Macedonia has the lowest tax rate in the world

The World Economic Forum (WEF) released the Global Competitiveness Report 2015-2016. The report identifies the competitiveness index of 140 jurisdictions. The competitiveness index is calculated on the basis of various variables, including the total tax rate. The total tax rate measures the amount of taxes and mandatory contributions which should be paid by a business in the second year of operation.

According to the report, the Former Yugoslav Republic Macedonia is the country that has a total tax rate of 7,4%, which is the lowest total tax rate in the world. Macedonia reorganized its tax system significantly in 2008 with the purpose to encourage investment, accelerate business development, and increase the overall living standard in the country.

The tax shift: (i) reduced the number of taxes, including VAT and income taxes; (ii) introduced tax exemptions for international business investors; and (iii) established special Technological Industrial Development Zones.

At present, the major factors defining Macedonia as an attractive country for outsourcing business include:

  1. The rate of Macedonian personal and corporate income tax is 10%. Moreover, the reinvested profit is taxed at a 0% tax rate.
  2. The establishment of a limited liability company via a one-stop-shop system takes about 4 hours and costs around EUR 40.
  3. In 2015, the average gross salary was EUR 502;
  4. Macedonian legislation provides for numerous exemptions for business and individual income, especially in the field of high tech industry.
  5. Macedonia has a well-educated workforce.

Numerous companies have already used the business opportunities provided by Macedonia, including, but not limited to, the Belgian bus manufacturing company “Van Hool”, the global energy optimization provider “Johnson Controls”, the American capacitor producer “Kemet”, the sustainable technology company “Johnson Matthey”, and the international IT service provider “Endava”.

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