Todays Date
December 7, 2021

Macedonia with the largest tax yoke in Europe – we will pay VAT to craftsmen, taxi drivers…

Macedonia will be a country with the lowest threshold for entry into the category of VAT payers in Europe. The smallest and weakest business entities will enter the VAT system, and it is not good for the vitality of the economy, it will increase unemployment, it will increase the price of products and services and many shopkeepers will be forced to close

Macedonia is at the very bottom according to the European threshold required for the introduction of VAT liability. Here a VAT payer is with revenues of 16.000 Euros, in Bosnia 25.000 Euros, 32.000 in Croatia, Bulgaria, Slovenia and Greece with 35.000, while in Germany the threshold is 100.000 Euros. This measure will give a serious blow to the weakest legal entities and physical persons and will increase the price of services.


With recent amendments in the Law on VAT, the threshold for inclusion in the group of mandatory VAT payers for companies and individuals has been reduced. With these amendments, from 2015 all legal entities and physical persons that make over one million denars (16.000 Euros) turnover in the previous year, will become VAT payers. Until now this threshold was two million denars (32.000 Euros).

Reactions and protests follow announcements about new amendments. Farmer Mihail S., through whose account last year there were over 16.000 Euros turnover, under changes to the Law on VAT becomes a VAT taxpayer:

“I am thinking about closing the agricultural firm because I need to calculate and pay VAT. I cannot argue with inspections”, says Mihail.

Stole T. from Skopje, taxi driver, is afraid of inspections.

“We are chased by the police, by a traffic inspector, by the city inspection, now the financial inspections will harass us. One cannot earn for bread”, complains Stole.

Our interlocutors, who will next year become VAT taxpayers, are most afraid of inspections.

Macedonia with the lowest threshold for VAT payers in Europe

With the latest amendments Macedonia will be the country with the lowest threshold for entry into the category of VAT payers in Europe. The country “earns” this infamous limit by setting the threshold of a million denars, 16.000 Euros. First above us is Montenegro with 18.000 Euros.

This means that in Macedonia the smallest and weakest business entities will enter the VAT system. This is not good for the vitality of the economy, says Peter Uzunov, accountant from Strumica.

“Changing the limit for VAT payers from 2 million to a million denars is not good for artisans and petty services. Their input costs are very small, mostly for intellectual labor. Most of these craftsmen will always be bigger taxpayers than using the VAT returns. So the state budget will be filled at the expense of craftsmen. Service trades, hairdressers, barbers, beauticians, car washes, mechanics, etc. will be further taxed by this law”, says Uzunov.

He adds that these amendments to the Law on VAT will contribute to increasing unemployment. Companies will deregister employees not to make a turnover of one million denars per year.

From the Public Revenue Office (PRO) they say that the Law on VAT was enacted in April 2000. From then until 2010 the threshold for VAT registration was 1.3 million deanrs (around 21.000 Euros), but the government, as an anti-crisis measure, raised the threshold of 2 million denars (32.000 Euros) in 2010. Now instead of increasing it, it drastically reduces it.

An interesting fact is that Croatia in 2011 reduced the threshold for VAT payers from 32.000 to 11.000 Euros, but the EU immediately said to return the limit of 32.000 Euros as its tax administration would not have sufficient capacity to record, to quality implement VAT returns and leave the smallest enterprises and sole proprietors with less tax burden.

Here, however, with the latest amendment, the government has burdened the weakest entities in the economy, craftsmen and services.

PRO: Taxation is for fair competition



Public Revenue Office (PRO) justifies the amendments to this law by explaining that it is to increase the competitive ability of small companies.

“Lowering the threshold for registration, which will start from the beginning of next year, is not done to fill the state budget, because small VAT payers create a negative VAT effect. The goal is to create fair and equal conditions on the market for everyone, as well as to increase fair competition. The measure is at the request of the companies themselves”, says Goran Trajkovski, director of PRO.



Experts and those familiar with the situation in the economy do not agree with this.

Arben Halili, executive director of the Chamber of North-West Macedonia has a contrary opinion to Trajkovski.


Arben Halili

“I believe that reducing the limit for VAT payers from 2 million to a million denars turnover per year is a shortsighted step and I am not sure that is well thought out. The measure for reducing the threshold which obliges companies to become VAT payers is bad”, says Halili.

He adds that the government is contradictory, on the one hand it says it supports small businesses, on the other hands these actions make difficult for them to act on the market.

Former deputy economy minister, Zoran Vitanov’s opinion is contrary to Trajkovski’s.

“Lowering the threshold for mandatory VAT payers from 2.000.000 to 1.000.000 denars turnover in the previous year is a measure with which the government will collect money from the economy, and that would not make it easier for the economy”, says Vitanov.


Zoran Vitanov

He adds that this is a desperate move by the administration of Nikola Gruevski to fill the state budget. It is unfortunate that this government sees its interest and not the interest of enterprises. The word “minister”, says Vitanov, in Latin means servant – the minister should serve citizens, and the situation here is vice versa, citizens serve the minister.

Pance Trpkovski, regional president of the Business Confederation of Macedonia has a completely opposite opinion.

“Every legal entity in RM now and in the past could realize the right of a VAT payer ​​at the registration itself or on its assessment in further work by submitting a request to the PRO to become a VAT payer, the threshold under denars has never been an obstacle for the legal entity to become a VAT payer”, says Trpkovski adding that unfortunately companies that earn less than denars, registered VAT payers, face much bigger problems.

Prices of goods and services will increase

This law will lead to more expensive services of craftsmen.

* This year in Macedonia there are 17,700 VAT payers

* 10,305 new payers are expected next year (9,060 legal entities and 1,245 tradesmen)

* Next year about 40% of the total number of companies in the country will be VAT payers

“Services will be further increased by 18%, an amount that will increase the price of their product or service, on the other hand will reduce their competitiveness in the market and they will face liquidity problems”, says Pance Trpkovski from Tetovo.

Accountant Uzunov expects unfair competition. He gives a logical condition that will occur between a VAT payer and craftsman who is not within the group of VAT payers.

Let’s take for example a hair salon which has an annual turnover of 1.100.000 denars and one that has 900.000 denars. The former will be entered in the system of VAT payers, the latter will not.

A VAT taxpayer for haircut which costs 200 denars has to pay 18% VAT, while the latter has no such obligation. To be as before, the former must increase the price of the service for 236 denars (200 denars for his effort and costs + 36 denars VAT), in the latter the same service will cost 200 denars.

A VAT taxpayer is forced, not to lose clients, to reduce the price of the service at 200 denars, but in that case the VAT taxpayer’s service will be cheaper (168 denars service + 32 denars VAT)

Editor: Stojanka Mitreska