NORTH MACEDONIA Law and Practice Contributed by: Ana Tosic Chubrinovski, Ivica Jevtic, Ljupka Naumoska Gjorgjievska and Marija Boceska, JPM Partners North Macedonia
Resources, with a strong emphasis on sustainable development and environmental protection.
• VAT has a general rate of 18%, with reduced rates applying to certain goods/services depending on the item/category. However, there is no tax reduction that applies exclu - sively to mining. In the mining sector, if part of the project – such as processing and/or industrial pro - duction – is located within a technological industrial development zone (TIDZ), the investor would gain the right to benefit from applicable incentives for legal entities, namely: • ten years exemption from profit tax; • ten years exemption from paying personal income tax for newly employed individuals within the legal entity; • exemption from customs duties on the import of equipment and materials for production; • exemption from VAT on the trade of goods and services within the TIDZ, except for trade intended for final consumption; and • exemption from VAT on imported goods, provided the goods are not released for free circulation – ie, are not intended for final consumption. Tax stabilisation agreements are not recognised under North Macedonia’s legislation for any sector. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects If the concessionaire intends to transfer the conces - sion for the exploitation of mineral resources, it is required to first obtain consent from the grantor – ie the government of the Republic of North Macedonia. The entire procedure is conducted before the compe - tent Ministry of Energy, Mining and Mineral Resources, which, upon receiving the request for consent to the transfer of the concession, submits a request for an assessment of the concessionaire’s business venture using the income method, in accordance with the Law on Valuation. The new concessionaire is required to pay a transfer fee amounting to 7% of the appraised value of the concession for the exploitation of mineral resources, based on the valuation report, and such payment is a precondition for effectuating the change in the trans -
4. Taxation of Mining and Exploration 4.1 Mining and Exploration Duties, Royalties and Taxes According to North Macedonia’s legislation, the charg - es related to mining/exploitation of mineral resources are mostly fees and concession payments. The concessionaire is obliged to make the following concession payments: • one-time fee for detailed geological explorations – ie, for using the area for exploration; • an annual fee for using the area awarded under the exploitation concession in the amount of DEN300,000.00/km² for metallic mineral resources; and • a fee/compensation for the quantity of exploited mineral resources, in the amount of 4% of the mar - ket value of the exploited metal per ton in each ton of concentrate produced by the concessionaire. This is effectively the “royalty-type” component – the mineral output is taxed. The concessionaire is also obliged to pay 10% profit tax. North Macedonia’s legislation does not make a dis - tinction between national and foreign investors, and the fees, concession payments and taxes are in the same amount regardless of whether it is a legal entity established by foreign legal entities or individuals or domestic legal entities or individuals. 4.2 Tax Incentives for Mining Investors and Projects In North Macedonia’s legislation, taxes are generally low and flat: • profit tax is 10%; • personal income tax (for individuals, salaries, divi - dends, etc) is also 10%; and
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