Global Forum on Transparency and Exchange of Information for Tax Purposes : Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Former Yugoslav Republic of Macedonia 2014

GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES

Peer Review Report
Phase 2
Implementation of the Standard
in Practice
Global Forum on Transparency and Exchange of Information
for Tax Purposes
PEER REVIEWS, PHASE 2: FORMER YUGOSLAV
REPUBLIC OF MACEDONIA
This report contains a Phase 2: Implementation of the Standards in Practice review, as well
as revised version of the Phase 1: Legal and Regulatory Framework review already released
for this country.
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by over 120 jurisdictions which participate in the work of the
Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the standards of transparency and exchange of information for tax purposes. These
standards are primarily reected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax
Convention on Income and on Capital and its commentary as updated in 2004, which has
been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. Fishing expeditions are not authorised, but all foreseeably relevant information must
be provided, including bank information and information held by duciaries, regardless of the
existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identied by the Global Forum as
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1
reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange
of information, while Phase 2 reviews look at the practical implementation of that framework.
Some Global Forum members are undergoing combined Phase 1 plus Phase 2 reviews.
The ultimate goal is to help jurisdictions to effectively implement the international standards
of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus represent
agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, and for copies of the published review reports, please visit
www.oecd.org/tax/transparency and www.eoi-tax.org.
FORMER YUGOSLAV REPUBLIC
OF MACEDONIA
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ISBN 978-92-64-21770-6
23 2014 19 1 P
9HSTCQE*cbhhag+
Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Former Yugoslav
Republic of Macedonia
2014
PHASE 2:
IMPLEMENTATION OF THE STANDARD IN PRACTICE
August 2014
(reflecting the legal and regulatory framework
as at May 2014)
This work is published on the responsibility of the Secretary-General of the OECD.
The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the OECD or of the governments of its member countries or
those of the Global Forum on Transparency and Exchange of Information for Tax
Purposes.
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Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews
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ISSN 2219-469X (online)
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OECD (2014), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
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http://dx.doi.org/10.1787/9789264217713-en
PEER REVIEW REPORT PHASE 2 THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA 2014
TABLE OF CONTENTS 3
Table of Contents
About the Global Forum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Information and methodology used for the peer review of the Former Yugoslav
Republic of Macedonia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Overview of the Former Yugoslav Republic of Macedonia. . . . . . . . . . . . . . . . . 12
Exchange of information for tax purposes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
A. Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
B. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
B.1. Competent Authoritys ability to obtain and provide information. . . . . . . . 65
B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 79
C. Exchanging information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
C.1. Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
C.2. Exchange-of-information mechanisms with all relevant partners. . . . . . . . 91
C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . 97
C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 98
4 TABLE OF CONTENTS
Summar y of Deter minations and Factor s Under lying Recommendations. . . .105
Annex 1: Jur isdictions r esponse to the r eview r epor t . . . . . . . . . . . . . . . . . . . 109
Annex 2: List of all exchange-of-infor mation mechanisms . . . . . . . . . . . . . . . .110
Annex 3: List of laws, r egulations and other r elevant mater ial. . . . . . . . . . . . .112
Annex 4: People inter viewed dur ing on-site visit . . . . . . . . . . . . . . . . . . . . . . . .114
ABOUT THE GLOBAL FORUM 5
About the Global For um
The Global Forum on Transparency and Exchange of Information for
Tax Purposes is the multilateral framework within which work in the area
of tax transparency and exchange of information is carried out by over
120 jurisdictions, which participate in the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer
review of the implementation of the international standards of transpar-
ency and exchange of information for tax purposes. These standards are
primarily reflected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, and in Article 26 of the
OECD Model Tax Convention on Income and on Capital and its commen-
tary as updated in 2004. The standards have also been incorporated into
the UN Model Tax Convention.
The standards provide for international exchange on request of fore-
seeably relevant information for the administration or enforcement of the
domestic tax laws of a requesting party. Fishing expeditions are not authorised
but all foreseeably relevant information must be provided, including bank
information and information held by fiduciaries, regardless of the existence
of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by
the Global Forum as relevant to its work, are being reviewed. This process is
undertaken in two phases. Phase 1 reviews assess the quality of a jurisdic-
tions legal and regulatory framework for the exchange of information, while
Phase 2 reviews look at the practical implementation of that framework. Some
Global Forum members are undergoing combined Phase 1 and Phase 2
reviews. The Global Forum has also put in place a process for supplementary
reports to follow-up on recommendations, as well as for the ongoing monitor-
ing of jurisdictions following the conclusion of a review. The ultimate goal is
to help jurisdictions to effectively implement the international standards of
transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum
and they thus represent agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency
and Exchange of Information for Tax Purposes, and for copies of the pub-
lished review reports, please refer to www.oecd.org/tax/transparency and
www.eoi-tax.org.
EXECUTIVE SUMMARY 7
Executive Summar y
1. This report summarises the legal and regulatory framework for
transparency and exchange of information in the Former Yugoslav Republic
of Macedonia (hereinafter the Republic). The international standard, which
is set out in the Global Forums Terms of Reference to Monitor and Review
Progress Towards Transparency and Exchange of Information, is concerned
with the availability of relevant information within a jurisdiction, the compe-
tent authoritys ability to gain timely access to that information, and in turn,
whether that information can be effectively exchanged with its exchange of
information (EOI) partners.
2. The Republic was identified in September 2010 as a jurisdiction
that is relevant to the Global Forums work in particular because of adver-
tising itself as an investment center attracting non residents and was added
to the Global Forums Schedule of Reviews for the first quarter of 2011.
Subsequently invited to join the Global Forum, the Republic responded posi-
tively and in January 2011 became the Forums 97
th
member. The Republic
has participated co-operatively throughout the review process.
3. The Republic hosts a small economy, recording a real gross domes-
tic product in 2011 of about USD 10.2 billion. The Republic functions as an
open-market economy which is highly integrated into international trade. In
recent years, the Republic has changed its legal framework substantially in an
effort to attract foreign investment. In this context, special emphasis has been
given to taxation, with the implementation of a flat tax at 10%.
4. Generally, the Republic has an adequate legal and regulatory frame-
work for transparency and exchange of information for tax purposes. In most
cases, the Republics extensive registration requirements ensure that accurate,
adequate and reasonably current information concerning legal ownership and
control of legal entities is maintained in the Republic. Banking information
and accounting records are also required to be maintained. In practice, the
Republic did not have a system of oversight in place to monitor the compli-
ance of the obligations to maintain accurate and updated ownership and
identity information for limited liability companies, partnerships and foun-
dations during the review period. The provisions ensuring the availability
8 EXECUTIVE SUMMARY
of accounting information in foundations were also not effectively enforced
during the review period.
5. The Republics tax authorities have powers to obtain bank, own-
ership, identity and accounting records and have measures to compel the
production of such information. In practice, the Competent Authority relies
heavily on conducting tax audits to obtain information for EOI purposes. The
Competent Authority also could not obtain information that related to periods
more than five years earlier than the current tax year and this has impeded
effective EOI in practice. The Republic should ensure that its laws allow for
access to information for any time period pursuant to a valid request under
and EOI agreement.
6. Confidentiality provisions applying to notaries public, attorneys, tax
advisers and auditors do not prevent tax authorities from accessing docu-
ments held on behalf of their clients. These confidentiality provisions have
not impacted effective EOI in practice. Whilst there are no sectorial laws
regulating auditors and tax advisers, all these professionals are required to
comply with anti-money laundering/counter-terrorist financing (AML/CTF)
laws.
7. The Republic has signed 45 Double Taxation Conventions which
provide for international exchange of information, 41
1
of which are in force.
All but two (the agreements with Austria and Switzerland) of the agreements
that are in force provide for exchange of tax information to the international
standard. The Republics network of agreements covers most of its main trad-
ing partners and neighbouring countries, namely Bulgaria, Croatia, Germany,
Italy, Montenegro, the Russian Federation (Russia), Serbia and Slovenia. In
addition, a multilateral agreement between the Republics tax administration
and the tax authorities of Bosnia and Herzegovina, Bulgaria, Montenegro and
Serbia, concluded in 2006, provides for enhanced co-operation among the
contracting administrations, including exchange of information spontaneously
or upon request.
8. During the review period, the Republic received thirty EOI requests
from thirteen EOI partners. Out of these requests, 30% of the requests
were responded to within 90 days and 70% of the requests were responded
to within 180 days. The Republic has not always provided status updates
where information could not be exchanged within 90 days but the Competent
Authority has issued new guidelines that require status updates to be sent to
treaty partners where this is necessary.
1. The Republic has signed two DTCs with Belgium. One of which is currently
in force and the other is awaiting ratification by Belgium. When the agreement
signed in 2010 enters into force it will replaced the 1983 agreement.
EXECUTIVE SUMMARY 9
9. The Republic has been assigned a rating for each of the 10 essential
elements as well as an overall rating. The ratings are Compliant for ele-
ments A.2, A.3, B.2, C.1, C.2, C.3, C.4 and C.5, and Largely Compliant for
elements A.1 and B.1. In view of the ratings for each of the essential ele-
ments taken in their entirety, the overall rating for the Republic is Largely
Compliant.
10. A follow-up report on the steps undertaken by the Republic to answer
the recommendations made in this report should be provided to the Peer
Review Group within twelve months of the adoption of this report.
INTRODUCTION 11
Intr oduction
Infor mation and methodology used for the peer r eview of the For mer
Yugoslav Republic of Macedonia
11. The peer review of Former Yugoslav Republic of Macedonia (herein-
after the Republic) has been undertaken across two assessments; the 2011
Phase 1 Report and the 2014 Phase 2 assessment. The assessments of the
legal and regulatory framework and the implementation and effectiveness of
this framework of the Republic were based on the international standards for
transparency and exchange of information as described in the Global Forums
Terms of Reference, and was prepared using the Global Forums Methodology
for Peer Reviews and Non-Member Reviews.
12. The 2011 Phase 1 report of the Republic, which was adopted and
published by the Global Forum in August 2011, was based on information
available to the assessment team including the laws, regulations, notices
and exchange of information mechanisms in force or effect as at May 2011,
the Republics responses to the Phase 1 questionnaire and supplementary
questions, information supplied by partner jurisdictions, and other relevant
sources.
13. The Phase 2 assessment is based on the laws, regulations, and
exchange of information mechanism in force or effect as at 22 May 2014,
the Republics response to the Phase 2 questionnaires, supplementary ques-
tions, and other materials supplied by the Republic, information supplied by
exchange of information partners and explanation provided by the Republic
during the onsite visit that took place from 11 to 15 November 2013 in Skopje.
During the onsite visit, the assessment team met with officials and repre-
sentatives of the relevant government agencies including the Public Revenue
Office, Ministry of Finance, Central Register, Central Securities Depository,
Securities and Exchange Commission, National Bank and the Financial
Intelligence Office (see Annex 4).
