Tax incentivizes for the investors in Technological Industrial Development Zones and in accordance with the Law on the Financial Support of Investments
Investment Opportunities in North Macedonia and How Our Law Firm Can Assist
In 2007, the Republic of North Macedonia, a developing country, enacted the Law on Technological Industrial Development Zones (TIDZ) to encourage investments in these zones, fostering economic growth and development. Subsequently, in 2018, the government introduced the Law on the Financial Support of Investments. Both laws aim to stimulate economic growth and employment while enhancing the competitiveness of North Macedonia’s economy.
I. Investment Incentives
The government offers compelling incentives to foreign and domestic investors, including:
- Long-term leases on land in free zones for up to 99 years at concessionary rates.
- Assistance with construction and facility leasing.
- Access to newly established services for building and leasing facilities.
- Free connections to natural gas, water, and sewage networks.
In terms of tax incentives, taxpayers using the zones benefit from exemptions and relief from payment of:
- Profit tax for ten years from the commencement of activity in the zone, but no longer than two years after the year of obtaining the work initiation decision.
- Profit tax for ten years from the date of receiving:
- The work initiation decision for capacity expansion.
- The work initiation decision for diversifying production by introducing new products.
- The work initiation decision for substantial changes in the overall production process.
- Personal income tax on employees’ salaries for ten years from the commencement of activity in the zone, regardless of the number of employees, as per conditions established by the law.
These incentives have resulted in over 17,000 jobs created by foreign investors in the TIDZ. Moreover, these investors have engaged local companies in their supply chains, facilitating knowledge transfer within their respective industries.
Moreover the TIDZ and the Government are ready to invest in tailor made solutions for each investor, based on his preference and investment capacity.
II. The Law on the Financial Support of Investments
In 2018, the Macedonian Government introduced the Law on the Financial Support of Investments to attract both foreign and domestic investors. The main incentives under this law include:
- Financial support of up to 50% of eligible investment costs, subject to the total financial support not exceeding 50% of the incurred eligible costs.
- For large investment projects:
- Up to 50% of eligible investment costs for projects up to EUR 50,000,000.
- Up to 25% for projects with investment costs between EUR 50,000,000 and EUR 100,000,000.
- Up to 17% for projects exceeding EUR 100,000,000.
III. How Our Law Firm Can Assist
Our law firm has been dedicated to assisting foreign investors in securing financial support from the government. We offer guidance in negotiating investment agreements, both within and outside the TIDZ, along with support in project financing and navigating the process of establishing companies in North Macedonia. Our services encompass legal aspects, construction, licensing, employment, structural setup, bylaws, GDPR, and compliance with domestic legislation.
For further information on the benefits and the investment pathway in North Macedonia, please contact our Managing Partner, Ivica Jevtic.
Ivica Jevtic – Managing partner at Tosic & Jevtic law firm