North Macedonia continues to align its laws with EU directives while introducing a solidarity tax and a food price freeze – both of which raise concerns, according to Debarliev, Dameski & Kelesoska Partner Jasmina Ilieva Jovanovik.
“One of the most frequent questions and concerns in North Macedonia pertains to the Law on the Solidarity Tax, which was enacted on September 25,” Ilieva Jovanovik begins. This law, while resembling EU Regulation (EU) 2022/1854, on an emergency intervention to address high energy prices, differs in a significant way, she says. “In the EU version, the extra profit tax applies exclusively to the energy sector. However, in North Macedonia, it encompasses all companies, regardless of their industry, as long as they had over EUR 10 million in income in 2022. The abrupt implementation of this law, retroactively, on the same day it was announced, has raised constitutional and practical challenges for companies.”
Separately, Ilieva Jovanovik reports that “the government's decision in September to freeze prices for a list of essential food products – as they were in the retail sector on August 1, minus 10% – coupled with restrictions on trading margins between retailers and wholesalers, aims to curb rising food prices.” While this is a public interest measure, she says that it has “generated concerns and uncertainties, especially among clients in the food retail sector. Moreover, a recent change in VAT and customs taxes adds complexity to the situation. The government is reassessing its approach, but clients in this sector are eagerly awaiting clarification,” she adds.
Food and agriculture products – and the related trading practices – are also in the focus these days with a new Law on unfair trading practices in the supply chain of agricultural and food products about to be adopted. Ilieva Jovanovik stresses that this draft law is designed to align with EU Directive 2019/633 on unfair trading practices in the agricultural and food supply chain. It targets both retailers and suppliers and seeks to limit certain contract clauses while granting more authority to the Commission for the Protection of Competition,” she explains.
Furthermore, Ilieva Jovanovik says that on the road to alignment with EU regulations, the new Law on the settlement of banks was adopted recently. “This law aligns with Directive 2014/59/EU and introduces mechanisms for state intervention in troubled banks to enable continuity of their critical financial and economic functions and prevent negative consequences to the financial system. It's a significant development aimed at protecting consumers, the market, and the overall banking framework,” she says. “While our country's banks are currently stable, the new law will help mitigate the consequences should any future banking crises arise, ensuring a more robust financial system.”
Finally, Ilieva Jovanovik reports that the “Fitch agency recently rated North Macedonia at BB+, indicating a certain level of creditworthiness. However, what has piqued interest is the inflation report, which has returned to single digits, at 8.3% in August. This is a noteworthy development after a long period of two-digit inflation,” she explains. “The real estate market, on the other hand, has experienced a slowdown due to the national bank's decision to increase interest rates, making mortgages less affordable. Prices have stabilized but the market is eagerly awaiting new trends,” Ilieva Jovanovik concludes.