14. The following analysis reflects the 2010 Phase 1 and the Phase 2
assessments of the legal and regulatory framework of the Republic in effect
12 INTRODUCTION
as at 22 May 2014 and the practical implementation and effectiveness of
this framework in the three-year review period from 1 January 2010 to
31 December 2012.
15. The Terms of Reference breaks down the standards of transparency
and exchange of information into 10 essential elements and 31 enumerated
aspects under three broad categories: (A) availability of information; (B) access
to information; and (C) exchange of information. This review assesses the
Republics legal and regulatory framework against these elements and each
of the enumerated aspects. In respect of each essential element a determina-
tion is made that: (i) the element is in place; (ii) the element is in place, but
certain aspects of the legal implementation of the element need improvement;
or (iii) the element is not in place. These determinations are accompanied by
recommendations for improvement where relevant. In addition, to reflect the
Phase 2 component, recommendations are made concerning the Republics
practical application of each of the essential elements and a rating of either:
(i) compliant, (ii) largely compliant, (iii) partially compliant, or (iv) non-com-
pliant is assigned to each element. An overall rating is also assigned to reflect
the Republics overall level of compliance with the standards.
16. The 2011 Phase 1 assessment was conducted by a team, which con-
sisted of two expert assessors and one representative of the Global Forum
Secretariat: Mr. Paul Walsh, from the Irish Revenue Service; Mr. Olivier
Vetillard, Directeur-adjoint from the Direction des services fiscaux of the
Principaut de Monaco; and Ms. Francesca Vitale from the Global Forum
Secretariat. The assessment team examined the legal and regulatory frame-
work for transparency and exchange of information and relevant exchange of
information mechanisms in the Republic.
17. The Phase 2 assessment was conducted by a team which consisted of
two expert assessors and two representatives of the Global Forum Secretariat:
Mr. Paul Walsh, from the Irish Revenue Service; Mr. Olivier Vetillard,
Directeur-adjoint from the Direction des services fiscaux of the Principaut
de Monaco; Mr. Robin Ng and Ms. La Toya James from the Global Forum
Secretariat. The assessment team examined the practical implementation of
the legal and regulatory framework for transparency and exchange of infor-
mation in the Republic.
Over view of the For mer Yugoslav Republic of Macedonia
18. The Republic is a landlocked country with a territory of approxi-
mately 26 000 square kilometres and a population of about 2 million located
in the central Balkan Peninsula, in Southeast Europe. Formerly part of the
Yugoslav Federation, the Republic declared independence in 1991 and was
admitted to the United Nations in 1993. It is also a member of the World Trade
INTRODUCTION 13
Organisation, the Council of Europe and the Intra-European Organisation of
Tax Administration, and a candidate country for joining the European Union.
19. The Republic is a small economy with a gross domestic product
of about USD 10.2 billion in 2011.
2
Over the past ten years, the Republics
government has implemented a number of fiscal and business sector reforms
designed to make the country more attractive to foreign investments. The
World Bank ranked the Republic as the 4
th
top reformer in 2008/9.
3
As a
result, the Republics economy is now open and highly integrated in interna-
tional trade (the total trade-to-GDP ratio was 81.6% at the end of 2009
4
). The
service sector constitutes by far the largest part of GDP with 58.3%, followed
by industry (29.6%) and agriculture (12.1%). The per capita GDP, however, is
about EUR 9 900, well below the average in the EU.
5
20. Most of the Republics trade is with the 28 EU member countries
(80.1% of export in 2014
6
). Exchanges with neighbouring non-EU economies
are also significant. The Republics major trading partners are Bulgaria,
Germany, Greece, Italy, Russia and Serbia.
21. The Republics currency is the Macedonian denar (MKD, with a
floating exchange rate of EUR 1 =MKD 61.60 on 14 March 2014).
General information on the legal and tax system
Governance and legal system
22. The Republic is a multiparty democracy. Elections for the unicam-
eral assembly (Sobranie) are held every four years. The Council of Ministers
and the Prime Minister constitute together the executive branch. While the
Council is elected by the majority vote of all the deputies in the Assembly, the
President is elected by popular vote for a five-year term, and can be re-elected
once. The Prime Minister is the head of government and is selected by the
party or coalition that gains a majority of seats in Parliament. The Prime
Minister and ministers must not be members of Parliament.
2. UNdata database: http://data.un.org/CountryProfile.aspx?crName=The%20
former%20Yugoslav%20Republic%20of%20Macedonia.
3. See www.doingbusiness.org/reforms/top-reformers-2010/.
4. Source: US Department of State Background Note: Macedonia (www.state.
gov/r/pa/ei/bgn/26759.htm).
5. 2010 estimates from the CIA World Factbook: https://www.cia.gov/library/
publications/the-world-factbook/geos/mk.html.
6. Source: Republics State Statistical Office: Macedonia (www.state.gov/r/pa/ei/
bgn/26759.htmwww.stat.gov.mk/PrikaziSoopstenie_en.aspx?rbrtxt=78).
14 INTRODUCTION
23. The judiciary comprises a Constitutional Court, a Supreme Court,
four appeal courts, the High Administrative Court, the Administrative Court
and 27 basic courts. The courts are autonomous and independent bodies
which judge on the basis of the Constitution and laws and international
agreements ratified in accordance with the Constitution. The independence
of the judiciary power is ensured by the Judicial Council, whose members are
elected by the Republics judges. The Constitutional Court comprises nine
judges, appointed by the Assembly (Art. 109 of the Constitution). It decides
on the conformity of laws with the Constitution, ensures the respect of the
constitutional rights and solves the conflicts of power or competency between
the three branches of government. Criminal and civil cases are heard by local
courts in first instance, appeal courts in second instance and the Supreme
Court in third instance. The Supreme Court is also responsible for the con-
sistent interpretation of laws by the lower courts. As for the Constitutional
Court, the judges of the Supreme Court are appointed by the Assembly. The
parliament also appoints an independent Public Prosecutor.
24. The Republics legal system is based on civil law. The 1991
Constitution is the supreme law of the Republic. Laws are adopted by the
Assembly in accordance with the Constitution and all other regulations in
accordance with the Constitution and law (Art. 51 of the Constitution). The
Assembly may also give the authentic interpretation of laws (Art. 68). The
Government proposes laws and adopts bylaws and other acts for the execu-
tion of laws. Laws and other regulations are published in The Official Gazette
of the Republic of Macedonia. Publication in the Gazette must occur at most
seven days after the day the act has been adopted. Laws come into force on
the eighth day after the day of their publication at the earliest, or on the day
of publication in exceptional cases determined by the Assembly (Art. 52).
There is a single national law, and no sub-national powers. Municipalities are
responsible for local self-government.
25. International agreements are concluded by the President in the name
of the Republic. They may also be concluded by the Government, when it is
so determined by law (Art. 119 Constitution). The international agreements
ratified in accordance with the Republics Constitution are part of the inter-
nal legal order and cannot be changed by law (Art. 118). Pursuant to the Law
on Tax Procedure, ratified international taxation agreements prevail over
national tax laws (Art. 1(5)).
26. By-laws are published in the Official Gazette and are considered sec-
ondary legislation. This category comprises rulebooks, directives, decrees,
regulations, settlements, etc. Internal acts (statutes, order etc.) of state bodies,
institutions or organisations are non-binding. They are not published in the
Official Gazette.
INTRODUCTION 15
27. A complete list of all the relevant legislation and regulations is set
out in Annex 3.
Tax system
28. Pursuant to the Republics Constitution, everyone is obliged to pay
tax and other public contributions, as well as to share in the discharge of
public expenditure in a manner determined by law (Art. 33). The author-
ity to determine public taxes and fees lies with the Assembly (Art. 68).
The major taxes are personal income tax, profit tax and value added tax.
The Government of the Republic also imposes a property tax, a tax on
inheritances and gifts and a turnover tax on estate and rights. The tax admin-
istration agency is the Public Revenue Office (PRO).
29. Income derived by individuals is subject to income tax. Income tax
is charged on a worldwide basis with a flat rate of 10% and applies both
to personal income (i.e. income from employment) and to other income,
including investment income and capital gains. Proprietors, sole proprietors,
individuals performing agricultural activity, craftsman activity and persons
performing services or freelance activities are subject to personal income tax.
30. Income derived by companies and other entities carrying on a busi-
ness activity is, in principle, subject to profit tax. Effective from 1 January
2009, undistributed profits arising from a business activity in the Republic or
abroad are not subject to profit tax. In addition, from 7 July 2010, profits dis-
tributed to resident companies are not subject to profit tax. Profit tax remains
due at a flat rate of 10% on dividends distributed to individuals and non-
resident companies, as well as on particular items of expenses that are not
deductible for tax purposes. Capital gains are generally regarded as ordinary
business income and included in the accounting financial results of the com-
panies. The profit tax due on distributed profits is payable upon distribution;
the profit tax due on non-deductible expenses must be paid within 30 days
from the due date of the annual tax return (28 February). Persons subject to
profit tax include all legal entities (joint-stock companies, limited liability
companies and all types of partnerships). Persons or associated persons that
earn revenues and have property, but no legal personality are not recognised
as separate taxpayers; their profits are subject to profit tax in the hands of the
legal representative. Trusts are not recognised in the Republic and therefore
there are no special rules on the taxation of income derived through a trust.
31. Resident legal entities which are defined by Article 4 of the Profit
Tax Law (PTL) as companies established or headquartered in the terri-
tory of the Republic and by Art. 4 of the Law on Tax procedure as persons
having in the Republic their place of administration (administrative seat) or
legal seat are subject to profit tax on their worldwide income. Payments to
16 INTRODUCTION
non-residents made by resident companies and permanent establishments
(including dividends, interest, royalties and payments for services such as
management, consulting and financial services, research and development
services, telecommunication services, insurance and re-insurance premiums,
rental of real estate located in the Republic) are generally subject to a 10%
withholding tax, unless a tax treaty provides for a lower rate.
32. According to the Profit Tax Law, companies classified as small and
micro traders and legal persons who are residents of the Republic which
keep accounting records and prepare annual accounts in accordance with the
Company Law and the Profit Tax Law may determine to pay an annual tax on
total income. Companies which perform bank, financial and insurance activ-
ity and activities in the field of games of chance and entertainment games, do
not belong in the simplified tax regime for payment of an annual tax on total
income. Companies are exempt from paying the annual tax on total income
provided that the total income for the tax year drived from any source does
not exceed MKD 3 000 000 per annum.
33. The tax on total income is calculated by the amount of 1% of the total
realised revenues presented in the income statement in the annual accounts
under the provisions of the Companies Law, for the business year for which
tax is calculated
7
provided that:
the company carries out a commercial activity, except banking,
financial, insurance activities and games of chance and entertain-
ment games; and
the total income for the year derived from any source is from
MKD 3 000 001 to MKD 6 000 000 annually.
8
34. Companies carrying on business activities in a technological indus-
trial development zone can benefit from a 10-year exemption from profit
tax, provided that certain requirements are met and that they obtain approval
by the tax authorities (Art. 5 Law on Technological Industrial Development
Zones). Companies wishing to benefit from these incentives need to submit
a yearly tax return request to the responsible tax authority through the
Directorate for Technical Industrial Development Zones (Art. 9(2)). The
request must be accompanied by a number of supporting documents, includ-
ing the requesting companys annual accounts and tax balance sheets for the
previous year.
