Skopje, 29 July 2011 (MIA) – Starting 1 September, green card for passenger and freight will be cheaper, VAT on tourist services and sales and import of raw oil used in production of cooking oil will be reduced from 18% to 5%, taxpayers, total turnover of which realized in the previous year is less than Denar 3 million on all bases will be fully exempted from the payment of profit tax.


These are only few of the measures adopted by the Government at today’s first session which, as Prime Minister said, will improve the business climate, have positive effects on the living standard of the citizens and better the possibilities for the companies.


Government also adopted draft Law on Subsidizing Housing Credits.


– Price of annual green card for passenger vehicles up to 66 kilowatts is reduced from EUR 160 to EUR 60, for passenger vehicles above 66 kilowatts, it is reduced from EUR 160 to EUR 90, while as regards freight vehicles, the price is reduced from EUR 450 to EUR 280. Monthly, three- and six-month green cards for both passenger and freight motor vehicles are abolished, Gruevski said at the press conference.


According to Vice Prime Minister Pesevski, it is, however, up to the citizens to decide whether they are going to use the green card, i.e. vehicle insurance services, when traveling abroad.


An amendment is also envisaged to the Law on Compulsory Motor TPL Insurance, pursuant to which the competence for green card pricing will be transferred to the Government in future.


Pursuant to the amendments to the Profit Tax Law, companies realizing Denar 3 to Denar 6 million as turnover in the taxable year can opt for the taxation model. They will be given the possibility to pay tax on turnover of 1%, instead of profit tax of 10%, as envisaged in the existing Law. Once they have opted for the taxation model, as Gruveski explained, they cannot change it in the next three years, including the year for which tax on turnover is paid.


– These measures have direct effect as regards stimulating the development of the private sector, as well as self-employment, establishment of new and growth of the existing small business. Proposed solution will start applying even in the course of this year. Funds released with such tax exemption are financial support to development of existing and newly established companies in the current years, Gruevski pointed out.


By reducing VAT rate on raw oil, he added, the Government directly contributes to reduction of producers’ costs, this reflecting on the setting of the final price of cooking oil.


Government pays special attention to tourism, an area where more jobs are created, higher foreign currency inflows are realized, local economic development is provided and cultural heritage of the country is promoted.


– In addition to subsidies to tour operators for bringing foreign tourists, reduction of VAT rate on accommodation, bed and breakfast, half boards and full boards in all types of commercial hotel facilities is expected to contribute to reduction of prices of services offered by hotel and other accommodation facilities for the amount of the reduced tax, greater competitiveness of hotel facilities on the market, increased number of both domestic and foreign tourists, increased profit, as well as modernization, reconstruction or extension of such facilities. Such reduction of VAT rate will also contribute to increase of sales of food products, intensification of production in certain production capacities in this sector, as well as increase of seasonal and full-time employment in the tourism sector, Gruevski said.


Objective of the draft Law on Subsidizing Housing Credits is to help the citizens who have not resolved their housing issue and do not have their own home, especially young people and married couples.


– Government will start realizing two projects, the first one where payment of credit installments for the first five years will be split by the Government and the citizens on 1/2 basis and the other one where 50% participation of the deposit in order to obtain a credit for purchasing a flat or building a house will be provided by the Government, Prime Minister underlined.


The new legal solution provides for subsidizing half of the monthly installment for a period of 5 years for credits up to EUR 50,000 at the most, intended for building a house or purchasing a flat. Thereby, if a flat is purchased, selling price, including VAT, should not exceed EUR 900 per square meter of net usable space. Interest in the first three years should not be higher that 4.99% annually.


Beneficiaries are not required to return the subsidized funds. Funds can be used for both new flat or house and purchasing or building larger flat/house by selling the existing flat/house. Should the credit be higher than EUR 50.000, subsidizing would not cover the amount exceeding this sum.


– Following the end of the three-year period, interest rate may not increase by more than 10% in the next two years, it will be up to 5.5% on annual basis. Banks will be paid the funds for subsidizing monthly installments for a whole year in advance. Repayment period may not be shorter than 20 years, Gruevski explained.


