The Government enacted three decrees with force of law for financial support for the companies and natural persons acting independently affected by the health-economic crisis caused by the coronavirus COVID-19.
The main measure is financial direct aid of 14.500 denars per month (for every employee of the companies affected by the crisis), for April and May, for which a decree with force of law was enacted for financial support to the private sector employers affected by the health-economic crisis caused by the virus COVID-19, for payment of salaries for April and May 2020.
The financial support refers to each enterprise from the private sector which employs workers on the basis of an employment contract, any legal entity which employs workers on the basis of an employment contract and employers which hire workers to perform tasks through private employment agencies, under the Law on Private Employment Agencies.
Eligible to apply for this measure are 87% of the companies and this measure will cover about 250.000 jobs and 35.000 companies. The amount that every worker will get, in April and May, is 29.000 denars, i.e. 14.500 per month.
With this measure a salary payment will be made to workers by the employer – applicant for financial support for April and May 2020, in an amount up to 14.500 denars per month per worker, in proportion to the hours spent at work prior to the crisis caused by COVID-19. This means that if the employee was hired full-time, he will be paid the entire amount provided under this measure – 14.500 denars, and if he was hired part-time, he will be paid a proportionate amount.
The employer – applicant for financial support should meet the following conditions:
– the reduction of the total revenue of the employer – applicant for financial support, in April 2020 or May 2020 to be more than 30% compared to the monthly average of total revenue generated in 2019, and for the employer – applicant for financial support which is registered in the appropriate registry (established) after March 2019, the total revenue for April 2020 and May 2020 to be lower by at least 30% compared to the monthly average of the total revenue generated from the date of registration in the appropriate register in 2019 and January and February 2020. For the employer –applicant for financial support that performs a seasonal activity, the reduction of the average income for the last seasonal period of 4 months compared with the average income for the seasonal period of the same 4 months in the previous year to be more than 30%;
– not to pay dividends to the owners, and has not made any payment on the basis of award for business performance (profit share, bonus) or other annual award of the employees and the management and supervision of the employer – applicant for financial support, from the date of entry into force of this decree, to the date of payment of salary for June 2020; and
– for the month for which financial support is requested, the average of the part of the highest net pay of 10% of the total number of employees by the employer – applicant for financial support to not exceed 120.000 denars per month per employee.
According to the decree with force of law, an employer cannot use the financial aid for worker if:
- the employee for the period December 2019, January 2020 and February 2020, realized net salary higher than 39.900 denars for each month separately, for the total number of effective hours in the month;
- the employer who use subsidizing contributions from the compulsory social insurance for the worker, according to the Law on subsidizing contributions from the compulsory social insurance due to an increase of salary and/or release of personal income tax in accordance with other regulations, if he reduces the employee’s salary for the period of using the financial support for payment of salaries in accordance with this Regulation.
- the employer who use support for the worker, i.e. subsidizing social contributions from salary in accordance with other regulations, and who has been granted financial support for new employments in accordance with law; and
- employer for a worker with additional work, under Article 121 of the Labor Law.
The measure does not apply to owner/founder of the employer – applicant for financial support, manager, procurator i.e. legal representative and members of the management and supervision of the employer – applicant for financial support. It also does not apply to authorities, institutions, agencies and other entities of state government and private agencies for employment for workers which they ceded to employers by the national government.
For the duration of the financial support under this decree and four months after its closure (including September 2020), the employer who used financial support for payment of salaries is obliged to keep the same number of employees as it had for the month for which he requested financial support for payment of salaries (including indefinite term employees, fixed-term employees and employees with working hours shorter than full-time), reduced for the number of employees due to retirement or death of a worker.
An alternative to this measure is the measure of financial support to cover half of the contributions of its employees, for which was enacted Decree with force of law to subsidize the payment of contributions for compulsory social insurance during a state of emergency.
This means that employers can decide to use the measure to cover 50% of the contributions of its employees, rather than direct financial aid of 14.500 denars per month per employee for April and May.
According to the decree, subsidizing the payment of contributions for compulsory social insurance can not be used by: a body of state and local government and other public bodies incorporated under the Constitution of the Republic of Macedonia and law, institutions operating in the field of education, science, health, culture, labor, social welfare and child protection, sports, and other activities of public interest determined by law and organized as agencies, funds, public institutions, public enterprises and companies established by the Republic of Macedonia, municipalities, the city of Skopje and municipalities in Skopje. Subsidizing the payment of contributions for compulsory social insurance can not be used for person – worker with additional part-time work for another employer under Article 121 of the Labor Law. Subsidizing the payment of contributions for compulsory social insurance in accordance with this decree with force of law can not be used simultaneously for an employee for which the employer use subsidizing according to the Law on subsidizing contributions from the compulsory social insurance due to an increase in salary.
