Macedonian Lawyers

The Government has announced a reduction of the social contributions beginning January 2009, in one of the most pro-business moves in its mandate so far, and as a response to the needs of the Chambers of Commerce and the foreign investors in Macedonia.

The initial reductions will be as follows:

- pension insurance: 21.2% → 19%

- health insurance: 9.2% → 7.5%

- unemployment contribution: 1.6% → 1.4%

By January 2011 the pension insurance contribution will drop to 15%, the health insurance contribution will drop to 6%, and the unemployment insurance contribution will drop to 1%.

“This will be major for the companies in Macedonia, with an even bigger effect than the tax cuts,” said Prime Minister Nikola Gruevski at a press conference.

This measure will contribute to creating more jobs, reducing the grey economy, and stimulating more domestic and foreign investment.

Foreign companies and foreign citizens can now directly own construction land in Macedonia, according to the newly adopted Law on Construction Land (Official Gazette of the Republic of Macedonia No. 82/08 from 08.07.2008) in the Macedonian Parliament.

The Law also entails a possibility for short- and long-term lease, as well as concessions. The regulations on long-term lease include a minimum of 5 years and a maximum of 99 years.

The new Law eliminates the requirement for foreign companies to have to buy or lease land strictly through locally registered companies.

The Law also introduces the principle of transparency in alienating public land, lessens the licensing procedures, and harmonizes the regulations with the EU legislation.

The business climate in Macedonia has significantly improved and growth has accelerated, noted the European Commission in the Progress Report on Macedonia published on 6 November 2007.

The Commission positively assesses the reduction of tax rates, as well as the results of the Regulatory Guillotine. “In June, the authorities started to implement the ‘regulatory guillotine’, involving a significant reduction in redundant legislation, introduction of the ‘silence is consent’ principle, lowering of fees in a number of areas and simplification and shortening of a number of procedures,” the Report states.

The Report underlines Macedonia’s sustained macroeconomic stability, the reduction of the trade deficit, the payback of foreign debt, as well as the increased official reserve assets. “The country's fiscal and monetary policy has supported an acceleration of economic activity, while maintaining overall economic stability,” the Report states.

The Report praises the political consensus in the fight against corruption and crime in the direction of improving the business climate. “Progress was made in anti-corruption policy and measures. The legal and institutional framework was strengthened, and strong political commitment yielded results.”

Moreover, the Commission notes that substantial measures have been taken to improve education, which will have positive effects on human capital.

The remaining challenges for Macedonia include decreasing the share of the grey economy, as well as reducing unemployment.

MACEDONIA - 4th BEST REFORMER IN THE WORLD

The World Bank has ranked Macedonia in the top five reformers in the world by the World Bank’s Doing Business report.

Macedonia came fourth mostly due to eliminating the minimum capital requirement for business start-up, speeding up the process for obtaining construction permits, lowering the corporate income tax rate to 12 percent (with another cut to 10 percent planned for January 2008), and simplifying tax payment procedures.

The prestigious Doing Business report provides objective measures of business regulations and their enforcement across 178 countries.