North Macedonia to abolish personal income tax in IT sector by 2023

North Macedonia plans to remove personal income tax for workers in the IT sector by 2023 to help alleviate staff shortages in the industry, prime minister Dimitar Kovachevski said. north macedonia it sector

The planned change is expected to stimulate younger people to choose careers in the IT sector where more workers are needed each day, Kovachevski said in a press release.

Currently, North Macedonia levies a flat tax of 10% on personal income in all sectors of the economy.

North Macedonia also plans to introduce other incentives for the IT industry by 2023, such as tax exemption for retraining, training and in-company training, as well as tax exemption on expenses incurred for licences, according to the press release.

North Macedonia IT Sector Overview

With an annual growth rate between 2 and 15 percent over the last several years, the Information and Communication Technology (ICT) sector in North Macedonia is a promising area for U.S. companies.  The ICT sector in North Macedonia benefits from a skilled and cost-effective workforce with excellent English language skills, solid telecommunications infrastructure, and low corporate tax.  ICT representatives expect the sector will continue to grow.

The total ICT market value in North Macedonia was an estimated $1 billion in 2020.  Software and IT service was the largest segment (56 percent) of the ICT market in North Macedonia, followed by ICT Trade and Manufacturing with 27 percent share each of country’s ICT market.  Many large ICT companies, such as Microsoft, Cisco, Oracle, Dell, Compaq, Hewlett Packard, IBM, Sun Microsystems, Apple, and Lotus, are present in North Macedonia via branch offices, distributors, dealers, resellers, solution providers, and business partners.

Leading Sub-Sectors

The best prospects continue to be in information and communication technologies such as smart phones, tablets, cloud technology, Wireless Application Protocol services, and 4G and 5G network equipment and solutions.  There are also opportunities for alternative telephone service operators, as well as services such as call centers, home-work services, and distance learning services.  Good opportunities continue to exist in the telecommunications sector for innovative peripheral products and services.  The largest customers in telecommunications are the two mobile operators in North Macedonia: Makedonski Telekom (part of the Deutsche Telekom Group through controlling owner Magyar Telekom) and A1 (a member of A1 Telekom Austria Group).

Opportunities

A number of software development companies are creating applications for Western markets.  These include banking, air traffic control, digital animation, cybersecurity, and website development.

With the liberalization of the telecom industry in 2005 (with the Law on Electronic Communications; http://privatnost.mk/en/law-on-electronic-communications/)), many opportunities exist to sell products and services in this market.  In November 2019 Makedonski Telekom launched the first real-time test of a 5G network by installing it at Skopje’s city square.  The Agency for Electronic Communications is preparing for an eventual 5G frequency auction in North Macedonia. north macedonia it sector

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