7. Article 38-e and 38-b of the Profit Tax Law.
8. Article 38-b of the Profit Tax Law.
INTRODUCTION 17
35. In 2012, the number of registered taxpayers that submitted an annual
tax return to the Public Revenue Office
9
in the following categories were:
(i) legal entities: 123 929; (ii) sole proprietors: 142 228; (iii) value-added tax
(VAT) taxpayers: 35 373; and (iv) individuals: 206 850.
Overview of the f inancial sector and relevant professions
36. The Republics financial sector comprises banking, insurance and
securities. The banking sector includes commercial banks, non-bank deposi-
tary institutions (saving houses), fast money transfer providers and currency
exchange bureaus. The insurance sector is made of insurance organisations
and founders of non-state pension schemes. Broker companies and securi-
ties registrars belong to the securities sector. The Republic has recently been
advertising itself as an investment destination and location for foreign inves-
tors, especially in the automotive sector. When doing this, emphasis has been
put on the above-mentioned flat tax on personal income and profits and on
the benefits stemming from a number of other reforms recently implemented
to improve the business climate. To date there is no international financial
centre in the Republic.
37. Banks are the driving force of the Republics financial sector. The
National Bank of the Republic of Macedonia (NBM) is the central bank,
licensing entity and regulator. The establishment, operation and supervision
of the deposit taking institutions (banks and savings houses
10
) are regulated
by the Banking Law and the by-laws of the National Bank. Banks perform
all financial activities listed by Article 7 of the Banking Law, whereas saving
houses can only: collect MDK denominated savings deposits of physical
persons; issue credit to physical persons and to individuals who perform
independent activities and are not legal entities; obtain loans from banks and
other savings houses; and provide economic and financial consulting services
to their clients.
38. Decisions and supervisory circulars adopted by the NBM to regulate
commercial bank activities are binding and have the force of law. The type
of financial activities that can be performed by a bank is conditional upon
the amount of bank capital. Certain activities also require a special approval
by the NBM. Branches of foreign banks also need to be licensed by NBM
to operate in the Republic. The NBM can revoke a licence if the bank does
not fulfil the requirements set out by the Banking Law. The NBM is also
9. Statistics can be found on the PROs website: www.ujp.gov.mk/en/statistika/
naplata.
10. As of 2000, savings houses can no longer be established; the existing ones con-
tinue to operate under the provisions of the Law on Banks and Savings Houses
(see Art. 172 of the Banking Law).
18 INTRODUCTION
responsible for the supervision of activities of commercial banks, savings
houses, fast money transfer providers and currency exchange units in respect
of the implementation of anti-money laundering (AML) obligations.
39. As of December 2012, there were 16 commercial banks operat-
ing in the Republic, with the five largest banks accounting for some three
quarters of the sectors assets and deposits. For twelve of the commercial
banks, foreign ownership was more than 50%. There were 7 savings houses
and 193 licensed currency exchange units. In addition, there were 15 insur-
ance undertakings operating in the Republic; of them, four are licensed to
perform life insurance, one non-life insurance and reinsurance business
and 10 non-life insurance. Insurance mediation services are performed by
twenty seven insurance brokerage companies and ten insurance agencies.
11

The amount of total deposits of non-financial entities in the banks, as of
December 2012 was MKD 245 373 000. In the year 2012 the assets under
management in the Republic totalled MKD 398 834 000 and in 2013 the total
was MKD 421 807 000.
40. Entities licensed to work with securities comprised, as of 2012,
10 authorised brokerage houses and 5 banks. Supervision on the securi-
ties market is exercised by the Securities and Exchange Commission. The
Commission is also responsible for the supervision of Macedonian Stock
Exchange, Central Securities Depositary, investment funds, investment fund
management companies, brokers, investment advisors.
41. Regulated professional service providers include lawyers, notaries,
real estate agents and casinos. Auditors and tax advisers are not regulated
under specific sectoral legislation.
42. Pursuant to the Republics Attorney Law the legal profession is con-
ducted exclusively by attorneys at law, either individually or in association
(law firms). Individual attorneys and law firms are registered in the register
of attorneys kept by the Macedonian Bar Association. There are currently
2 471 attorneys registered in the Republic. Notaries public number 175 and
are registered with the Chamber of Notaries. Supervision over lawyers
and notaries is exercised by a commission formed by the Macedonian bar
Association and the Chamber of Notaries, respectively.
43. Real estate agencies are founded as limited liability companies on the
basis of the Law on Trade Enterprise. There are 202 such agencies registered
in the Republic. Companies meeting the capital and technical requirements
provided by the Law on Games of Chance and Entertainment Games can be
licensed as casinos by the Government. There are 6 licensed entities with a
11. The EU Commissions 2009 Progress Report (SEC(2009) 1335), available at: http://
ec.europa.eu/enlargement/pdf/key_documents/2009/mk_rapport_2009_en.pdf.
INTRODUCTION 19
total of 7 casinos in the Republic. Pursuant to the AML/CTF Law, these enti-
ties are supervised by the PRO (Art. 46).
Entities subject to AML/CTF legislation
44. The Republics anti-money laundering legislation has been sub-
stantially revised in recent years. The core piece of legislation is currently
the 2008 (amended 2010) Law on Prevention of Money Laundering and
Other Criminal Proceeds and Financing Terrorism (AML/CFT Law). With
respect to the scope of the natural and legal persons implementing AML/
CFT measures, customer due diligence, reporting obligations, prohibition of
disclosure, record keeping and statistical data, internal procedures, training
and feedback, penalties, as well as supervision, the Republics AML/CTF
law substantially implements the provisions contained in the EU Directive
2005/60/EC.
12
45. Pursuant to the AML/CTF law, the obliged entities include all
financial institutions, i.e. banks, exchange offices, savings houses, broker-
age houses, service providers for fast money transfer, post offices, insurance
companies, insurance brokerage companies, insurance mediations companies,
insurance brokers and insurance agents, investment funds and investment
fund management, pension funds and companies for management of voluntary
pension funds and other legal entities or individual persons performing one
or more activities related to the approval of credits, issuing electronic money,
issuing and administering credit cards, economic financial consulting, leas-
ing, factoring, forfeiting, provision of financial consulting services and other
financial activities (Art. 5).
46. AML/CTF requirements also cover legal entities and individual per-
sons performing activities such as:
trade in real estate, auditing and accounting services;
notary public, attorney and other legal services, relating to: sale and
purchase of moveable or immovable items, real estate, partnership
shares and stock, trading in and management of money and securi-
ties, opening and disposal with bank accounts, safe-deposit boxes
and other financial products, incorporation or participation in the
management or operation of legal entities, representing clients in
financial transactions, etc.;
12. MONEYVAL, The Former Yugoslav Republic of Macedonia
Progress report (MONEYVAL (2009) 33), 21 September 2009, page 3;
www.coe.int/t/dghl/monitoring/moneyval/Evaluations/progress%20reports/
MONEYVAL(2009)33-ProgRep-MKD_en.pdf.
20 INTRODUCTION
provision of advice related to taxes;
provision of consulting services; and
provision of investment consulting services.
47. The terms consulting services and investment consulting ser-
vices are not defined by the law and appear to have a broad meaning.
48. Finally, the same requirements apply to: organisers of games of
chance according to the law; associations of citizens and foundations (domes-
tic and foreign); financial consulting companies; stock exchanges; service
providers to legal entities; the Central Register of the Republic of Macedonia;
the Central Securities Depository; credit bureaus; legal entities who accept
collateral in moveable items and real estate, and the Employment Agency of
the Republic of Macedonia.
49. Pursuant to Article 2 point 10 of the AML/CTF Law, service pro-
viders to legal entities are individual persons or legal entities who provide
services for: incorporation of legal entities; arranging or assisting for
another person to act as the management body or a member of the manage-
ment body of the legal entity; provision of a registered office of the legal
entity; arranging or assisting for other persons to act as partner or share-
holder for another person other than a company which is listed on the Stock
Exchange and other services stipulated by Law.
Exchange of infor mation for tax pur poses
50. The Republics legal and regulatory framework relevant to exchange
of information for tax purposes is presided over by the Ministry of Finance
and the Public Revenue Office (PRO), a state body within the Ministry of
Finance (Art. 2(1) Law on Public Revenue Office, Law on PRO). The
Republics competent authority in all matters concerning tax conventions
is the Minister of Finance or his authorised representatives. The PRO is
responsible, inter alia, for the implementation of international agreements
in the area of taxes and for providing international legal assistance (Art. 4(1)
Law on PRO); as such, it is the competent authority dealing with specific
requests for exchange of information under the Republics DTCs. Pursuant
to the Law on PRO, the PRO co-operates with foreign tax administrations
in tax related matters and other areas of mutual interest, in accordance with
the international agreements ratified by the Republic. The PRO is party to a
multilateral administrative agreement (the Multilateral Agreement) on the
co-operation and mutual assistance signed in 2006 with the tax authorities of
Bosnia and Herzegovina, Bulgaria, Montenegro and Serbia. The Multilateral
Agreement is not an international treaty, but an administrative agreement; as
INTRODUCTION 21
a consequence, it has not been ratified by the Assembly and does not possess
the force of law.
51. The PROs work is supported by the Office for the Prevention of
Money Laundering and Financial Terrorism (OPMLFT) and other govern-
mental institutions, which report to the PRO whenever there are grounds for
suspicion that a tax-related criminal act is being performed.
COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 23
Compliance with the Standar ds
A. Availability of Infor mation
Over view
52. Effective exchange of information requires the availability of reliable
information. In particular, it requires information on the identity of owners
and other stakeholders as well as accounting information on the transactions
carried out by entities and other organisational structures. Such information
may be kept for tax, regulatory, commercial or other reasons. If information
is not kept or if information is not maintained for a reasonable period of time,
a jurisdictions competent authority may not be able to obtain and provide
it when requested. This section of the report assesses the adequacy of the
Republics legal and regulatory framework on availability of information.
53. The Company Law and the Law on Securities require filing of almost
all information on the ownership and identity of companies and partnerships
with the Central Registry or the Central Securities Depository. Information
on companies shareholdings is also submitted to the tax authority. Foreign
companies and partnerships need to register a branch office in the Republic
to conduct commercial activities there. They also need to comply with the
reporting requirements applicable to the type of company or partnership they
can be assimilated to. If the foreign entity cannot be assimilated to any of the
entities regulated by the Republics Company Law, the rules on joint stock
companies apply. When coupled with the obligations under the Company Law
24 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION
for companies to maintain registers of parts
13
or shareholders, such require-
ments ensure that companies and partnerships in the Republic are required to
maintain full legal ownership and identity information. As regards the moni-
toring of the legal obligations to maintain identity and ownership information
for all the relevant entities, it is noted that the Central Registry and the PRO
do not monitor these obligations actively and penalties are rarely imposed in
practice. The Republic should monitor the compliance of the legal obligations
to maintain accurate and updated ownership and identity information for all
relevant entities and exercise its enforcement powers as appropriate to ensure
that such information is available in practice.
