FYR Macedonia: Ministry of Finance Publishes 2018 Budget; Introduction of Progressive Tax on Standby

The FYR Macedonian government plans to spend 3.44 billion euros in 2018, which is 300 million euros less than what it plans to receive as revenue, with a target to reduce the deficit down to 2.7%.

A highest percentage of the state expenditures is foreseen to be related to social welfare and child protection, with 33% of the budget allocated to spending in that sector, while 19% are set aside for economic development.

Promises for increases in state-paid salaries have somewhat been kept in the planned budget; with employees in the army seeing a 10% increase whereas the public administration in the health and education sectors having to settle with a 5% increase. The Government also foresees new employments in the public education sector. Facing criticism about the fact that public administration payroll expense will be higher than those budgeted for capital investments, the Government has focused planned investments in roads and railways, with EUR 96 million budgeted for gas pipelines, water supply and wastewater treatment plants. Funds are also planned – among others – for the completion of the Demir Kapija-Smokvica road section, the reconstruction of Corridor 10 and construction of the railway along Corridor 8.

Despite multiple announcements of introducing progressive taxation rates, the proposed personal tax regime change remains on standby. It is expected that personal income tax may be imposed at progressive rates starting from 2019. FYR Macedonia’s personal income tax has been levied at a flat rate of 10% since 2008.

For more information, feel free to contact:

Elena Kostovska
Eurofast Global, Skopje Office
E: elena.kostovska@eurofast.eu

Please read our DISCLAIMER