Taxation on Total Income - “Simplified Tax Regime for the Trade Companies“

The application of “Simplified Tax Regime for Trade Companies”

The trade companies which meets the conditions for calculating and payment of annual tax of total income and which realized total income in the year that is being assessed from any sources between 3.000.001 and 6.000.000 MKD on annual level, can determine to calculate and pay Annual Tax of Total Income according to the provisions of the chapter VII-a “Simplified Tax Regime for the Trade Companies” of the Law on Corporate Income Tax, instead paying of Corporate Income Tax.

The trade companies cannot change the determined model/regime of taxation in the next three years, including the year in which the tax of total income is paid, if in the next three years they are realizing total income between 3.000.001 and 6.000.000 MKD on annual level.

The trade companies which perform: banking, financial, insurance activity, as well as activity from the area of the games of chance and entertainment games are not taxed by the Annual Tax on Total Income, regardless of the amount of the realized total income.

Tax exemption

The trade companies that meet the conditions for calculating and payment of Annual Tax of Total Income and which total income realized in the year for which the tax is being assess from any source do not overcome the amount of 3.000.000 MKD on annual level are exempt of the obligation for paying of Annual Tax of Total Income.

Basis for Annual Tax on Total Income

The Annual Tax on Total Income is calculated on the basis of the realized total income on all grounds (revenues from main activities, financial revenues, share in the profit of the associated companies), in the business year for which the tax is being assess. The business year means calendar year.

Rate on which the Annual Tax of Total Income is calculated and paid

The Annual Tax of Total Income is calculated in the amount of 1%from the realized total income amount stated in to the Income Statement in the Annual Account and the financial reports according to the provisions of the Law on Trade Companies, for the business year for which the tax is being assess.

Method and period of registration of the Trade Companies for Annual Tax on Total Income

The trade companies that meets the conditions for calculation and payment of the Annual Tax on Total Income, the Public Revenue Office records them in Registry of Trade Companies for Annual Tax on Total Income.

The PRO performs the registration on the basis of the data for the expressed total income in to the Income Statement in the Annual Account and the financial reports according to the provisions of the Law on Trade Companies, for the business year for which the tax is being assess.

The assessment of the Annual Tax of total Income is being made by self taxation on the basis of the form “DB-VP” - Тax balance of the total income which is submitted to the PRO within the period specified for submitting the Annual Account according the Law on Trade Companies and the accounting regulations i.e. until 28/29 of February in the year following the year for which the taxation is being asses. For the taxpayers who submitted the Annual accounts to the Central Registry of RM electronically, the deadline for submission is March 15th.

Obligation for submitting of the form “DB-VP” to the PRO, also have the Trade Companies which are exempted of paying Annual tax of total Income (which total income do not overcome the amount of 3.000.000 MKD).

The payment of the tax is made at latest within 30 days after the deadline for the submission of the form.

Erasing from the Registry of Trade Companies for Annual Tax of Total Income

The trade companies are erased from the taxpayer`s registry which calculate and pay Annual Tax of Total Income if:

• The Public Revenue Office during the review of the annual accounts and the business books of the trade company, determines that it does not meet the conditions of the Law, i.e. if the realized total income in the year for which the tax is assessed is higher of the maximum amount, i.e. it is higher than 6.000.000 MKD. In this case the trade company is obliged to pay Corporate Income Tax, and the paid tax on total income will be considered as advance payment of the Corporate Income Tax;
• The Public Revenue Office determines that it is a case of related entities that make significant joint turnover, with prices that are different from the prices established with independent entities, with an aim to achieve reduced tax payment; and
• The Public Revenue Office determines that the trade company undertakes obligations and shows expenses in regards to the work with related entity.