Implications of the Financial Crisis for Developing Countries
TAX IMPLICATIONS OF CRISIS THE CASE OF MACEDONIA
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OECD Sofia 10-11 June , 2010 TAX IMPLICATIONS OF CRISIS THE CASE OF MACEDONIA
Transcript of TAX IMPLICATIONS OF CRISIS THE CASE OF MACEDONIA
OECD
Sofia
10-11 June , 2010
TAX IMPLICATIONS OF CRISIS
THE CASE OF MACEDONIA
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Introduction of flat rate system
Reduction of tax rates
Broadening the tax base
TAX POLICY MEASURES IN 2006
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Tax rate was 15%
Tax incentives and relieves:
Accelerated depreciation up to 25% of tax base:
- Technologic modernization
- Purchase of the environmental protection assets
Tax base decreased for investments in fixed assets
up to Eur 100,000
Tax relief in proportion of the foreign capital invested
for the next three years (at least 20% participation)
PROFIT TAX
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Full tax relief if 100% foreign capital is
invested
50% tax decrease for start-up companies
Tax relief for companies initially listed on the
stock exchange:
- 30% in the first year
- 15% in the second year
PROFIT TAX
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PROGRESSIVE TAX RATES
Up to 2004:
15% and 18% brackets
From 2005 - 2006:
15%, 18% and 24% brackets
PERSONAL INCOME TAX
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Zero rate tax for reinvested profit
Depreciation not tax deductible
REINVESTED PROFIT
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Effects
strong performance of the revenues
There are more tax declarations submitted in
2008 compared to 2007 for 6,78% which
implies that more companies where subject
to profit tax
Financial result stated in the tax
declarations is higher for 74,5% in 2008 than
2007 which says a lot about a profitability of
the companies
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VAT
Strong performance in the first half of 2008
Effects of the oil price growth
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Last quarter in 2008
Revenues started to decline
Becoming aware of crisis
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Last quarter in 2008
Banks were not hit
Good mortgage coverage
Real economy
Orders were stopped
Export going downward
Import as well
Industrial production declining
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Anti-crisis measures
Companies started to complain
Asking for tax relaxation
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Anti-crisis measures
Measure for introduction of non-taxation of
profit not distributed
Political decision – policymaker problem
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Anti-crisis measures
CIT
Designing the corporate tax system
Taxation at the moment of dividend distribution to
non-resident companies or to individuals
Taxation of expenditures not recognized for tax
purposes
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VAT
The general rate of 18% for a certain supplies has
been shifted into preferential rate of 5%
computers
irrigation of water
flats
Filing of the VAT returns has been deferred
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PIT
Tax revenues did not decline
Gross salary concept
Food and travel allowances included in the gross salary
Integrated collection by the PRO
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2010 performance
Q1
Tax revenues are on the level of 2009 but not
meeting the Budget plan
Budget facing troubles
Increasing the tax rates or introducing new
taxes?
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2010 performance
Expecting the reduction of public expenditures in
the Budget Supplement
Expecting the second half of 2010
Projected increase of GDP between 1 and 2%
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GDP MOVEMENT
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TAX REVENUES MOVEMENT
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
2001 2002 2003 2004 2005 2006 2007 2008 2009
PERSONAL INCOME TAX
PROFIT TAX
VAT
EXCISES
TAX REVENUES STRUCTURE IN 2009
VAT
57%
EXCISES
22%
Personal Income Tax
14%
Profit Tax
7%
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Questions!
