The Parliament has adopted the amendments to the VAT Law and the Law on Excise Duty, proposed by the Government as measures aimed to mitigate increasing energy and food prices.
The amendments to both the VAT Law and Law on Excise Duty were promulgated in the Official Gazette No. 57 dated 12 March 2022 and entered into force on the same day.
Amendments to the VAT
- The supply of certain food products for human consumption will be subject to 0% VAT rate, while the supply and import of certain types of fuels will be subject to the preferential VAT rate of 10%, until 31 May 2022.
This is based on the amendments which introduced specific articles in the VAT Law, under which in certain cases (such as major natural disasters or epidemics, state of emergency, etc.), the Government can adopt a Decision which would determine the specific food products/fuels that would be subject to 0%/10% VAT, as well as the duration of the measure.
Accordingly, in the same Official Gazette with the amendments, the Government published two Decisions which determined the specific food products/fuels subject to 0% and 10% VAT respectively, and the period of application, which is from 17 March until 31 May 2022 with respect to the foods products and from 12 March until 31 May 2022 with respect to the fuels.
- The period of application of the reduced VAT rates for the supply of electricity for households is prolonged, as follows
- the preferential rate of 5% VAT which initially was envisaged to apply until 30 June 2022 will instead apply until 31 December 2022,
- the preferential rate of 10% VAT which initially was envisaged to apply for the period between 1 July to 31 December 2022, will now apply from 1 January 2023 until 30 June 2023.
- The import of natural gas and electricity through a transmission system will be exempted from VAT.
At the same time, the place of supply rules regarding supply of natural gas and electricity through a transmission system located on the territory of North Macedonia as well as the provision of heating or cooling through distribution networks, have been amended to be the place where the recipient has its registered seat, when the supplies have been made towards a taxable trader. Accordingly, in case of such supplies from a non-resident taxpayer (without a seat or branch office in the country) to a local taxable trader, the latter may be liable to self-charge VAT under the reverse charge mechanism. For this purpose, the amendments include a specific definition for who is to be considered a taxable trader.
In other cases (i.e., in case where the above noted supplies have not been made toward a taxable trader), the place of supply is determined at the place where recipient is using the goods.
Amendments to the Law on Excise Duty
Similarly to the amendment to the VAT Law, the amendments to the Law on Excise Duty have introduced specific provisions under which in certain cases (such as major natural disasters or epidemics, state of emergency, etc.), the Government can adopt a Decision which would determine an alternative method for calculation of excise duty that would allow for a reduction of the excise duty on some types of fuels. The Decision would also determine of the specific types of fuel that are subject to the reduction in excise duty and the duration of the measure.
In the Decision published in the same Official Gazette with the amendments, the Government determined the specific types of fuel which will be subject to the reduced excise duty, and the period of application, which is from 12 March until 31 May 2022.