Basic categories of the Law on personal income tax
What is a personal income tax Questions and answers
Aleksandar Buzarovski Head of the Administrative-financial department with MCMC
Current Law on personal income tax was passed in 1993 (Official Gazette of the Republic of Macedonia No. 80/93). By this Law are regulated all the payments referring to physical persons in the Republic of Macedonia, regardless of the fact whether it is an endorsement or a cash payment, i.e. it is regulated the way of taxation of the citizens’ income.
General provisions of the Law
According to Article 6 of the above stated law, income tax shall not be payable on earnings for the following:
O Awards granted by the United Nations and other international organizations;
O Awards granted for lifetime achievements in science, culture and sports;
O Scholarships and allowances given to pupils and students through public administration agencies and foundations in accordance with the Law;
O Rewards for sportsmen for achieved results on the official international competitions;
O Stipends for sportsmen
O Compensation of travel and per diem costs for official trips, fieldwork allowances and allowances for living separately from the family;
O Payments for travel, food and annual leave allowances;
O Disability allowance, salary and pension for disabled persons;
O Child allowance;
O Unemployment benefit;
O Compensation for the death of a family member;
O Compensation for suffered damages from catastrophes;
O Compensation for health insurance;
O Social welfare;
O Compensation for corporal injuries;
O Compensation for damages based on life and property insurance;
O Interests from public loans;
O Interests on saving deposits, current accounts and sight deposits;
O Alimentation and compensation for damages upon court decisions;
O Severance pay for retirement;
O One-time allowance as severance pay for constant employment under conditions and procedures determined by the law.
All payments not listed in the above-mentioned article are subject to calculation and payment of personal income tax. For every payment not listed above (which means not exempt) you have to calculate and pay the personal income tax. The same (that is the earnings or the realised income) are defined by the law as follows:
Personal earnings based on employment (salary)
Incomes form agricultural activity
Personal earnings from economic or professional activity
Incomes from property and proprietary rights
Other kinds of income
A taxpayer is the person who is a receiver of the payment/earnings, but a responsible person for tax calculation and payment is the person (the subject) who pays out the personal earning. In practice, that would be: a taxpayer is the person to whom a certain compensation is paid, but responsible for the tax calculation and tax pay is the one who executes the order.
For each individual payment, the receiver of the payment is obligatorily given a sample of the calculation, and until February 15 the next year, he is given information about total calculated and paid advanced payments of the personal income tax.
As a tax base can be considered all incomes (of every individual) realized in the country and abroad reduced by one fourth of the average salary realized in the country.
The rate used in calculating the personal income tax is changeable (progressively) and depends on the level (a calculation base) of the payment, so that for payments:
O Up to 25 500.00 MKD (net) or 31 500.00 (gross) MKD, a rate of 15 % is used;
O Above 25 500.00 MKD (net) or 31 500.00 (gross) MKD, a rate of 18% is used.
This means that for all incomes you will pay a 15% rate for the personal income up to 25 500.00 and for every sum above this, the rate is 18 % …
(To be continued in the next issue)