1. Percentage tax designation: Reflections from Macedonia
Nikica Kusinikova
September 2016

2. Civil Society Organisations in Macedonia
13656 (registered); 4156 (with renewed registration)
Total revenues in 2014: EUR
85% of CSOs with annual income < EUR
State funding (excl. local government) to CSOs in 2014: EUR (< 2%)
No official data on citizens’ and corporate contribution to CSOs
Total official levels of corporate donations and sponsorships in 2013 – 10,5 million EUR
10% of the companies have donated to CSOs

3. Tax incentives on private giving
Personal income tax – tax credit – 20% of annual tax amount up to approx. 400 EUR
Profit tax – tax debit – up to 5% from annual turnover for donations and 3% for sponsorships
VAT exemption
Purpose: public interest activities
Beneficiaries: all not-for-profit legal entities
Challenges
Complicated administrative procedure and burden
Legal uncertainty for the users

4. Effects of the tax incentives on philanthropic giving
0,02% of submitted personal income tax forms claimed tax incentives on donations
0,66% of legal entities used the incentives (468, mostly large companies)
Year
Total tax revenues from the profit tax (EUR)
Total approved tax debit on donations (EUR)
Ratio of tax expenses to total tax revenues from the profit tax
Ration including sponsorships
2011
71,853,659
2,499,832
0.35%
0.67%
2012
59,430,894
5,355,373
0.89%
1.32%
2013
63,219,512
4,473,670
0.70%
1.34%

5. Tax designation mechanism – potential option for Macedonia
Additional source of more flexible funding
Small personal income tax base thus relatively modest level of funding
Burdensome administration for the authorities relative to financial benefits to beneficiaries
Concerns regarding the effect on the existing tax incentives especially for corporate giving
It might not equally benefit all CSOs
Opportunity for tax benefits to PBOs

6. Benefits beyond finances
Raise awareness among citizens about CSOs and developing habit to contribute to CSOs
Stimulate proactive approach by CSOs to reach out to constituencies
Simplified procedure for the taxpayers
Opportunity to unlock the potential of the tax incentives on the donations
Mechanism for decentralized decision-making in state funding to CSOs

7. Thank you! nikicak@konekt.org.mk www.konekt.org.mk
ph: 389 (0)
cell: +389 (0)