Government abandons failed ‘progressive’ tax, returns to flat tax


Finance Minister Nina Grouper Angelovska informed that the Government is giving up on the progressive taxation of income and will restore the 10 percent flat tax introduced by the Nikola Gruevski Government for the next three years in order to stimulate the economy.

Zaev’s Government introduced an 18 percent tax rate for incomes surpassing 90.000 denars per month, and a 15 percent rate on income from rental properties, capital gains and gambling, but Minister Angelovska now says that the effects were negligible and that high income earners simply moved a portion of their business elsewhere.

The 10 percent rate will apply for the next 36 months, on employment income, income from individual work, from copyright, sale of agricultural products, and for all other activities which were included in the progressive tax law. We are also suspending the 15 percent tax rate. We don’t want to destimulate the economy, Angelovska said.

Zaev and his previous Finance Minister Dragan Tevdovski defended the progressive tax on the grounds of “fairness and social equality”. Angelovska also announced that the Finance Ministry will increase the revenue threshold after which the company needs to pay value added tax from 1 million denars per year to two.