The employer, for each insured person, for April, May and June 2020, is subsidized the amount for payment of contributions for compulsory social insurance in the amount of 50% of the calculated contributions for compulsory social insurance by the taxpayer, but up to 50 % of the contributions for compulsory social insurance calculated on the average gross salary per employee in Republic of Macedonia, according to the State Statistical Office published for January 2020.
To use the subsidy for payment of contributions for compulsory social insurance, the employer must fulfill the following conditions:
- the reduction of the total revenue of the employer – applicant for financial support, in April 2020 or May 2020 to be more than 30% compared to the monthly average of total revenue generated in 2019, and for the employer – applicant for financial support which is registered in the appropriate registry (established) after March 2019, the total revenue for April 2020 and May 2020 to be lower by at least 30% compared to the monthly average of the total revenue generated from the date of registration in the appropriate register in 2019 and January and February 2020. For the employer –applicant for financial support that performs a seasonal activity, the reduction of the average income for the last seasonal period of 4 months compared with the average income for the seasonal period of the same 4 months in the previous year to be more than 30%;
- the number of employees of an employer who requires financial support, taking into account the employees through a private employment agency, to not decrease for April, May and June 2020 in terms of number of employees as of March 31, 2020, except in the case of retirement or death; and
- not to pay dividends to the owners, and has not made any payment on the basis of award for business performance (profit share, bonus) or other annual award of the employees and the management and supervision of the employer, from the date of entry into force of this decree, to the date of submission of annual accounts/financial statements for 2020.
The employers who have exercised the right to financial support for the payment of salaries or the right to subsidize for the payment of contributions for compulsory social insurance, have an obligation to return the received funds to the Budget of the Republic of Macedonia, but up to the amount of 50%:
- the achieved financial result for 2020 increased for the amount of taxable expenses and the less reported revenues from the Tax balance;
- the achieved financial result of the Income statement (profit before tax) for the 2020 for the bonds that are in the regime of annual tax on total income;
- the amount of the expressed financial result before tax in the form B, increased for the non-deductible expenses for tax purposes of the Annual tax balance for determining the tax on income from acting independently.
The return of the amount will be made in three installments, without interest, in April, May and June 2021.
For the payment of financial aid to natural persons acting independently affected by the crisis caused by COVID-19, the Government enacted a Decree with force of law for financial support to natural persons acting independently affected by the health-economic crisis caused by the coronavirus COVID-19 during a state of emergency.
According to the decree with force of law, “natural person performing independent activity” means a sole proprietor, natural person who performs agricultural activity, person who performs craft activity and person who performs services, who realizes income from performing activity and is recorded in the appropriate register.
The financial support is the payment of funds in the amount of 14.500 denars per month for natural person acting independently – applicant for financial support, on the transaction account through which that person performs transactions for the business.
To use the financial support, the natural person acting independently – applicant for financial support, and is taxed on the actual income must meet the following conditions:
- the reduction of the total income of the natural person acting independently- applicant for financial support, in March 2020 to be more than 30% compared to the monthly average of the total revenues generated from the independent activity in 2019;
- for natural persons acting independently – applicant for financial support recorded in the appropriate register (established) after March 2019, the total income from the independent activity for April 2020 and May 2020 to be lower by at least 30 % compared to the monthly average of the total income generated from the independent activity from the date of registration in the appropriate register in 2019 and January and February 2020.
- for natural persons acting independently – applicants for financial support, performing seasonal activities, the reduction of the average income of the independent activity for the last seasonal period of four months compared to the average earnings of self-employed seasonal period of the same four months previous year to bemore than 30%.
Financial support can not be realized by natural person acting independently who is taxed at a real income and who in 2019 per year achieved a net income before tax in amount of 478.800 denars, i.e. natural person acting independently and is taxed fixed annual lump net income and which in 2019 has established an annual lump net income greater than 478.800 denars.
For the duration of the financial support under this decree with force of law and four months after the expiry of validity of this decree with force of law, the natural person acting independently – user of financial support, can not stop the activity, except in cases of retirement and death of the individual.
The natural person acting independently and taxed on real income – applicant for financial support who have exercised the right to financial support, according to this decree with force of law is obliged to return the received funds to the Budget of the Republic of Macedonia, but up to the amount of 50% of the stated financial results for 2020, before tax in the Income Statement balance (form B), increased for the non-deductible expenses for tax purposes of the Annual tax balance for determining the tax on income from acting independently.
The return of the amount will be in three monthly installments, without interest, in April, May and June 2021.
Given that the negative effects of COVID-19 on the Macedonian economy will affect all companies and natural persons who perform independent activities, these three economic measures will help them cope with the effects of the pandemic of coronavirus.