54. Trusts are not recognised under the Republics law and there is no
registration requirement for trusts. Some mechanisms however, ensure the
availability of ownership information, particularly, AML/CFT obligations
on professional service providers and the tax obligations on representatives
and fiduciaries to provide information on request to the revenue authorities,
both during tax investigations and through the tax returns. The PRO has
never encountered foreign trusts with a resident person acting as trustee
during the normal course of performing its duty and hence does not have any
experience in dealing with foreign trusts. However, it is noted that regular
monitoring activities have been undertaken by the relevant AML/CFT super-
visory authorities to ensure that that the AML/CFT Law obligations under
the Republics AML/CFT Laws are properly carried out by the AML/CFT
obligated persons which may provide services to the trust. In this regard,
it can be concluded that the Republic has taken all reasonable measures to
ensure that information is available to its competent authorities that identifies
the settlor(s), trustee and beneficiaries of express trusts administered in the
Republic or in respect of which a trustee is resident in the Republic.
55. Foundations may be formed pursuant to the Republics law. They are
registered and under an obligation to disclose the identity of the founders.
Foundations are non-profit entities and cannot allocate gains to the founders
or to the managers. As foundations are established for charitable purposes
in the Republic, it may be concluded that foundations established in the
Republic are not relevant for the Global Forums purposes.
56. Enforcement provisions are in place to ensure all relevant entities
maintain information and/or provide it to government authorities as required
under the various laws. In practice, these enforcement provisions have only
been exercised by the relevant authorities in a fairly limited number of cases.
13. The total of the rights and liabilities acquired by each member of a limited
liability company on the basis of the contribution to the companys core capital
represent the members part in the company.
57. As concerns accounting records, entities are generally required to
keep comprehensive accounting information, including underlying docu-
mentation, under either company or tax law. The scope of the obligations to
keep accounting records under the tax law, however, is not clear; in particu-
lar, the tax law does not clearly cover professional service providers acting
as trustees of foreign trusts. As the PRO has never encountered any cases
where a resident person is found to be acting as trustee of a foreign trust,
they could not provide any assessment as to whether accounting records of a
foreign trust with a resident person acting as trustee are maintained and kept
in practice.
58. In respect of banks and other financial institutions, the combination
of the anti-money laundering/counter-financing of terrorism regime and
licensing requirements imposes obligations to ensure that all records per-
taining to customers accounts as well as related financial and transaction
information are available. As of 2008, anonymous accounts are expressly pro-
hibited in the Republic. In addition, the Republics authorities have indicated
that no such accounts had been opened in the past. The supervisory authori-
ties for banks have exercised their enforcement powers and have conducted
regular onsite inspection to ensure financial institutions comply with the
requirement to maintain banking information required under the standard.
A.1. Owner ship and identit y infor mation
J urisdictions should ensure that ownership and identity information for all relevant
entities and arrangements is available to their competent authorities.
Companies (ToR
14
A.1.1)
Types of companies
59. The Company Law (OG 28/04) is the central piece of legislation gov-
erning the establishment and management of corporations in the Republic.
Companies may be established only in the form and manner set forth by the
Company Law (Art. 20). Pursuant to the same Law, companies are classi-
fied according to their form, regardless of whether they perform commercial
or other activities, as one of the following:
general partnership (Javno Trgovsko Drustvo, J TD);
limited partnership (Komanditno Drustvo, KD);
14. Terms of Reference to Monitor and Review Progress Towards Transparency and
Exchange of Information.
limited liability company (Drustvo so ogranicena odgovornost, DOO);
joint stock company (Akcionersko Drustvo, AD); and
limited partnership by shares (Komanditno drustvo so akcii, KDA).
60. The form of a company is freely chosen by the founder, unless oth-
erwise provided by law.
61. Despite the fact that all of the abovementioned entities are classified
as companies pursuant to the Republics law, this section only deals with
limited liability companies and joint stock companies; the three remaining
companies (general partnerships, limited partnerships and limited partner-
ships by shares) are dealt with in the section of this report on Partnerships.
62. A limited liability company is a company in which one or more
natural or legal persons subscribe to the pre-determined core capital of the
company with a contribution (Art. 166 Company Law). The contributions of
members may vary in amount. The members are not liable for the companys
liabilities. A limited liability company may be founded by one or more natural
or legal persons, but the members may not exceed 50; otherwise the company
has to be transformed into a joint stock company or be liquidated. The total of
the rights and liabilities acquired by each member of a limited liability com-
pany on the basis of the contribution transferred in the companys core capital
represent the members part in the company (Art. 21(2)). Parts cannot be
used as securities. Limited liability companies are established with a company
agreement signed by the founders and certified by a notary; or if established
by a single member, a statement of founding is required. There are 16 151 lim-
ited liabilities companies, and 74 207 limited liability companies that were
incorporated by a single member in the Republic as at 31 December 2012.
63. A joint stock company is a company in which shareholders par-
ticipate with contributions in the charter capital that is divided into shares
(Art. 270 Company Law). The shareholders are not liable for the liabilities of
the joint stock company. Rights and liabilities acquired by each shareholder
of a joint stock company on the basis of the contribution transferred in the
companys charter capital represent the part in the company for which the
subscriber acquires shares (Art. 21(3)). The nominal value of each share
must not be less than EUR 1. Shares may be common or preferred, according
to the rights attached to them. Preferred shares may consist of several classes,
but preferred shares of the same class confer identical rights (Art. 277).
64. Joint stock companies may be founded by one or more persons,
simultaneously or successively (Art. 286(1) Company Law). Simultaneous
founding occurs when the founders themselves and/or together with other
persons acquire all the shares and sign the charter, without public notice.
When this is the case, a written statement by the founders confirming their
willingness to assume the obligation to pay up the shares is enclosed to or
comprised in the companys charter (Art. 293). Successive founding occurs
when the founders adopt the charter, subscribe for a certain number of shares,
and announce a public notice for the subscription of shares (Art. 303). For
joint stock companies, the founding document is the company charter.
There are 695 joint stock companies in the Republic as at 31 December 2012.
65. Companies acquire legal personality on the date on which they are
entered in the commercial register. Equally, they cease to exist as a legal
person upon deletion from the register (Art. 25 Company Law).
66. Companies may carry out their activities outside the registered
office, through one or more branch offices. The establishment and deletion
of a branch office is registered in the commercial register, in the companys
file (Art. 26 Company Law).
67. As a general rule, a foreign company is any company established
pursuant to the law of the country where it has its registered office (Art. 579
Company Law). Each foreign company is subject to the provisions of the
Company Law pertaining to the form of company that most closely represents
its own characteristics. If it is not possible to classify the foreign company
under any form of company regulated by the Company Law, provisions gov-
erning the joint stock company apply (Art. 582). A company whose registered
office is not in the Republic is nonetheless considered as domestic when it
is actually managed from a location in the Republic or when it is engaged in
commercial activities, which are fully or for the most part carried out in the
Republic (Art. 580(2)).
68. Foreign companies may operate on the Republics territory by open-
ing a branch office (Art. 581(2) Company Law) or a representative office. The
foreign company may carry out all activities through its branch office under
the same conditions as domestic companies with the same or similar form
and scope of activities. The establishment of a branch office has to be regis-
tered in the commercial register. Once the registration procedure is complete,
the branch office can conduct its activities in the name and on behalf of the
foreign company (Art. 589). There are 152 branches of foreign companies in
the Republic as at 31 December 2012. Representative offices of foreign com-
panies have no legal personality and must not perform commercial activities
(Art. 596).
Company ownership and identity information to be provided to
government authorities
69. The Republic has several national registers for legal entities and
individuals. As a result of the adoption in 2005 of the Law on one-stop-shop
system and keeping a trade register and the register of other legal entities
(OG 84/05; hereinafter OSS Law), most of the registers provided for by the
Republics legislation are maintained by a single Central Registry.
70. All commercial entities established in the Republic are required to
register in the trade register. All companies are commercial entities subject
to registration (Art. 5 Company Law). In addition, the Company Law provides
for the registration of all entities that are considered commercial by type of
activity i.e. all persons that independently and continuously perform com-
mercial activities in order to generate a profit from market production, trade
and provision of services (Art. 4). Farmers, craftsmen and natural persons
engaged in self-employed or freelance activities including lawyers, notaries
and doctors are not considered to be commercial entities (Art. 8). In any
case, once a business name has been entered in the trade register, it may not
be claimed that the business activity performed under such business name is
non-commercial.
71. Chapter 4 (commercial register and registration procedure) of the
Company Law defines the registration procedure at the commercial (now
trade) register. The trade register consists of a registration file and a book of
enclosures, containing documentary (ownership) evidence and other relevant
documents (Art. 82(2)).
72. Data entered in the trade register is public: any person may, at his
expenses, both request a copy or a verified transcript of the data entered in
the registration file. With the exception of the book of enclosures of the gen-
eral partnership and the limited partnership, it is also possible for any person
to submit a request to inspect the books of enclosures and request a copy of
the documents contained therein (Art. 85 Company Law).
73. Entities subject to registration under the Company Law (Art. 90) are:
sole proprietors;
general partnerships;
limited partnerships;
limited liability companies;
joint stock companies;
limited partnership by shares;
economic interest groupings; and
branch offices of foreign companies (hereinafter: foreign com-
pany), or branch offices of foreign sole proprietors.
74. Entities must file a variety of information on their members iden-
tity and ownership upon registration. They also need to submit a number
of documents (including the company agreement, founding statement or
charter, and copies of the founders IDs). The Company Law specifies which
information needs to be disclosed for each type of company (see Art. 182 for
limited liability companies; Articles 298 and 316 for joint stock companies;
Art. 587 for branch offices of foreign companies). Information submitted to
the Central Registry upon registration covers the founders of the company
and the persons authorised to represent it. These persons need to submit their
certified signatures as proof of identity.
75. Upon registration, each entity is assigned a seven-digit personal iden-
tification number (PINE). The PINE is a unique identifier of the entity for use
when exercising its rights and obligations with the competent state bodies and
organisations (Art. 6 OSS Law).
76. In addition, upon registering in the Central Registry, all companies
are assigned a tax identification number (TIN) and entered in the single reg-
istry of taxpayers kept by the PRO. Companies have to mention their TIN in
all written correspondence and documents (Art. 36 Law on Tax Procedure).
The registration form has to be submitted to the PRO within five days of the
day of commencement of company activity; if the taxpayer fails to submit it,
the PRO will assign a TIN ex officio (Art. 38). Companies benefiting from
the micro-enterprise annual tax regime are registered in a special company
registry for annual tax on total revenues.
77. The Central Registry also maintains the register of the other legal
entities, the register of natural persons and legal entities having been imposed
sanction to prohibit the performance of profession, activity or duty and tem-
porary prohibition to perform certain activity, the register of sentences for
committed crimes by legal entities, as well as the court register, the register
of water communities, the register of water economies, the register of asso-
ciations and foundations and the register of chambers of the competent courts
(Art. 1 OSS Law).
78. When any of the registered data in the company agreement or the
company charter is amended, a copy of the revised company agreement
or charter is to be submitted to the commercial register (Art. 22 Company
Law). Any change of the LLCs or the JSCs registration data as well as the
admission and withdrawal of a member will also have to be entered in the
commercial register (Articles 182(4) and 298(2) and 316(2)).
