Value Added Tax (VAT) as a general consumption tax was introduced by the Law on Value Added Tax, and it regulates its calculation and payment. The subject of VAT taxation is:
• the supply of goods and services, which is carried out for a fee in the country by the taxpayer within the framework of his economic activity and
• the import of goods.
A taxpayer is a legal entity and a natural person who carries out an activity on the territory of the Republic of Macedonia, and the obligation for mandatory registration for VAT purposes has only those taxpayers who:
• in the past calendar year achieved a total taxable turnover of over 2,000,000 denars (including the tax attributable to it, except for the turnover exempted without the right to deduct the previous tax);
• or whose total turnover is expected at the beginning of the performance of the economic activity to exceed the amount (over 2,000,000 denars);
• or during the year exceeds the amount (over 2,000,000 denars).
Small business entities that are below the threshold for mandatory registration are given the opportunity to choose whether to be registered as VAT payers.
VAT is calculated by applying proportional tax rates to the tax base for taxable turnover of goods and services and imports, as follows:
1. According to the general tax rate of 18%, which is applied to the entire taxable turnover and imports, except for turnover and imports that are taxed at the preferential tax rate and
2. According to the preferential tax rate of 5%, which is applied to the turnover and imports of the following goods and services:
o products for human consumption, Drinking water from public systems for supply and disposal of urban wastewater and water for irrigation of agricultural land;
o publications;
o seed and planting material for the production of agricultural plants, fertilizers, plant protection products, foils, of plastic mass for use in agriculture, agricultural mechanization;
o automatic data processing machines and their units (computers), software for automatic data processing machines and their units (computers);
o thermal solar systems and components;
o medicines;
o medical equipment, aids and other devices intended for the alleviation or treatment of disability exclusively for personal use by disabled persons;
o crude oil for the production of food for human consumption;
o the first turnover of residential buildings and apartments in the part in which they are used for residential purposes and which will be carried out within five years after construction;
o animal feed, feed additives and live livestock;
o baby products, namely: cot, stroller, transporter, relaxer, car seat, bathtub, feeding bottle, pacifier, bottle and diapers for babies;
o school supplies, namely: school bag (backpack), notebook, pencil, pen, pad, workbook, crayons, ruler, compass, plasticine, sharpener, eraser and corrector;
o transportation of persons and their accompanying luggage;
o services for maintaining public cleanliness and waste disposal;
o accommodation services (overnight stay) or accommodation with breakfast, half board or full board;
o in all types of commercial catering facilities.
o Thermal energy for heating;
o Electricity for households and
o Craft services performed by craftsmen who are registered in the craft register in accordance with the Craft Law, namely: Repair of: – bicycles, – shoes and leather products, – household clothing and bedding (including mending and re-tailoring) and hairdressing services.
3. The preferential tax rate of 10% applies to:
• services for the delivery of food and beverages for on-site consumption and catering services, with the exception of alcoholic beverages;
• the supply and import of electricity for households and
• the supply and import of energy sources.
Certain transactions are exempt without the right to deduct the previous tax, such as:
• the transaction of residential buildings and apartments, in the part in which they are used for residential purposes, with the exception of the first transaction, which will be carried out within a period of up to five years after construction, as well as the rental of residential buildings and apartments, if they are used for residential purposes;
• the transaction of postage and fee stamps at their nominal value, of envelopes, postal cards and other postal securities on which postage stamps are imprinted, as well as of control stamps (banderole) and postal services by the Macedonian Post;
• banking and financial transactions, insurance and reinsurance services, including the related services of insurance brokers and agents;
• games of chance and entertainment games, the performance of which is regulated by the Law on Games of Chance and Entertainment Games;
• educational services, health services;
• services and supply of goods by social care and protection institutions, including the services of nursing homes, nursing homes and treatment facilities for the elderly;
• services within the framework of the care and supervision of children and young people, as well as closely related supply of goods;
• services within the framework of the accommodation of children and young people for the purpose of their upbringing, education or further training, as well as closely related supply of goods;
• international passenger transport,
• supply by institutions carrying out activities in the field of culture with a non-profit purpose for cultural services and goods directly related to those services.
Certain supplies are exempt with the right to deduct the previous tax, such as:
• export of goods;
• supply of goods transported or sent from the country to free zones, customs zones or customs warehouses;
• services related to import, export and transit;
• supply of gold and other precious metals to central banks;
• the supply, modification, repair, maintenance, chartering and rental of aircraft used mainly in international commercial air traffic, as well as the delivery, rental, repair and maintenance of goods used to equip the aircraft; as well as the supply of goods and services related to meeting the immediate needs of aircraft;
• international air transport of passengers in air traffic;
When importing goods into the country, certain exemptions are also provided, which are listed in detail in the law itself.
Upon request, taxpayers who do not have a seat or branch in the Republic of Macedonia and who do not carry out any trade in it, are refunded the previous tax paid for purchases in the country.
Non-profit organizations are granted a VAT refund for the supply and import of goods that are transferred abroad where they are used for humanitarian, charitable or educational purposes.
If a foreign diplomatic or consular mission purchases goods or uses services for official purposes in the country, it shall be refunded the VAT paid, for invoices whose amount exceeds 5,000 denars, including VAT.
The VAT refund shall also be granted to diplomatic personnel, if the said persons have acquired goods or used services in the country for personal purposes. In that case, the refund shall be limited to a total amount of 50,000 denars for the relevant calendar year.
International organizations and their members shall ensure the refund of VAT for the supply of goods or services provided to them, according to the conditions and limitations established by international agreements.
