How will the latest tax amendments to the civil society organizations’ performance reflect?
Amendments to the Personal Income Tax Law II
In the last months of 2006 the Government of the Republic of Macedonia initiated a series of amendments in the so-called tax legislation. As a result, the surroundings and working conditions of the economic subjects and civil society organizations will drastically change. That is why in the following few issues the Civic World shall explain the amendments to the existing laws on Tax Profit, Value Added Tax and the Personal Income Tax Law along with the beginning of application of the Law on Donations and Sponsorships and introduction of the so-called flat tax.
In this issue read the second part of the amendments to the Personal Income Tax Law.
Income from property and property rights
In accordance with Article 34 of the Law, the net income shall be the base for computation of the tax, which is realized when the annual amount of the earned income in the taxable year is reduced by the expenses for maintenance and management, annual amortization and other expenses necessary in earning the income.
The expenses shall be acknowledged at 25% of the income. When establishing the tax base of the income tax on property revenues realized by renting furnished flats and offices, then in accordance with Article 34-a the expenses shall be recognized in the amount of up to 30% of the gross income and they do not need to be proved. The other expenses, if there are any, need to be documented, to have appropriate invoices, receipts and other documents that shall prove their occurrence.
In accordance with Article 80, advance payment of income tax from property and property rights (lease), when the income payer maintains business records, is computed on tax base (lease) according to Article 34 with application of tax rate of 12%.
Tax computation
Computations can be done in two ways, with application of regulated or computed rate.
Computed rate is computed as following:
2006
computed rate = 0.15 x (1-0.25) / 1-[0.15x(1-0.25)] x 100 = 12,6761
2007
computed rate = 0.12 x (1-0.25) / 1-[0.12x(1-0.25)] x 100 = 9,8901
According to this way of computation, computed (deduced) rate of PT is applied to the amount that shall be paid to the person, thus having the amount of personal tax. We will present it through examples:
- if the payment is on net amount, the computation shall be:
|
|
Until 31.12.2006 |
From 01.01.2007 |
|
Net amount for payment |
10,000 |
10,000 |
|
Computed rate |
12,6761% |
9,8901% |
|
Personal tax |
1.267 |
989 |
|
Gross income |
11.267 |
10.989 |
- if the payment is on gross amount, the computation shall be:
|
|
Until 31.12.2006 |
From 01.01.2007 |
|
Gross income |
11.267 |
10.989 |
|
Percentage of standardized costs |
25% |
25% |
|
Tax base |
8.450 |
8.242 |
|
Regulated rate |
15% |
12% |
|
Personal tax |
1.267 |
989 |
|
Net amount for payment |
10,000 |
10,000 |
If costs are acknowledged in amount of 30% of the gross income, the computation is as follows:
2006
computed rate = 0.15 x (1-0.30) / 1-[0.15x(1-0.30)] x 100 = 11,7318
2007
computed rate = 0.12 x (1-0.30) / 1-[0.12x(1-0.30)] x 100 = 9,170%
- for paid net rents
|
|
Until 31.12.2006 |
From 01.01.2007 |
|
Net amount for payment |
10,000 |
10,000 |
|
Computed rate |
11,7318% |
9,170% |
|
Personal tax |
1.173 |
917 |
|
Gross income |
11.173 |
10.917 |
- for paid gross rents
|
|
Until 31.12.2006 |
From 01.01.2007 |
|
Gross income |
11.173 |
10.917 |
|
Percentage of standardized costs |
30% |
30% |
|
Tax base |
7.821 |
7.642 |
|
Regulated rate |
15% |
12% |
|
Personal tax |
1.173 |
917 |
|
Net amount for payment |
10,000 |
10,000 |
Capital revenues
Capital revenues shall refer to the following:
(1) dividends and other incomes realized through participation in the profit with legal
entities and physical persons;
(2) interests on loans given to physical persons and legal entities;
(3) interests on bonds or other securities, and
(4) interests on time savings deposits and other deposits.
With the amendments to the Personal Income Tax Law, the regulation that the income tax base on the basis of paid gross dividends, that is, incomes from participation in the profit allocated to the taxpayer are reduced to 50%, is deleted. It means that after 01.01.2007, taxation base shall be the whole amount of paid dividends, that is, the whole amount of income from participation in the profit.
The computed rate is computed as follows:
2006
computed rate = 0.15 x (1-0.50) / 1-[0.15x(1-0.50)] x 100 = 8,1081
2007
computed rate = 0.12 / 1- 0.12 x 100 = 13.6363%
According to this way of computation, computed (deduced) rate of PT is applied to the amount that shall be paid to the person thus having the amount of personal tax. We will present it through examples:
|
|
Until 31.12.2006 |
From 01.01.2007 |
|
Net amount for payment |
1.000,000 |
1.000,000 |
|
Computed rate |
8,108% |
13.6363% |
|
Personal tax |
81.080 |
136.363 |
|
Gross income |
1.108,080 |
1.136,363 | Notice: When it is about dividends, one should take into consideration that an amount bigger than the dividend determined by financial reports cannot be paid, that is, the tax is included in that amount.
Games of chance
The taxpayer of an income earned from games of chance and other prize games shall be a physical person who has realized gains from the mentioned games.
Each single gain earned from games of chance and other prize games shall represent the tax base.
lf the gains from games of chance and other prize games consist of objects, the market value of the objects at the time of the gain will be considered as the tax base.
lf the single gain does not exceed the amount of 10,000 denars realized in the country, the gains from games of chance and other prize games shall be exempt from taxation.
lf the single amount of the gain exceeds the amount of 10,000 denars, the tax shall be computed for the full amount of the gain.
Advance payment of income tax for incomes earned from games of chance shall be computed on the tax base of Article 54 of this Law with application of a rate of 12% and the computed and paid tax after deduction is considered to be discharged tax liability. Incomes on this base are not included in the tax base of the annual income tax.
Other incomes
2006
computed rate = 0.15 x (1-0.35) / 1-[0.15x(1-0.35)] x 100 = 10,8033
2007
computed rate = 0.12 x (1 – 0.35) / 1- [0.12 x (1 – 0.35)] x 100 = 8.4598%
|
|
Until 31.12.2006 |
From 01.01.2007 |
|
Net amount for payment |
1.000,000 |
1.000,000 |
|
Computed rate |
10,8033% |
8,4598% |
|
Personal tax |
108.033 |
84.598 |
|
Gross income |
1.108,033 |
1.084,598 |
|