79. Finally, all securities issued in the Republic (including shares) are
registered in the name of the owner in a special register kept by the Republics
Central Securities Depository (see Articles 30 ff. Law on Securities).
Rights conferred by securities issued in the Republic may be obtained,
limited or transferred only by means of appropriate subscription in the secu-
rities accounts of the Depository (Art. 31(2) Law on Securities). The Central
Securities Depository is obliged to issue a list of all owners of a particular
issuers Securities to such issuer of Securities as well as to state bodies
authorised by law (Art. 67(5)). It is also required to publish each month a list
of a joint stock companies substantial shareholders i.e. individuals and
legal entities holding more than 5% of any class of securities in a company
(Art. 67(6))
15
but only in reference to a Joint stock company with special report-
ing requirements. A Joint stock company with special reporting requirement
is a company that has either made a public offering of securities, or that has
a basic capital of EUR 1 000 000 in counter denar value and more than 50
shareholders or that is listed on the stock exchange. In addition, the issuer of
the shares is required to submit a revised act of issuance with the correct infor-
mation concerning the purchasers identities every time the identity of any of
the named purchasers changes (Art. 28(2)).
80. Information on companies shareholdings is also submitted to the tax
authority. The Law on Tax Procedure requires taxpayers to disclose all facts
relevant to taxation, including the establishment, movement and closure of a
company or its business unit, commencement of business activity and change
of place of stay. Taxpayers also need to disclose to the PRO the establishment
or acquisition of enterprises or undertakings abroad; participation in foreign
companies or their withdrawal or change; the acquisition of shareholdings in
companies abroad, as well as the changes in their percentage of shareholding
(Art. 49).
81. In addition, once a year the PRO obtains from the Central Registry
data entered in the annual accounts of legal persons submitted to the Central
Registry. The data is entered into the database of the PRO and then processed
in order to be readable through specific applications. The annual accounts
can then be accessed by PRO employees from the General Office and
Regional Offices who are granted access to the application.
Ownership and identity information required to be held by companies
82. Once the founding of a limited liability company has been registered
in the trade register, the manager is responsible for the diligent maintenance
of the register of parts and the accuracy of the data entered in it (Art. 195(3)
Company Law). This means the manager must ensure data contained in the
register are complete, accurate and up-to-date. Such register contains, inter
alia, full identity information on each member. Where the member is a for-
eign individual person, the register contains the persons name and surname,
unique ID number, passport number or ID number, as well as his place of
residence and address; if the member is a legal person, it contains its business
15. The list can be accessed at http://hv.cdhv.org.mk/pregled-mk.asp?ItemID=81http://
cdhv.mk/default-MK.asp?ItemID=81.
name, registered office and registration number (Art. 195(1)). The register of
parts is kept at the companys registered office (Art. 210).
83. The manager is required to enter in the register of parts any amend-
ments relating to the registered entries without any delay. In particular, the
manager is required to enter in the register, without any delay and on his own
initiative, the withdrawal and expulsion of a member, the change of the owner of
the part with regard to the conversion of a part into cash, as well as the transfer
of new contributions, decrease of contributions or refund of additional pay-
ments. Other changes, encumbrances and divisions can be entered in the register
of parts only upon receipt of an application form duly completed and filed by
any of the members (Art. 195(2) Company Law). Only the members registered
in the register of parts are considered to be members of the company (Art. 196).
84. All shares issued by a joint stock company are maintained in an
electronic format in the Central Securities Depository whereby they are
registered in the shareholders register of the issuing company. Shares are
registered by indicating the name and full identification data of the share-
holder (Art. 283 Company Law). Each shareholder is entitled, upon request, to
inspect all data registered in the register of shareholders of his company, but
information obtained can only be used for exercising the shareholders rights.
85. Foreign companies operating in the Republic through a registered
branch are subject to the provisions of the Company Law pertaining to the
form of company that most closely represents their own characteristics. If it
is not possible to classify the foreign company under any form of company
regulated by the Company Law, the provisions governing the joint stock
company apply (Art. 582). As a consequence, foreign companies are also
required to keep a register of parts or a register of shareholders, depending
on the circumstances.
Ownership and identity information required to be held by nominees
and service providers
Anti-money laundering requirements for service providers
86. Persons providing services to legal entities are subject to the client
due diligence (CDD) obligations set out by the AML/CFT Law. The obliged
entities include all financial institutions, i.e. banks, exchange offices, savings
houses, brokerage houses, service providers for fast money transfer, post
offices, insurance companies, insurance brokerage companies, insurance
mediations companies, insurance brokers and insurance agents, investment
funds and investment fund management, pension funds and companies for
management of voluntary pension funds and other legal entities or individual
persons performing one or more activities related to the approval of credits,
issuing electronic money, issuing and administering credit cards, economic
financial consulting, leasing, factoring, forfeiting, provision of financial
consulting services and other financial activities (Art. 5).
87. These entities are obliged to:
identify the client and verify his/her identity;
identify the authoriser and verify his/her identity and identify the
beneficial owner,
16
his/her ownership and management structure and
verify his/her identity;
obtain information on the purpose and intention of the business rela-
tionship; and
conduct ongoing monitoring on the business relationship.
88. Entities subject to AML/CTF obligations are required to perform
CDD in a number of circumstances, including when establishing a business
relationship or when there is doubt about the veracity or adequacy of the
previously obtained client identification data (Art. 8). In addition, as a part of
the CDD procedure entities are obliged to update the documents and the data
about their clients.
Nominees
89. Shares can be held by a person on behalf of another person through
accounts of securities. The Law on Securities regulates the opening and
maintenance of accounts of securities in the Depository. As a general rule,
each account is in the name of one person as owner of the securities and
presents the whole condition of these securities; no owner can possess more
than one account of securities (Articles 52 and 52-a). However, pursuant to
Article 52-b of the same Law, accounts of securities can also be opened by:
(i) an authorised securities market participant; or (ii) a proxy who opens
an account in his own name and on behalf of a third person.
16. The term beneficial owner is defined in the article 2 point 9 of the AML/CFT
Law as follows: Beneficial owner shall mean an individual person who is the
owner or who has direct influence on the client and/or individual person in
whose name and on whose behalf the transaction is being performed. A benefi-
cial owner of a legal entity shall be a individual person: a) who has a direct or
indirect share of at least 25% of the total stocks or share, or rather the voting
rights of the legal entity, including possession of bearer shares and/or b) who
otherwise exercises control on the management of and gains benefits from the
legal entity. As bearer shares are not allowed in the Republic (see Section A.1.2),
the reference to bearer shares contained in this provision applies to bearer shares
of foreign companies.
90. Any natural person or legal entity involved in the operation of the
securities market who has received an operating license from the Securities
and Exchange Commission including securities depositories, stock
exchanges, brokerage houses, banks, brokers or investment advisors is a
licensed (authorised) securities market participant. Authorised securities
market service providers can open and manage on behalf of a third party (the
investor-principal) the following types of accounts of securities: portfo-
lio, custodian and omnibus accounts. In the case of omnibus accounts,
the investor-principal may only be a non-resident. The authorised securities
market service provider and the bank-custodian of the assets of the pension or
investment fund are obliged to keep separate records for the condition of the
securities for each client and, at the request of the Securities and Exchange
Commission, to submit full data for all the clients and the amount of securi-
ties in their property (Art. 52-b(5) Law on Securities). They are also subject
to CDD and record keeping obligations under the AML/CTF Law and must
therefore identify their clients. Coupled with the registration system apply-
ing to all companies and relevant entities, CDD requirements ensure that full
ownership and identity information are available for these types of accounts.
91. Proxies are legal representatives acting on behalf of minors or
persons deprived of legal capacity, as well as on behalf of pension and invest-
ment funds management companies. Proxies are allowed to open proxy
accounts of securities. When opening such an account, the Depository is
required to check that the proxy is acting under the regulations govern-
ing legal representatives and has submitted a verified Power of Attorney by
which the owner of the securities entrusts him the management and disposi-
tion of its securities and the exercise of the rights of those securities. The
Power of Attorney will always identify the person the proxy is acting for.
92. When shares are held through accounts of securities by authorised
securities market service providers or by proxies, no indication of this is
entered in share registers. For tax purposes, however, any person claiming
that he/she owns or keeps the rights registered on his/her name or the items
in his/her possession only as a representative of another person fiduci-
ary is obliged, upon request by the PRO, to identify the owner of those
rights; otherwise, they are considered as his property (Art. 66 Law on Tax
Procedure).
93. The obligations on these two allowed forms of nominees to identify
their clients, coupled with the AML, registration and tax obligations, ensure
that information is available to the competent authority that identifies persons
in the ownership chain where the legal owner acts on behalf of a under a
nominee or similar arrangement.
Availability of identity and ownership information of companies in
practice
94. The Central Registry is responsible for maintaining the trade register
and the registration and formation of all types of legal entities are undertaken
by the Central Registry.
Limited Liabilities Companies and Branch of a Foreign Company
95. In practice, the Central Registry is responsible for registering limited
liabilities companies as well as foreign company intending to operate in the
Republic. The Central Registry does not conduct active checks to ensure that
registers of parts for limited liability companies and foreign companies
with branches operating in the Republic have been properly maintained by
the companies. There are also no active checks by the Central Registry to
ensure that all changes to the members of companies are reported to the
Central Registry. In this regard, the accuracy and completeness of the identity
information of the members maintained by the Central Registry are depend-
ent on voluntary filing by the companies.
96. As regards the obligations to inform the PRO of changes to members
of limited liability companies, the PRO explained that the information con-
cerning admission or withdrawal of members is provided to the PRO by the
Central Registry automatically and electronically under the one-stop shop
system. The PRO also does not monitor whether the registers of parts have
been properly and accurately maintained by all limited liability companies
and all changes to members are reported to the PRO. However, the PRO does
conduct tax audits on limited liability companies and in the process may
also audit the registers of parts to verify the identity of the members if it is
determined to be relevant for tax purposes. The PRO also highlighted that if
a new member is not registered in the registers of parts, he/she will not be
eligible for any rights in the company and it is always in the best interest of
the member to ensure that he is registered in the register of parts. The PRO
has explained that the number of tax audits performed is determined in the
annual tax audit plan.
97. When identity information relating to the members of the limited
liability companies and foreign companies (e.g. during admission or with-
drawal of members) is filed with the Central Registry, the information is kept
permanently by the Central Registry as the Central Registry is obliged to
provide complete chronological profile of the entity, including its past mem-
bers. Similarly, the Central Registry also maintains information concerning
the members of companies that have been struck-off, dissolved or liquidated.
Joint Stock Companies
98. In practice, the transfer of shares of a joint stock company can only
be conducted through the Central Security Depository (CSD) as shares are
held electronically in the securities account of the shareholder maintained
with the CSD. All shareholders of a joint stock company are required to
maintain a securities account with the CSD (with the exception of shares held
through nominees) and all transfers of shares of a joint stock company are
carried out electronically through debiting or crediting the securities account
of the transferor and transferee maintained with the CSD. As it is not possible
to transfer shares of a joint stock company without the involvement of the
CSD, the information on shareholders held by the CSD is necessarily accu-
rate. In this regard, the CSD and the Securities and Exchange Commission do
not see the need to conduct any form of active monitoring to ensure that all
transfers of shares are properly reported.
