PROMOTING ENTREPRENEURSHIP
Republic of North Macedonia has created favourable business environment for domestic and foreign investors. Country is ranked 10th ease of doing business in the World’s Bank Doing Business Report 2019. With the recent economic reforms, North Macedonia has created the most attractive tax package in Europe. These reforms include: 10% corporate income tax and 10% to 18% personal Income tax, which simplify the tax system and stimulate successful companies to further improve operations and increase profitability.
Market freedom, the freedom of entrepreneurial activity, as well as property rights are fundamental values outlined in the Constitution of the Republic of North Macedonia.
More on business environment on the following link: http://www.investinmacedonia.com/investing-in-north-macedonia/business-environment
North Macedonia has introduced a ONE-STOP-SHOP SYSTEM that enables investors to register their businesses after 4 hours of submitting on application (in practice, it might take 1-2 business days). One can register a company in North Macedonia by visiting one office, obtaining the information from a single place, and addressing one employee. This significantly reduces administrative barriers and start-up costs.
More on how to start business in Republic of North Macedonia on the following link: http://www.investinmacedonia.com/investing-in-north-macedonia/setting-up-your-business
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT
The Constitution of the Republic of North Macedonia guarantees an investor’s right to property. No person may be deprived of his/her property or the rights deriving from it, unless the use of that property affects the general welfare of the public. Foreign investors may acquire property rights for buildings and for other immovable assets to be used for their business activities, as well as full ownership rights over construction land through a locally registered company. If the property is expropriated or restricted, rightful compensation of its market value is guaranteed. If the foreign company registers a local company according to Macedonian law, it can acquire land with full ownership rights similar to a domestic company.
THE COMPANY LAW
The Company Law is the primary law regulating business activity in North Macedonia. It defines the types of companies, as well as the procedures and regulations for their establishment and operations. Foreign investors receive the same treatment as local companies and therefore do not need any special approvals.
Under the Company Law, trade companies are formed as separate legal entities that operate independently and are distinct from their founders, shareholders, and managers. Depending on the type, trade companies have their own rights, liabilities, names, and registered offices. The law defines five forms of trade companies: public trade (general partnership), limited partnership, Limited Liability Company, Joint Stock Company, and limited partnership by shares.
LAW ON INVESTMENT FUNDS
The Law on Investment Funds governs the conditions for the incorporation of investment funds and investment fund management companies. It also regulates the manner in which a company operates and exercises supervisory control of these operations, and the process of selecting a depository bank. The law does not discriminate against foreign investors in the establishment of open-ended or closed investment funds.
More on Law and Regulations on the following link: http://www.investinmacedonia.com/investing-in-north-macedonia/law-and-regulation
The legal framework includes the One-Stop-Shop system that aims to tackle some of the administrative barriers of entry into the business life in North Macedonia. According to the Law of the One-Stop-Shop system, all types of trade companies are registered within 4 hours of submission. Another important feature of the One-Stop-Shop is the electronic distribution service that allows any potential investor or third party to obtain complete electronic information about the operations of companies in the country.
https://www.crm.com.mk/DS/default.aspx?MainId=1&CatID=50
Ministry of finance is the responsible institution for tax policy formulation.
https://finance.gov.mk/mk/node/4434
https://finance.gov.mk/mk/node/385
Public Revenue Office is responsible for implementation of tax policies and taxes collection.
http://www.ujp.gov.mk/en
Republic of North Macedonia offers lowest total tax rate in the world according to the Global Competitiveness Report (2015-2016).
The rate of the Macedonian personal and corporate income tax is 10%. Moreover, the reinvested profit is taxed at a 0% tax rate. VAT is 18%. Property tax ranges from 0.10-0.20% and tax for property sales ranges from 2-4% depending on the municipality where the property belongs.
Social Security Contribution in North Macedonia: Pension Insurance: 18.4%, Health Insurance: 7.4%, Employment Insurance: 1.2% and Additional Health Insurance: 0.5%
http://www.investinmacedonia.com/why-north-macedonia/labor-market
North Macedonia offers additional incentives for development in the TIDZs (Technological and Industrial Development Zones), in addition to those normally associated with free economic zones.
Investors in TIDZs are entitled to personal and corporate income tax exemption for the first 10 years. Investors are exempt from payment of value added tax and customs duties for goods, raw materials, equipment and machines.
http://fez.gov.mk/#about-us
Ministry of economy offers support to SME’s through its Programme for competitiveness, innovation and entrepreneurship. Financial support is given in 4 different areas:
- support of SME’s and crafts
- support in the implementation of industrial policy
- support for clusters and
- support for social responsible practices.
