11th December 2020, Skopje – Revenue collection by the municipalities needs to be improved, municipal capacities for better planning need to be strengthened, fiscal consolidation is needed, as well as greater transparency and accountability in spending public funds. These are the main conclusions from today’s UNDP Conference “Beyond COVID-19: Building Resilient Local Governments”, at which Minister of Finance, Fatmir Besimi, took part.

The Minister pointed out that municipalities are provided stable revenues from the Budget of the Republic of North Macedonia on the basis VAT grant, in the amount of 4.5% of VAT collected.

“Under the measure, adopted by the Government within the fourth set of measures, aimed at ensuring smooth financing, last three years are taken as a reference period rather than the previous year alone. In the period to come, more attention will be paid to introducing the revenue equalization system, by introducing a criterion to the existing VAT grant allocation, thereby taking account of the fiscal effort put by each municipality. This provides for more equal allocation of the VAT grant on one hand, at the same time stimulating the municipalities to undertake measures and activities for collecting the legally prescribed revenues, on the other”, Besimi said.

As regards the grants for transferred competences, criteria for distribution of funds allocated for the transferred competences in the field of primary and secondary education, culture, child care and protection of elderly people and fire fighting will be determined in the coming period. At the same time, amount of grants will be determined according to the municipalities’ needs, adhering thereby to the legal provisions, whereby local institutions need to be reorganized and equal access to all municipal services to the citizens needs to be ensured. At the same time, activities are undertaken aimed at improving the quality of local services for the transferred competences.

Increased own revenue performance at the municipalities, in particular revenues collected on the basis of taxes on real estate, as a result of better inclusion of the real estate of natural persons and legal entities and re-assessment of the value of real estate, will continue in the next medium-term period.

The Minister pointed out that municipalities are provided stable revenues from the Budget of the Republic of North Macedonia on the basis VAT grant, in the amount of 4.5% of VAT collected.

 “Under the measure, adopted by the Government within the fourth set of measures, aimed at ensuring smooth financing, last three years are taken as a reference period rather than the previous year alone. In the period to come, more attention will be paid to introducing the revenue equalization system, by introducing a criterion to the existing VAT grant allocation, thereby taking account of the fiscal effort put by each municipality. This provides for more equal allocation of the VAT grant on one hand, at the same time stimulating the municipalities to undertake measures and activities for collecting the legally prescribed revenues, on the other”, Besimi said.

As regards the grants for transferred competences, criteria for distribution of funds allocated for the transferred competences in the field of primary and secondary education, culture, child care and protection of elderly people and fire fighting will be determined in the coming period. At the same time, amount of grants will be determined according to the municipalities’ needs, adhering thereby to the legal provisions, whereby local institutions need to be reorganized and equal access to all municipal services to the citizens needs to be ensured. At the same time, activities are undertaken aimed at improving the quality of local services for the transferred competences.

Increased own revenue performance at the municipalities, in particular revenues collected on the basis of taxes on real estate, as a result of better inclusion of the real estate of natural persons and legal entities and re-assessment of the value of real estate, will continue in the next medium-term period.

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