Nominees
99. As regards the monitoring of the obligation for nominees to verify
the identity of the person that he is acting on behalf as required under the
Republics AML/CFT Law, the Securities and Exchange Commission con-
ducts regular onsite examination on obligated persons under its supervision
(e.g. brokerage companies, providers of investment advisory services and
companies for management of investment funds). During the three year
review period the Securities and Exchange Commission conducted 68 onsite
examinations, 0 in 2010, 29 in 2011 and 39 in 2012. There were no deficien-
cies identified and no actions required to be taken.
General Enforcement of the AML/CFT Obligations
100. General monitoring of the Republics AML/CFT Law obligations
is imposed by different bodies/institutions on obligated persons as required
by Articles 46 and 47 of the AML/CFT law. From 2010 to 2012 regular
supervisory activities were mainly undertaken by the Financial Intelligence
Office who has shared responsibility with all the other supervisory authori-
ties for the entities outlined in Article 46 and 47 and have specific powers to
address the identified misdemeanours as outlined in Articles 53-a and 48-a
of the AML/CFT law. In addition, they conducted joint audits with the Public
Revenue Office and it was agreed that the FIO would undertake actions for
the misdemeanours identified during those audits. During 2010 the FIO
implemented a settlement procedure with 1 bank and 1 real estate agency and
issued 38 warnings with recommendations for elimination of the irregulari-
ties on 1 bank, 4 exchange offices, 1 insurance brokerage house, 22 citizens
associations and foundations, 5 real estate agencies and 1 casino.
101. In 2011 the competent court ruled in favour of the FIO upon a previ-
ously initiated misdemeanour procedure against a savings bank. In addition,
the FIO educated 28 entities regarding the clearance of deficiencies identi-
fied when performing the supervision. Specifically, following a previously
conducted regular supervision, over 6 citizens associations and founda-
tions, 11 accounting companies, 3 audit companies, 5 lawyers and 3 notary
public officers office inspectors identified irregularities in accordance with
Article 50-a and Article 51 of the Law for which education is stipulated. In
2012, the Office educated 29 entities regarding the clearance of deficien-
cies identified when performing the supervision. Specifically, following a
previously conducted regular supervision over 8 citizens associations and
foundations, 9 accounting companies, 6 lawyers, 3 real estate agencies,
2 exchange offices and 1 legal entity whose business is the purchase of
vehicles, the Office inspectors identified irregularities in accordance with
Article 50-a and Article 51 of the Law for which education is stipulated.
102. In addition to the above monitoring the following bodies/institutions
are required to monitor the following persons as follows:
The National Bank is responsible for monitoring all banks, savings
houses, exchange offices and providers of fast money transfer.
The Insurance Supervision Agency is responsible for monitoring all
insurance companies, insurance brokerage companies, companies
for representation in insurance and insurance brokers and insurance
agents. During 2010 2012 they conducted 1 onsite examination in
2012 and no major deficiencies were found.
The Securities and Exchange Commission: the brokerage companies,
providers of investment advisory services and companies for man-
agement of investment funds;
The Agency for Supervision of Fully Funded Pension Insurance is
responsible for monitoring companies which manage voluntary pen-
sion funds. During 2010 2012 they conducted 2 onsite visits per
year and during these visits no major deficiencies were found
The Bar Chambers and Notary Chambers are responsible for moni-
toring all Lawyers and Notaries. They have conducted a total of
140 onsite inspections, 53 in 2010, 17 in 2011 and 62 in 2012. During
these inspections the deficiencies found included the failure of
auditees to report transactions pursuant to Article 29-a and failure to
develop an AML/CFT programme. In these cases the Notary cham-
bers issued warnings and recommendation for the elimination of the
irregularities and also conducted training/education procedures in
accordance with Article 48-a of the AML/CFT law.
The Public Revenue Office is responsible for monitoring all Trade
companies organising games of chance (casino), other legal and natu-
ral persons performing services relating to real estate trading, audit
and accounting services, tax related advisory services, consulting
services and citizens associations and foundations.
EOI requests relating to ownership and identity information of
companies
103. During the review period, the Republic received 3 EOI requests per-
taining to ownership and identity information of joint stock companies and
34 EOI requests pertaining to limited liability companies. All the information
requested was provided by the Republic.
Conclusion
104. While ownership and identity information of limited liability com-
panies and foreign companies operating in the Republic is made available
through a combination of obligations imposed under the Company Law
and Law on Tax Procedure, the Republic did not have a system of oversight
in place to monitor the compliance of these obligations during the review
period. The Republic should monitor the compliance of the legal obliga-
tions to maintain ownership and identity information for limited liability
companies and foreign companies and exercise its enforcement powers as
appropriate to ensure that such information is available in practice. As it is
not possible to transfer shares of joint stock companies without the involve-
ment of the CSD, the ownership information held by the CSD is necessarily
accurate. As regards the AML/CFT Law obligations, it is noted that the rel-
evant AML/CFT supervisory authorities have taken appropriate monitoring
and enforcement activities to ensure that the AML/CFT Law obligations are
being carried out appropriately by the obligated persons.
Bearer shares (ToR A.1.2)
105. Pursuant to the Company Law, the capital of a joint stock company
can only be represented by registered shares (Art. 283(1)). All shares are
issued, transferred and maintained in an electronic form in the Central
Securities Depository whereby they are registered in the shareholders regis-
ter of the respective company by indicating the name and full identification
data of the shareholder, be it a natural or legal person. The fact that all shares
must be registered means that bearer shares are not allowed in the Republic.
Partnerships (ToR A.1.3)
Types of partnerships
106. The Republics law provides for three types of partnerships:
general partnership;
limited partnership; and
partnership limited by shares.
107. A general partnership is a company of two or more legal or indi-
vidual persons that are jointly and severally liable to creditors for the
companys liabilities with their entire property (Art. 110 Company Law).
The partners may contribute to the general partnership with contributions
made in cash, in kind, rights, labour or services (Art. 117). Parts in a general
partnership may be transferred to a third party only pursuant to a written
legal act and with the consent of all partners. Each partner is authorised to
manage the company, unless the partners agree to delegate this task only to
one or more of them. There are 1 041 General Partnerships in the Republic
as at 31 December 2012.
108. A limited partnership is a partnership of two or more individual
and/or legal persons, where at least one of the partners is personally liable
with his entire property for the liabilities of the limited partnership (general
partner) and at least one partner is liable for the liabilities of the limited
partnership only up to the amount of his subscribed contribution in the capital
of the limited partnership (limited partner). The contribution of the limited
partner cannot be in labour or services. General partners have to contribute
an amount of at least one-fifth of the total amount of contributions (Art. 148
Company Law). There are five Limited Partnerships in the Republic as at
31 December 2012.
109. A limited partnership by shares (i.e. a partnership limited by
shares) is a company, the charter capital of which is divided into shares, and
in which one or more partners are jointly and severally liable for the liabilities
of the company with their entire property (general partners) and several
partners who have the status of shareholders are liable up to the amount of
their contributions and are not liable for the liabilities of the company (lim-
ited partners). The number of limited partners may not be less than three
(Art. 461 Company Law). There is only one Limited Partnership by Shares in
the Republic as at 31 December 2012.
110. The Company Law also regulates the silent partnership agreement.
Under the silent partnership agreement, a person (the silent partner) contrib-
utes or makes monetary or non-monetary contributions into a business owned
by another person-entrepreneur (the public partner), and on the basis of such
contribution, acquires the right to participate in the profit and loss of the busi-
ness of the entrepreneur (Art. 567). This arrangement can be characterised as
a contract, and like a contract, its existence is typically not subject to disclo-
sure or registration requirements. Silent partnerships do not have the status
of a legal person or business name (Art. 568) and cannot therefore hold real
estate or own assets. They do not carry on business and cannot be compared
to a limited partnership. Therefore, these arrangements are clearly not under
the scope of the Terms of Reference.
Ownership and identity information on partnerships to be provided to
government authorities
111. As for companies, the founding of all types of partnerships is entered
in the commercial (now trade) register.
112. The application for entry of the founding of a partnership is submit-
ted by all the partners authorised to represent the entity. Enclosed with the
registration form, all the founding partners which includes the general
and the limited partners need to produce a number of documents, including
the partnership agreement, a copy of the founders identification documents,
and documentary ownership evidence for immovable and movable property
that this is transferred as a contribution and is required to be registered as
prescribed by law. Any change in the data submitted upon registration, as
well as the admission or withdrawal of a partner (both general and limited)
from the partnership is registered in the commercial register in the form of a
resolution to amend the partnership agreement (see Art. 115 Company Law
for general partnerships; Art. 153 for limited partnerships).
113. In addition to the information prescribed for limited partnerships,
when registering with the Central Registry partnerships limited by shares
need to furnish the particulars of the general partners. If the agreement con-
tains special provisions for authorising the general partners to represent the
limited partnership by shares, such provisions is also entered into the com-
mercial register (Art. 463 Company Law).
114. Pursuant to the Law on Securities, the central Securities Depository
is obliged to issue a list of all owners of a particular issuers Securities
to such issuer of Securities as well as to state bodies authorised by law
(Art. 67(5)). Partnerships limited by shares are considered issuers for the
purposes of the Law on Securities (Articles 2 and 3). For all such partner-
ships, ownership information is therefore available at the central Securities
Depository upon request of an entitled person or a State body, including the
Public Revenue Office acting within its competence provided by law.
115. Partnerships are legal entities subject to profit tax. Therefore, they
need to comply with the same tax reporting requirements applicable to com-
panies, detailed above in Section A1.1.
Ownership information held by the partnership or partners
116. Parts of general and limited partnerships are not freely transferable.
Each transfer requires the written approval of all partners (Articles 123 and
159), ensuring that the partners identities are always available from the part-
nership or, at least, the partnerships manager.
117. Shares issued by partnerships limited by shares are subject to the
same provisions applying to shares issued by joint stock companies (Art. 461(4)
Company Law). They are therefore registered in the shareholders register of
the issuing partnership kept by the Central Securities (see Section A1.1).
Ownership information held by service providers
118. A wide range of entities and professionals providing services to
legal entities, including partnerships, are subject to the CDD obligations
set out by the AML/CFT Law and must therefore identify their clients (see
Section A1.1).
Availability of identity and ownership information of partnerships in
practice
119. In practice, the Central Registry does not conduct any active checks
to ensure that all changes to the partners of a partnership are filed with the
Central Registry. Similarly, the PRO depended on the Central Registry to
provide information concerning changes to partners of a partnership and do
not conduct independent checks or monitoring activities to ensure that all
changes to partners of a partnership are reported to the PRO. However, the
PRO does conduct tax audits on partnerships and in the process may verify
the identity of the partners of the partnership if it is determined to be relevant
for tax purposes.
120. The transfer of shares of a limited partnership by shares can only
be conducted through the CSD similar to the procedure for joint stock com-
panies as described in section A.1.1. It is not possible to transfer shares of a
limited partnership by shares without the involvement of the CSD. In this
regard, the CSD and the Securities and Exchange Commission do not see the
need to conduct any active monitoring to ensure that all transfers are properly
reported.