Public calls are announced all year around and can be reached at: www.economy.gov.mk and www.konkurentnost.mk
Agency for Promotion and Support of SME’s offers support to SME’s through its Programme for competitiveness, innovation and entrepreneurship. Main instruments are:
- voucher counselling system
- mentoring services
- info-desk- through regional centers
- trainings, workshops, forums etc.
More info on: http://www.apprm.gov.mk/
Fund for Innovation and Technological Development supports innovation activities in micro, small and medium-size enterprises (MSMEs). Fund is responsible for implementation of the 3rd pillar of the Plan for economic reforms.
Main areas of support under 3rd pillar of the Plan for economic reforms are:
- co-financed grants for SME’s with tendency for fast growth
- co-financed grants for micro enterprises
- co-financed grants for innovation
- co-financed grants for training for newly employed young people.
Other instruments include:
- co-financed grants for newly established companies- “start-up” and “spin-off” and
- co-financed grants and conditional loans for commercialization of innovations.
More information on public calls: http://www.fitr.mk/aktivni-povici/
Macedonian Bank for Development Promotion (MBDP) promotes export, through providing credits and other forms of support: providing support for development of small and medium enterprises, by providing investment credits, as well as providing insurance of claims based on performed export against short term commercial risk.
MBDP offers the following financial products:
1. LENDING
- export credit financing – working capital for pre-shipment export finance and working capital for bridging the period between export and collection of payment from the foreign buyer; credit support to SMEs – permanent working capital and investment financing from various fund sources: ICL-Revolving, MBDP, EIB, EIB-Revolving; credit support to agriculture and agroindustry – primary production, processing and export – through commercial banks or directly through MBDP;
- micro financing – micro and small scale enterprises, individual entrepreneurs, handicraft shops, private merchants, market counters, and other micro and small scale entities;
- financing energy projects – energy efficiency and renewable energy sources; loans for reducing unemployement – creation and preservation of jobs and self-employment financing;
- loans for accommodation facilities – micro, small and medium-sized enterprises, with registered office in the Republic of North Macedonia, for purchasing, building and adaptation of small accommodation facilities not exceeding 70 beds and having up to 3 stars standard.
- loans for old people’s homes and kindergartens – micro, small and medium-sized enterprises, with registered office in the RNM for building and equipment of facilities for old people and kindergartens.
- loans for municipalities int he RNM – for realization of projects from the instrument for pre-accession assistance-IPA component for cross-border cooperation.
2. CREDIT INSURANCE of:
- domestic accounts receivable (pre- and post-shipment)
- export accounts receivable (pre- and post-shipment)
- against commercial and political risk.
3. FACTORING – is the Bank’s newest product which is unique on the financial market in RNM. It is a service which enables sale of goods and supply of services with defer payment, while part of the invoice value is received in advance.
More information on the following link:
http://www.mbdp.com.mk/index.php/en/
Employment Service Agency is responsible for implementation of the Operational Plan for Employment. Several measures include support for SME’s:
-Measure 2. Creation of new jobs-financial support for salaries, employment and growth of SME’s and
-Measure 3. Trainings-financial support for trainings and acquiring qualifications according to the employer’s needs.
More information and public calls on the following link:
http://av.gov.mk/announcements-for-employers.nspx
EU Funds
COSME- Europe’s Programme for SME’s aims at helping SME’s in accessing finance and accessing markets, supporting entrepreneurs and improving business conditions. SME’s from Macedonia are eligible for participation in the Programme. For more details and open calls: https://ec.europa.eu/easme/en/cosme/cosme-open-calls-proposals
IPARD – Instrument for Pre-Accession for Rural Development, among others, offers financial support for diversification of economic activities in rural areas and investments in manufacturing industry for agricultural products.
More information and public calls are available at: http://ipard.gov.mk/mk/category/soopstenija/javen-povik/
European Bank for Reconstruction and Development (EBRD) offers loans for support of competitiveness of SME’s with maximal amount of 1.000.000,00 Euros and 15% grant component. Loans are managed through the following banks:
Ohridska Banka https://www.ohridskabanka.mk/
Komercijalna Banka https://www.kb.com.mk
Sparkasse Banka https://sparkasse.mk
ProCredit Banka https://pcb.mk/
Detailed list of supporting institution and instruments for SME’s is available on the following link:
https://www.swisscontact.org/fileadmin/user_upload/COUNTRIES/Macedonia/Documents/Publications/Catalogue_Financial_Support_Services_2.pdf
The Free Zones Authority currently manages three fully operational zones: Skopje 1 and 2 in the capital, and one in Stip, the largest town in eastern Macedonia. The zone in Tetovo is currently operating as a public private partnership, and is in the process of implementing its first investment projects. Simultaneously, eleven zones intended for equal economic advancement of all regions in Macedonia are in various stages of development.
http://fez.gov.mk/#zones
Taxes, Customs and other Incentives
- 10 YEAR TAX HOLIDAY – Investors in the free zones are entitled to a 10-year tax holiday for profit and corporate tax and 100% reduction of personal income tax for a period of up to 10 years. Investors are exempt from payment of value added tax for import and trade of goods in the free zones. Additionally, investors are exempt from payment of customs duties for equipment, machines and spare parts.