The second project envisaged under this Law provides the possibility for the Government to participate with 50% of the of the deposit in order to obtain a credit for building a house/purchasing a flat. Remaining 50% of the deposit will be provided by the purchaser. The deposit may not exceed 25% of the housing credit, whereby the credit may not be higher than EUR 50.000. If it is a matter of credit for purchasing a flat, selling price, including VAT, should not exceed EUR 900 per square meter of net usable space. Repayment period may not be shorter than 20 years, and interest rate should be lower than Euro LIBOR + 4.5%.


Funds, as Prime Minister said, are provided from the Budget of the Republic of Macedonia, and the beneficiaries will start repaying the funds after 20 years, interest free, in five annual installments. Should the credit be higher than EUR 50.000, these requirements will not apply for the portion exceeding EUR 50,000.


Requirements to use credits under this program will be as follows: the flat to be purchased/the house to be built to be in a new building/to be new house, with all necessary documentation (title deed, licences and building permits), to be purchased directly from the investor or the contractor of the residential building, credit beneficiary, i.e. his/her spouse not to own any flat proving it by submitting a statement under substantial and criminal liability, credit beneficiary to be allowed to sell his/her flat so as to build a house, credit beneficiary and his/her spouse to have no other housing credits, earnings of both the credit beneficiary and his/her spouse not to exceed EUR 900 on monthly basis.


When concluding agreement with the banks, prohibition will be envisaged as for leasing the real estate (rent), additional burdening of the real estate with mortgage and an obligation to report the place of residence on the address of the new flat/house for a period of 15 months from the day of concluding the sale and purchase agreement.


Vice Prime Minister Zoran Stavreski said that the issue of substantial and criminal liability of the person applying for subsidized housing credit will be precisely regulated. The idea is to prevent any possible abuses.


– The purpose is for the funds to be extended to those persons resolving their housing issue for the first time and meeting the envisaged requirements. We would like to provide for the middle class and the working class to be able to build a house or purchase a flat, Stavreski explained.


This program will be for a period of four years, during the term of office of the present Government. Amount of funds to be used for subsidizing building of new houses and purchasing flats will ne determined each budget year, in line with the priorities.


According to Stavreski, fiscal implications are in the amount of Denar 150 million as regards profit tax measures, Denar 300 million for VAT on annual basis, while with respect to subsidizing the building of a house and purchasing a flat, there will be no implications until funds in the budget intended for this purpose are projected, Stavreski explained.


He also said that, so far, initial discussions have been held with the banks as regards interest rate.


– Such discussions will continue. Now, we have a period of 60 days till the preparation and adoption of the bylaws. The Law will come into force in the new budget year, 1 January. We believe we can succeed in achieving agreement at least with some banks to accept these requirements. We are also being flexible, if the citizens cannot be extended funds under these requirements, we are still going to provide subsidizing, however within the set limits. Funds exceeding the set limits will not be subsidized, however, it does not mean they will be excluded from the possibility to use subsidized funds, Stavreski said.


Manner of participating, as he explained, will be transparent on the basis of public call for competition announced by the Ministry of Finance, inviting the banks, which are to meet certain requirements, to participate, and the citizens, in a period of several months, will to be informed through a public invitation to be apple to apply. Citizens will have to previously obtain consent by the banks on their creditworthiness. Their selection will most probably be carried out through an electronic auction.


– Implementation of this Law will boost activities and employment in the construction sector. It is assessed that effects of such measure will be of broader scope, taking into account that they will subsequently spill over and stimulate the activity in many other segments of the economy and the society as a whole, Gruevski underlined.


As he said, there were only initial measures under the government program to have deep positive reflection. Many new measures are to follow, which will even more improve the conditions for both the citizens and the companies.


– Continuity of the reforms and the results yielded therefrom, coupled with the new beginning and the new cycle of new reforms and measures will lift Macedonia to a new rung of quality of life and competitiveness. The goal is better life for all citizens. We will use all our potentials to provide for this, Gruevski underlined, expressing, once again, thankfulness to the citizens for their support and trust.


– We promise to put maximum efforts to the best interests of all citizens to realize the program, all to the end of improving the living standard and intensifying the economic growth and development. Trust has to be justified. Prompt, efficient and effective actions are to be undertaken. Reforms continue with the intensified pace, Prime Minister Nikola Gruevski pointed out at the press conference, attended by all new Government members.


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