121. As regards the AML/CFT law obligations imposed on obligated
persons that may provide services to partnerships, the supervisory authori-
ties of these obligated persons conduct regular monitoring activities such as
onsite examinations to ensure that the AML/CFT Law obligations under the
Republics AML/CFT Laws are properly carried out by these obligated per-
sons (See details in section A.1.1).
122. During the review period, the Republic did not receive any EOI
requests that relate to the identity information of partners of a partnership.
Conclusion
123. While ownership and identity information of partnerships is made
available through a combination of obligations imposed under the Company
Law and Law on Tax Procedure, the Republic did not have a regular system
of oversight in place to monitor the compliance of these obligations during
the review period. The Republic should monitor the compliance of the legal
obligations to maintain ownership and identity information for partnerships
and exercise its enforcement powers as appropriate to ensure that such infor-
mation is available in practice.
Trusts (ToR A.1.4)
124. It is not possible to form a trust under the Republics law and there is
no domestic trust legislation. The Republic does not recognise foreign trusts
and it has not ratified the Hague Convention on the Law Applicable to Trusts
and their Recognition.
17
125. Under the Republics law, there are no restrictions for a resident of the
Republic to act as trustee, protector or administrator of a trust formed under
foreign law.
126. As regards the availability of information regarding settlors, trustees
and beneficiaries of trusts, the Republics legislation does not require regis-
tration or disclosure of this information to government authorities.
127. Further, the Republics law does not contain any provision obliging
trustees resident in the Republic to maintain information on the trusts they
administer.
128. However, if a person states he is holding assets in a fiduciary rela-
tionship, then this person has to provide evidence of the existence of such
a relationship in order to avoid the tax liability attaching to the assets or
any income derived within the Republic from the trust, or other fiduciary
17. www.hcch.net/index_en.php?act=conventions.text&cid=59.
relationship, to be attributed to him or her for tax purposes. In fact, pursu-
ant to Article 66 of the Law on Tax Procedure, a [p]erson claiming that he/
she owns or keeps the rights registered on his/her name or the items in his/
her possession only as a representative of another person fiduciary, he/she
shall be obliged, in the tax procedure, upon request by the Public Revenue
Office, to prove the owner of those rights, i.e. those items, otherwise, they
shall be considered as his/her property. In addition, a trustee resident in the
Republic is a taxpayer subject to the provisions of the Republics tax law, and
in particular to Article 49 which states that taxpayers shall disclose all facts
relevant to the taxation.
129. The AML/CFT legislation establishes an obligation regarding the
identification of clients by designated entities (financial institutions and rel-
evant service providers, i.e. notaries, attorneys, tax advisors or accountants,
as well as other professionals and entities providing legal services, consulting
services and investment consulting services). In case of transactions carried
out in the name of and on the behalf of a third party, including transactions
carried out in the context of a fiduciary relationship, designated entities are
bound to establish and verify the identity of the person performing such a
transaction (authorised person), the holder of the rights, the client acts (the
authoriser) and the authorisation. Such verification is required in the cases
when the law stipulates such an obligation (Art. 12 AML/CTF Law), i.e. in
the cases listed in Art. 8 of the AML/CTF Law (when establishing a business
relationship; when carrying out one or several linked transactions amount-
ing to EUR 15 000 in denar counter-value; when there is suspicion of money
laundering or financing terrorism, regardless of any exception or amount of
funds; and when there is doubt about the veracity or adequacy of the previ-
ously obtained client identification data). In addition, designated entities are
obliged to verify the identity of the beneficial owner, i.e. of the natural
person who is the owner or who has direct influence on the client or the
natural person in whose name and on whose behalf the transaction is being
performed (see Section A.1.1 above).
18
130. In essence, notaries, lawyers, accountants and tax advisers are all
professionals with reporting obligations under Articles 8 and 12 of the AML/
CFT Law. In addition, these obligations also apply to all legal entities and
natural persons providing consulting services and investment consulting
services (Art. 5(2)e and 5(2)f: see also above, Section A.1.1). Under the AML/
CFT Law, these professionals and entities are obliged to maintain ownership
and identity information regarding their clients and their clients beneficial
owners. This applies also when such professionals and entities are acting as
fiduciaries for non-residents and may therefore include information on trusts.
18. The 25% threshold provided for beneficial owners of legal entities does not apply
to trusts, which are legal arrangements.
Coupled with the obligation to submit information to the revenue authorities,
such AML/CFT obligations allow for maintenance of information on the sett-
lors and beneficiaries of trusts which have trustees in the Republic.
Trust ownership and identity information in practice
131. The PRO highlighted that trust arrangements are uncommon in the
Republic and they have never encountered any cases where a resident person
was found to be acting as trustee of a foreign trust during the normal course
of performing its duties (e.g. tax audits). As the PRO has never encountered
any such cases, they could not provide any assessment as to whether infor-
mation that identifies the settlor(s) and beneficiaries of a foreign trust with
a resident person acting as trustee are maintained by the resident trustee in
practice.
132. As regards the AML/CFT law obligations imposed on obligated per-
sons that may provide services to the trust (e.g. where an AML/CFT obligated
person act as the trustee of the foreign trust), the supervisory authorities
conduct regular monitoring activities such as onsite examinations to ensure
that the AML/CFT Law obligations under the Republics AML/CFT Laws are
properly carried out by the obligated persons (See details in section A.1.1).
133. During the review period, the Republic did not receive any EOI
requests that relate to the identity information of settlor(s) or beneficiaries of
a foreign trust.
Conclusion
134. While the PRO does not have any experience dealing with foreign
trusts, it is noted that regular monitoring activities have been undertaken by
the relevant AML/CFT supervisory authorities to ensure that that the AML/
CFT Law obligations under the Republics AML/CFT Laws are properly
carried out by the obligated persons. In this regard, it can be concluded that
the Republic has taken all reasonable measures to ensure that information is
available to its competent authorities that identifies the settlor(s), trustee and
beneficiaries of express trusts administered in the Republic or in respect of
which a trustee is resident in the Republic.
Foundations (ToR A.1.5)
135. The creation of foundations is permitted under the Republics law and
it is regulated by the 2010 Law on Associations of Citizens and Foundations
(ACF Law). Foundations are legal entities formed for the purpose of achiev-
ing an aim by means of acquiring and managing property and assets in
accordance with the ACF Law (Art. 27). They can be established by one
or more founders (legal entities or individual persons) with a pool of assets
amounting to at least EUR 10 000 (or MKD equivalent). Foundations acquire
the capacity of a legal entity when entered in the register kept by the Central
Registry; they cannot be transformed in other types of entities (Art. 6). There
are 153 foundations registered with the Central Registry as at 31 December
2012.
136. Foundations are charitable entities. They cannot be established for
the purpose of gaining profits. A foundation may perform activities that may
lead to gaining profits only incidentally, and provided that the activity is
related to the aims determined with the statute (Art. 12 ACF Law). However,
such gained profits cannot be allocated to any of the persons related to the
foundations, including the founders, the members, the members of the gov-
erning bodies, the directors and the employees (Art. 12(4)).
137. Foreign residents can be founders or members of foundations
regulated by the ACF Law (Art. 37). They have the same rights and obliga-
tions, as well as the domestic persons, unless otherwise determined by law.
Foreign organisations, including foundations, are permitted to operate in the
Republic, provided that they comply with the provisions of the ACF Law.
Foreign organisations qualified as foundations under an international agree-
ment ratified by the Republic are naturally subject to the rules contained in
the international agreement under which they are established and do not need
to comply with the Republics domestic law on foundations (ACF Law).
Information held by government authorities
138. All foundations are registered in the Register of Foundations kept
by the Central Registry (Art. 40 ACF Law). Data to be entered in the register
includes: the full name of the organisation (or its abbreviation, if any), its
head office, articles of incorporation, date of establishment, name, surname
and personal identification number of the citizen and personal identifica-
tion number of the founders, the foundations aims and activities, the name,
surname and personal identification number of the legal representative, as
well as the initial property mass. All changes to a foundations registered
data need to be filed with the Registrar within 30 days (Art. 46(1) ACF Law).
Similar registration requirements apply when a foreign entity is a founder
or a member of a foundation regulated by the Republics law (Arts.37 ff).
The Republics authorities confirmed data submitted to the Register include
records about the identity of the founders, the members of the foundations
board and any beneficiaries.
139. Information entered in the Register of Foundations and the Register
of Organizational Forms of Foreign Organizations is public and released on
the Registrys website (Art. 47 ACF Law).
140. Although foundations cannot be established for the purpose of
gaining a profit, it is possible that profits can be gained when the activities
necessary to attain the foundations statutory aims are being performed.
Therefore, the Republics authorities have indicated that where this occurs
then the use and disposal of the profits so gained will represent expenditure
and acknowledged for taxation purposes.
Information kept by foundations
141. Pursuant to the ACF Law, foundations keep records of the name,
address and the unique identification number of the founders. Each foun-
dation has its own statute regulating, inter alia, the internal organisational
setup, type and composition of governing bodies, competences, manner of
selection and dismissal of the members of the governing bodies, duration of
the term of office of the members of the governing bodies and the manner
of decision making, legal representation, manner of acquiring and managing
funds, manner of adopting business, financial and other reports, publicity and
transparency of its operations, manner of adopting, amending and modifying
the statute, manner of reaching decisions on status changes and dissolution
of the foundation, usage of funds of the foundation in case of dissolution of
the foundation, manner of adopting plans and programmes and other issues
determined by law (Art. 31 ACF Law).
142. Each foundation has its own board and one or more directors. The
board is the highest managing body of the foundation, while the director
manages the foundation on a daily basis. Directors need to be natural persons
with the capacity to contract. They must be permanently or at least temporar-
ily resident in the Republic (Art. 36 ACF Law).
143. Foundations are obliged to prepare and make available to the public
annual financial reports and annual reports on their work (Art. 53 ACF Law).
Anti-money laundering legislation
144. Professionals providing services to foundations are subject to the
relevant provisions of the AML/CFT Law and the Criminal Code. As a
consequence, they are obliged to conduct CDD when foundations are their
clients, as detailed above under Section A.1.1.
145. In conclusion, the Republics legal and regulatory framework ensures
the availability of information on the founders, the members of the founda-
tions board, the directors and any other beneficiaries.
Foundation ownership and identity information in practice
146. As foundations are established for charitable purposes in the
Republic, it appears that the risk of any potential abuse concerning the inap-
propriate use of foundation in the Republic is low. In this regard, it may be
concluded that foundations established in the Republic are not relevant for the
Global Forums purposes.
Enforcement provisions to ensure availability of information
(ToR A.1.6)
Compliance with commercial laws
147. The Republics laws provide for a system of penalties for non-com-
pliance with key obligations to maintain ownership and identity information.
148. As detailed above, companies, partnerships and foundations (includ-
ing when formed under the laws of a foreign jurisdiction) do not have legal
personality prior to filing their data with the Central Registry and obtaining
a personal identification number. In addition, Part ten Penalty provisions
of the Company Law (Articles 598-605) prescribes sanctions for non-compli-
ance with the registration requirements.