- The land in the free zones in Republic of North Macedonia is available under long-term lease for a period of up to 99 years at concessionary prices.
- Investors are exempt from paying utility taxes to the local municipality, and fees for land building permits.
- Free connection to natural gas, water and sewage network.
- The Government may support growth of capital investments and income with a return of 10% of investment costs in new machines and equipment, or investment in buildings and land up to a maximum of €1 million during a 5-year period.
For more information visit: http://fez.gov.mk/why-invest/#1516709706334-5b5d1d63-4d2e
Agency for support and promotion of entrepreneurship http://www.apprm.gov.mk/
Economic Chamber http://www.mchamber.mk/default.aspx?mid=1&lng=1
Macedonian Chambers of Commerce http://www.chamber.mk/en/
Economic Chamber of North-West North Macedonia https://oemvp.org/mk/
Agency for support and promotion of entrepreneurship is governmental institution established with a purpose to implement the government policies for support of SME’s. Its network of regional foundations and centres, established in different regions in the country offers consultancy and other “soft” services for SME’s.
http://www.apprm.gov.mk/
Invest North Macedonia – Agency for Foreign Investors and Export Promotion of the Republic of North Macedonia is an official Government investment and export promotion agency responsible for attracting foreign investments and supporting the export promotion of the Republic of North Macedonia.
http://www.investinmacedonia.com/about-us
Recently, Government of Republic of North Macedonia adopted the Law on Financial Support of Investments offering aid scheme for business entities which invest in Republic of North Macedonia.
The entities that are eligible as beneficiaries of financial support shall be business entities that:
- perform production activities and
- have generated growth of revenues from the business activity in the last year as compared to the average of the previous three years or a shorter period, provided that the business entity is registered and has started with the business activity in a period shorter than four years as of the day of submission of the application for granting financial support and
- have the same average number, that is, growth of the average number of employees in the course of the last year as compared to the average of the previous three years or a shorter period, provided that the business entity is registered and has started the business activity in a period shorter than four years as of the day of submission of the application for granting financial support.
The following shall constitute types of financial support for investments:
a) Support for new employments;
b) Support for establishing and promoting the cooperation with suppliers from the Republic of North Macedonia;
c) Support for establishing organizational forms for technological development and research;
d) Support for investment projects of significant economic interest;
e) Support for capital investments and revenues growth; and
f) Support for purchasing assets of companies in distress.
Implementation institution are:
Direction for Technological Industrial Zones http://fez.gov.mk/financial-support/ and
Agency for Foreign Investors and Export Promotionhttp://www.investinmacedonia.com/financial-support
On the following link potential investors can calculate potential financial support: http://calculator.konkurentnost.mk/?curr=MKD&lang=en
Additional incentives are offered for investments in the Technological Industrial Development Zones.
Taxes, Customs and other Incentives
- 10 YEAR TAX HOLIDAY – Investors in the free zones are entitled to a 10-year tax holiday for profit and corporate tax and 100% reduction of personal income tax for a period of up to 10 years. Investors are exempt from payment of value added tax for import and trade of goods in the free zones. Additionally, investors are exempt from payment of customs duties for equipment, machines and spare parts.
- The land in the free zones in Republic of North Macedonia is available under long-term lease for a period of up to 99 years at concessionary prices.
- Investors are exempt from paying utility taxes to the local municipality, and fees for land building permits.
- Free connection to natural gas, water and sewage network.
- The Government may support growth of capital investments and income with a return of 10% of investment costs in new machines and equipment, or investment in buildings and land up to a maximum of €1 million during a 5-year period.
For more information visit: http://fez.gov.mk/why-invest/#1516709706334-5b5d1d63-4d2e
The Free Zones Authority currently manages three fully operational zones: Skopje 1 and 2 in the capital, and one in Stip, the largest town in eastern Macedonia. The zone in Tetovo is currently operating as a public private partnership, and is in the process of implementing its first investment projects. Simultaneously, eleven zones intended for equal economic advancement of all regions in Macedonia are in various stages of development.
http://fez.gov.mk/
