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Authentic Interpretation of Article 14 under the Law on Value Added Tax Will Provide Positive Impetus for Further Investments in ICT Industry

Skopje, May 23rd, 2019

Authentic interpretation by the Assembly of the Republic of North Macedonia of Article 14 under the Law on Value Added Tax will provide a strong incentive for domestic and foreign companies in the information and communication industry to continue their investments and create new jobs.

Minister of Information Society and Administration Damjan Manchevski, Secretary General of the Government Dragi Rashkovski, MASIT tax expert Marijana Andrikj, lawyer Ivica Jefikj and the Chief Executive Director of Macedonia 2025 Nikica Mojsoska Blazhevski, have presented this message at a press conference at MASIT today.

"As a person coming from the private sector, it is my opinion that a rigid interpretation of legal norms does not go in favor of business. This authentic interpretation is an impetus for the future development of the ICT industry and an example for other companies facing problems with interpretation of some legal norms, to launch an initiative for their revision "said Minister Manchevski.

Marijana Andric, a representative of MASIT, explained that the need for authentic interpretation appeared due to the problem of the method of taxation of various types of IT, marketing, administrative and similar services that were not adequately treated from the aspect of Article 14 of the Value Added Tax Act on the same abroad.

Marijuana Andrikj, a representative from MASIT, has explained that the need for authentic interpretation arose due to the problem with taxation methods of various types of IT, marketing, administrative and similar services that have not been adequately treated in view of Article 14 under the Law on Value Added Tax, when investing abroad in the area of these services.

This Article defines the place of taxation according to the starting point of the services, and since the adoption of the Law in 1999, a starting point of an information technology services is considered a place where the user of the service is located.

"At the beginning, there were no dilemmas in the application of this Article, but with the new services in recent years, during the inspection conducted by the Public Revenue Office, there was a dilemma regarding the services that can be included under this paragraph. There was a start of a very restrictive application, with the inspectors demanding that each service is explicitly laid down in the law. For this reason, the companies from the IT industry, as well as other exporters of intellectual services, faced a serious risk of additional debts with VAT liability, "explained Mrs. Andrikj.

After the numerous meetings held with the authorities in the Public Revenue Office and the Ministry of Finance, a conclusion was reached that an authentic interpretation of this Article is the only solution for the two stakeholders - the tax authority and the economy. Finally, the dilemmas concerning the starting point of the services have been resolved, and thus the exemption from the liability to calculate the VAT when exporting this type of services are specified thereat.

"This positive example with an authentic interpretation provided by the Assembly prevents any possibility for someone to improvise interpretation of this Article under the Law. We are confident that after this interpretation, the Public Revenue Office will amend some of the Decisions in the interests of companies, "said lawyer Ivica Jeftikj.

Following this successful example, MASIT continues with activities aimed at improving business regulations that are directly related to the ICT industry. At the moment, the most popular are proposals of measures that simplify business management and contribute to environmental protection with paper usage reduction by introducing an e-invoice using an electronic signature and trusted services and electronic delivery of acts to employees and other collaborators.

The Secretary General of the Government of the Republic of North Macedonia Mr. Dragi Rashkovski, pointed out that the authentic interpretation is a very powerful tool rarely used in our country and as a university professor pointed out that the tool will be used in textbooks, emphasizing that the legislation is created to serve people and not to be slaves to legal norms.

The whole press conference is available on the following link:

Ministry of Information Society and Administration