax is levied annually by municipalities on the market value of real estate at rates within statutory bands, and a real estate transfer tax applies on the transfer of immovable property, also administered at the municipal level. Employers and employees bear payroll-related pension, health and unemployment insurance contributions as described in section 3.3. Excise duties apply to alcohol, tobacco, petroleum products and certain other goods. There is no net wealth tax or general capital duty on share capital contributions.

7.1 Filing, assessment and audit

The tax year is the calendar year for both corporate and individual taxpayers, with limited scope to adopt a deviating financial year in specified circumstances. Corporate income tax returns are filed annually, with monthly advance payments during the year based on the prior year's tax liability, trued up on annual assessment. The Public Revenue Office administers assessments and conducts risk-based audits, with increasing focus on transfer pricing, VAT compliance and, going forward, Pillar Two top-up tax computations for in-scope groups. The general statute of limitations for assessment is five years, extended in cases of fraud or non-filing.

7.2 Rulings, appeals and penalties

Taxpayers may request binding rulings from the Public Revenue Office on the tax treatment of proposed transactions in specified circumstances. Assessments may be challenged through an administrative appeal to the Ministry of Finance's second-instance body and, if unresolved, before the Administrative Court. Late payment attracts statutory default interest, and administrative penalties apply for late filing, under-declaration and other compliance failures, with more serious tax evasion potentially attracting criminal liability under the Criminal Code.

Advance CIT payments not aligned with the eventual annual liability are trued up on filing of the annual return, with any shortfall attracting statutory default interest from the original due date. Groups within Pillar Two scope should anticipate additional standalone registration steps ahead of their first minimum-tax return, notwithstanding the retroactive 1 January 2024 application of the underlying law.

9.1 Entity choice

The limited liability company (Друштво со ограничена одговорност, DOO) is the standard vehicle for both domestic and foreign investors, offering limited liability with modest minimum capital requirements. Joint-stock companies (Акционерско друштво, AD) suit larger enterprises or those anticipating external capital raises or public listing. Branches of foreign companies are permitted and taxed on attributable North Macedonian-source profits at the standard 10% rate. Technological Industrial Development Zone residency is available as an alternative structuring option for manufacturing and export-oriented investment, offering a ten-year CIT holiday.

9.2 Structuring and incentives

Investors commonly evaluate Technological Industrial Development Zone residency for manufacturing and export operations given the ten-year corporate tax holiday and customs relief, and the simplified 1% turnover-based CIT regime for smaller domestic operations. The domestic dividend participation exemption supports holding structures for groups with North Macedonian subsidiaries, while outbound financing and royalty flows should be tested against related-party thin-capitalisation restrictions and the flat 10% withholding rate, mitigated where available under North Macedonia's treaty network.

9.3 Worked effective-rate illustration

A North Macedonian DOO earns EBITDA of MKD 60,000,000, books depreciation of MKD 8,000,000 and net interest expense of MKD 4,000,000 on an arm's-length related-party loan within permitted debt-to-equity parameters. Taxable profit is 60,000,000 − 8,000,000 − 4,000,000 = MKD 48,000,000. CIT at the standard 10% rate is MKD 4,800,000. If the after-tax profit of MKD 43,200,000 were fully distributed to a resident individual shareholder, dividend withholding of 10% would apply, giving a combined burden on distributed profits of 10% + (90% × 10%) = 19% — a modest cumulative tax burden that makes North Macedonia one of the lower-tax jurisdictions in South-East Europe for owner-managed businesses.

9.4 Compliance

Expect monthly or quarterly VAT compliance depending on turnover, monthly payroll withholding, statutory financial statements prepared under applicable accounting standards, and transfer pricing documentation for material related-party dealings. Technological Industrial Development Zone residents face zone-specific reporting to maintain preferential status. Groups within Pillar Two scope should budget for standalone registration and top-up tax return obligations under the December 2024 Law on Minimum Global Corporate Income Tax, notwithstanding North Macedonia's low headline CIT rate.