MACEDONIAN TAX LEGISLATION COPING WITH THE EU INTEGRATION: REFORMING PROCESSES

Abstract

Four years before the Macedonian authorities submitted the request for membership in the
European Union, they have started the process of tax harmonization with the EU law. Therefore, in 2000
the legislator adopted the Law on the Value Added Tax that was completely established on the basic
principles of the VI VAT directive, considered as the raison d'etre for VAT in every EU member states.
Different from the obligation to harmonize the national legislations with the EU rules in the area
of indirect taxation, countries still preserve their tax sovereignty regarding the direct taxes. However,
contemporary supranational tax problems and challenges, such as the issue of transfer pricing, aggressive
tax planning, hybrid tax mismatches etc., require cross-border cooperation, mutual coordination and
implementation of the measures adopted on EU level. In this context, most important is the EU Anti-Tax
Avoidance Directive of 2016, which is a set of minimum standards and rules that aim to create a business
environment with fair conditions for all EU members.
For this entire pre-accession period, the Republic of North Macedonia has undertaken series of
reforms in the area of income taxes, although all the changes and amendments were or still are in
direction of “relaxing” the tax policy. Since the current corporate tax system has not provided the much
wanted and expected benefits, the country is still “suffering” from the significant tax revenue losses. It is
the right moment to undertake serious steps toward reforming the Macedonian income tax legislation.
These legal changes should be implemented regardless of the status of North Macedonia in the EU
integration process, considering that vital interest of every country is to have sustainable and healthy
public finances.