Calculating profit tax is an important topic for every business owner who wants to understand how much of the company’s financial result may need to be paid as tax and how to plan business operations in time.
Every company in North Macedonia should understand whether it is subject to profit tax, how profit tax is calculated, and when tax on total income may be applied instead.
Which legal forms are subject to profit tax?
Profit tax applies to legal entities that generate profit from business activity. In practice, this most often includes companies and other organizational forms that perform commercial activity.
- commercial companies;
- limited liability companies such as DOO and DOOEL;
- joint-stock companies — AD;
- state and public enterprises.
Which organizational forms are excluded from profit tax?
Certain organizational forms are not subject to profit tax for income that is not considered income from commercial activity.
For these organizational forms, it is important to distinguish between income such as membership fees, voluntary contributions, donations, grants and gifts, and income from commercial activity.
Company categorization and business examples
Profit tax is not calculated in the same way for every company. One important criterion is annual total income, because it can determine whether the company is exempt, whether it may choose a special regime, or whether it is subject to standard profit tax.
| Annual total income | Treatment | What it means in practice |
|---|---|---|
| Up to 3,000,000 MKD | Small company | The company does not pay profit tax, in accordance with the conditions that apply to this category. |
| From 3,000,001 to 6,000,000 MKD | Medium company | The company may choose to pay annual tax on total income of 1% instead of profit tax of 10%, when the conditions are met. |
| Over 6,000,000 MKD | Large company | The company becomes subject to standard profit tax at a rate of 10%. |
How is profit tax calculated?
One of the most common questions is how profit tax is calculated in North Macedonia. In basic terms, the tax is determined based on the profit generated by the company, meaning the company’s income and expenses, with the relevant tax rate applied.
| Example | Situation | Calculation |
|---|---|---|
| Small company | Total income up to 3,000,000 MKD | Does not pay profit tax |
| Medium company | Total income of 4,000,000 MKD | 1% tax on total income = 40,000 MKD, when this regime applies. |
| Company with profit | Profit of 500,000 MKD | 10% profit tax = 50,000 MKD. |
| Larger company | Total income over 6,000,000 MKD | Standard profit tax of 10% applies. |
These examples are simplified and are intended to make the concept easier to understand. The actual calculation depends on the company’s specific income, expenses, tax rules and accounting records.
Profit tax rate: what percentage applies?
The basic profit tax rate is 10%. For certain companies, depending on the amount of annual total income and the conditions met, tax on total income of 1% may also be relevant.
What are advance tax payments and why are they paid?
Advance tax payments are monthly payments that the company makes in advance during the year. Their purpose is to distribute the tax obligation throughout the year instead of paying the full amount at once.
- total income: 7,000,000 MKD;
- total expenses: 4,000,000 MKD;
- profit: 3,000,000 MKD;
- profit tax: 10% of 3,000,000 MKD = 300,000 MKD annually.
When the calculated tax is distributed into monthly amounts, the company gets a clearer overview of its obligations and can plan its cash flow more easily.
Why do successful businesses choose Aleksandar.AK?
Calculating profit tax is not only a mathematical operation. At Aleksandar.AK, we help companies gain a clearer accounting picture, timely tax calculation and a better understanding of their tax obligations.
- accurate and timely profit tax calculation;
- better planning of tax obligation payments;
- support with the tax balance and annual financial statements;
- clear records of income, expenses and profit;
- lower risk of errors and unplanned obligations.
Frequently asked questions about profit tax
How is profit tax calculated?
In the simplest form, profit tax is calculated based on the profit generated by the company, applying a tax rate of 10%. The actual calculation depends on the specific income, expenses and tax treatment.
Who is subject to profit tax?
Profit tax most often applies to legal entities that generate profit from activity, such as commercial companies, DOO, DOOEL, AD, state and public enterprises.
What is the profit tax rate?
The basic profit tax rate is 10%. For certain companies, tax on total income of 1% may also be relevant, depending on income and the applicable conditions.
What is tax on total income?
Tax on total income is a regime that may apply to certain companies according to their annual total income. In that case, 1% of total income is calculated, when the conditions are met.
Why are advance tax payments paid?
Advance payments are paid so that the tax obligation is distributed throughout the year, instead of paying the full amount at once.
Do you need support with profit tax?
If you need timely calculation, a review of the tax treatment, preparation of the tax balance or accounting support for your company, our team can help.
Request support from Aleksandar.AK and place your accounting on a stable and reliable foundation.