Combating Tax Evasion and Tax Avoidance by Exchanging of Tax Information - Macedonian Experience on the Path to the EU Integration
Combating Tax Evasion and Tax Avoidance by Exchanging of Tax Information - Macedonian Experience on the Path to the EU Integration

Author(s): Elena Kjoseva Neshovska
Subject(s): Law, Constitution, Jurisprudence, EU-Accession / EU-DEvelopment, Fiscal Politics / Budgeting
Published by: Правни факултет Универзитета у Источном Сарајеву
Keywords: Tax evasion; Tax avoidance; Tax cooperation; Exchange of tax information
Summary/Abstract: Since 2007 Macedonian authorities have been strongly committed to the idea to become foreign direct investors` choice number one. Additionally, Republic of North Macedonia has strived to response to tax competition among Western Balkan countries. In such environment,every Macedonian Government has recognized the “open door tax policy” as a key ingredient for attracting foreign capital. Tax competition has pushed them even further in the “race to the bottom”. The Macedonian relaxed tax policy regarding the profit and income taxation, has been perceived as a perquisite for economic development as an important condition for EU membership.For many years Macedonian tax system has been promoted “as friendly and comfortable as possible” for doing business. The authorities have overlooked and neglected the problems and potential tax revenue losses. However, the EU agenda has put additional pressure on Republic of North Macedonia. These circumstances drove the country at a crossroad. The dilemma has always been: to continue with one of the most competitive tax policies, through the application of a proportional 10% income tax rate and multiple tax benefits for legal entities, or to join the international fight against tax evasion, tax avoidance and aggressive tax planning. In light of the tax harmonization with EU tax legislation (and OECD tax rules), the fiscal and political arguments prevailed, aiming to prevent the future loss of potential tax revenues.Thus, Republic of North Macedonia signed the Multilateral Convention on Mutual Administrative Assistance for Tax Purposes on June 27, 2018. In addition, as a candidate state for membership in the European Union, the Public Revenue Office is responsible for exchange of tax information with foreign tax authorities, which contributes to further development of the system of mutual exchange of information in accordance with EU Regulation 32003R1798. However, this process is ongoing and is to confirm the commitment and image of the country as an equal partner in the EU efforts to combat harmful business practices that are undertaken mainly for tax purposes.

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