149. A company (which includes limited liability companies, joint
stock companies, general partnerships, limited partnerships and limited
partnership by shares) faces fines amounting from EUR 2 500 to 5 000 (in
MKD equivalent) if it commences its business activities prior to its entry in
the commercial register. The same fine applies if the entity fails to enter the
transfer of the registered office of the company in the trade register (Art. 599
Company Law). In such cases, a fine amounting from EUR 1 000 to 2 000
(in MKD equivalent) is also imposed on the companys responsible official.
In addition, the entity may be subject to a protective measure resulting in
a prohibition to conduct business activities for a period from six months to
five year. The responsible official would be subject to the same protective
measure from one to five years. Penalties ranging between EUR 500 and
1 000 in MKD equivalent are envisaged for sole proprietors failing to comply
with the registration requirements (Art. 598). During the review period, the
Republics authorities confirmed that no penalties were imposed under these
two Articles of the Company Law.
150. Foreign companies that operate in the Republic without registering a
branch or representative office face penalties between EUR 2 500 and 5 000
(Art. 605 Company Law). During the review period, the Republics authorities
confirmed that no penalties were imposed under this Article of the Company
Law.
151. General partnerships are subject to a specific penalty of EUR 1 000
to 2 000 for failure to report their termination for the purpose of entry in
the trade register (Art. 600 Company Law). Limited partnerships and the
responsible persons within them also face specific sanctions for failure to
register the particular of the general partners or to submit an application to
register the transformation of the partnership in another commercial entity
(Art. 604 Company Law). During the review period, the Republics authori-
ties confirmed that no penalties were imposed under these two Articles of
the Company Law.
152. A fine of EUR 2 500 to 5 000 in MKD equivalent (accompanied by
the prohibition to pursue a business activity from six months to five years)
is imposed on limited liability companies that fail to register an application
form with the trade register for the entry of any change of data, or admission
or withdrawal of a member in the company or fail to maintain the register
of parts (including when a register is maintained, but not in a diligent and
proper manner). Similar penalties are imposed on the person within the com-
pany that is responsible for the infringement. During the review period, the
Republics authorities confirmed that no penalties were imposed under this
Article of the Company Law.
153. Joint stock companies are subject to a fine of EUR 2 500 to 5 000 in
MKD equivalent when failing to keep acts and documents in the registered
office of the company pursuant to the Company Law or failing to entry in
the trade register the termination or transformation of the company or other
resolutions by the management body (Art. 602 Company Law). A fine of
EUR 1 000 to EUR 2 000 in MKD equivalent is also imposed on the person
within the company responsible for the infringement, together with the pro-
hibition to pursue a business activity from one to five years. Equally, the
Central Registry is subject to a fine of EUR 2 500 to 5 000 in MKD equiva-
lent if it fails to issue the shareholder a copy of data entered in the register of
shareholders. During the review period, the Republics authorities confirmed
that no penalties were imposed under this Article of the Company Law.
154. The Law on Securities empowers the Securities and Exchange
Commission to fine joint stock companies that are in breach of their reporting
requirements (Art. 220). A fine may also be issued to directors, employees,
members of the Management Board, members of the Supervisory Board or
members of the Board of Directors of the joint stock company who caused
the company to breach any of the provisions of the Law on Securities, includ-
ing those on reporting requirements. Persons holding more than 5% of the
shares of a joint stock company and failing to comply with the reporting
requirements provided for by the Law on Securities may also be fined by the
Commission (Art. 221). The Commission may publicly disclose information
about such irregularities or violations, issue a decision requiring the person
or legal entity to eliminate such violations within a set period of time or issue
a decision suspending the persons or entitys voting rights with respect to the
applicable Securities until the violation has been amended. During the review
period, there were 21 instances where the penalties under Art. 220 of the Law
on Securities were imposed on joint stock companies.
155. If a legal entity (joint stock company or limited partnership by
shares) issues securities and fails to deliver them to the Depositary to be
registered within three business days of the date of subscription of the basic
capital in the trade register, it is subject to a fine of EUR 4 000 to 5 000 in
MKD equivalent. The responsible person within the legal entity is also sub-
ject to a fine of EUR 1 000 to 2 000 in MKD equivalent (Art. 233 Law on
Securities). During the review period, the Republics authorities confirmed
that no penalties were imposed under this Article of the Law on Securities.
156. Foundations performing an activity not being in line with the objec-
tives determined under the registered statute are subject to a fine of EUR 200
to EUR 300 in MKD equivalent (Art. 91 ACF Law). A fine of EUR 300
to EUR 3 000 in MKD equivalent is imposed to the representative failing
to report changes in the registered data within 30 days from the day such
changes have occurred. For the same infringement, the foundation itself is
subject to a penalty of EUR 200 to EUR 300 in MKD equivalent (Art. 93).
When the foundation does not use its funds for achieving its aims as deter-
mined with the statute and the programme, a fine in the amount of EUR 200
to 300 in MKD equivalent is imposed (Art. 94). During the review period, the
Republics authorities confirmed that no penalties were imposed under these
Articles of the ACF Law.
Compliance with AML/CTF legislation
157. Compliance with CDD obligations is enforced through a system of
fines. Failure to perform customer due diligence procedures results in a fine
of EUR 30 000 to 40 000 in MKD equivalent (Art. 50 AML/CTF Law). The
law also provides for additional penalties for the legal entity and the person
within it responsible for the misdemeanour. Equally, failure to identify and
verify the identity of a client by a legal entity are sanctioned with a fine of
EUR 5 000 to 10 000 in MKD equivalent (with additional sanctions for the
legal entity and the responsible person). When the same offences are commit-
ted by a natural person, fines range between EUR 2 500 and 5 000 in MKD
equivalent (Art. 51). Penalties under these articles have been imposed 5 times
during the year 2010, 1 time in 2011 and 0 times during 2012.
Specific penalties for professional service providers
158. A legal entity which performs the service of keeping securities is
subject to a fine of EUR 2 500 to 5 000 in MKD equivalent if it does not
maintain special evidence of the status of the securities for each individual
client and fails to submit full details of all individual clients and the number
of securities in their possession at the request of the Securities and Exchange
Commission. The responsible person within the legal entity is also fined
(Art. 235-a Law on Securities). During the review period, the Republics
authorities confirmed that no penalties were imposed under this Article of
the Law on Securities.
Compliance with tax law
159. Taxpayers who are legal entities and who fail to report facts relevant
to taxation (and especially the following: establishment, movement and clo-
sure of company or its business unit, or commencement of business activity,
change of place of stay, etc.) are subject to a fine of EUR 2 000 to EUR 3 000
in MKD equivalent. In addition, the person within the legal entity responsible
for the infringement is subject to a fine in the amount of EUR 1 000 in MKD.
The legal entity may also suffer a temporary prohibition to perform certain
activity lasting from 3 up to 30 days at the most. For the same infringement,
the fine applicable to a taxpayer who is not a legal entity is of EUR 150 to
EUR 500 in MKD equivalent (Art. 179-a Law on Tax Procedure). During the
review period, the PRO has imposed the penalties provided under Art. 179-a
of the Law on Tax Procedure on 54 limited liability companies (32 in 2010
and 22 in 2011).
160. A fine in the amount of EUR 2 500 to EUR 3 000 in MKD equiva-
lent and a temporary prohibition to perform certain activities lasting from
3 to 30 days is imposed to taxpayers who are legal entities and who fail
to provide all necessary information upon request by the Public Revenue
Office. In addition, the responsible person will suffer a fine in the amount of
EUR 1 500 in MKD equivalent (Art. 179-b Law on Tax Procedure). During
the review period, the PRO has exercised its powers and has applied penalties
as prescribed under Art. 179-b on on Joint Stock Companies 2 times (once in
2011 and once in 2012) and on Limited Liability Companies 24 times (once
in 2010, 9 times in 2011 and 14 times in 2012).
Deter mination and factor s under lying r ecommendations
Phase 1 determinati on
The el ement i s in pl ace.
Phase 2 rating
Largel y Compli ant
Factors underl ying
recommendati ons Recommendati ons
The Republic did not have a regular
oversight programme in place
to monitor the compliance of the
obligations to maintain accurate
and updated ownership and identity
information for limited liability
companies, foreign companies and
partnerships during the review period.
The Republic should monitor the
compliance of the legal obligations
to maintain accurate and updated
ownership and identity information
for limited liability companies, foreign
companies and partnerships and
exercise its enforcement powers
as appropriate to ensure that such
information is available in practice.
A.2. Accounting r ecor ds
J urisdictions should ensure that reliable accounting records are kept for all
relevant entities and arrangements.
161. A condition for exchange of information for tax purposes to be effec-
tive, is that reliable information, foreseeably relevant to the tax requirements
of a requesting jurisdiction is available, or can be made available, in a timely
manner. This requires clear rules regarding the maintenance of accounting
records. The obligations to maintain reliable accounting records are found
in most of the laws governing the various types of entities covered by this
report, and in the tax legislation.
General requirements (ToR A.2.1)
Companies and partnerships
162. Companies and partnerships established in the Republic are subject
to the same general obligations with respect to the keeping of accounting
records, both under the Company Law and the Law on Tax Procedure.
163. Pursuant to the Company Law, each commercial entity is obliged to
keep accounting records in the manner determined by both this Law and the
accounting regulations (Art. 469). Each commercial entity must keep trade
books in accordance with the principles of proper account keeping, in a
manner that clearly reflects all business and legal operations and the position
of its assets, liabilities, equity, revenues and expenses (Art. 471). Trade books
that need to be kept are the journal, the ledger and the subledger (Art. 471(4)).
Commercial entities are also required to compile an accurate inventory of
their entire property, where separate evidence is given to immovable prop-
erty, installations, equipment, stock, intangible assets (patents and licenses),
cash and cash equivalents and all current assets by stating the value for each
part of the property separately (Art. 473).
164. In addition, each commercial entity, following the expiry of the
business year, must prepare annual accounts. The annual accounts include
a balance sheet and income statement. Major and medium sized commercial
entities, entities that carry out banking activities, insurance activities, listed
traders on the stock exchange and entities whose financial statements include
the consolidated financial statements of the aforementioned entities, other
than annual accounts, also prepare financial statements. Financial statements
include balance sheet and income statement, statement of changes in equity,
cash flow statement, applied accounting policies and other explanatory
notes prepared in line with the International Financial Reporting Standards
(Art. 476 Company Law).
165. Pursuant to the Law on Securities, joint stock companies are required
to prepare and to submit to the Securities and Exchange Commission an annual
report on their financial results, legal status and operations. The annual report
includes Financial Statements prepared in accordance with International
Financial Reporting Standards, together with an opinion from a certified audi-
tor summarizing the results of an audit of the Financial Statements conducted
according to International Auditing Standards (Art. 154).
166. Pursuant to the Law on Tax Procedure, taxpayers are obliged to keep
business books and records for the purpose of taxation, if they are regulated
under special tax laws (Art. 45). Taxpayers regulated under special tax laws
are all taxpayers falling within the scope of any of the tax laws in force in the
Republic. All companies and partnerships are subject to the Republics profit
tax and therefore to the record keeping requirements provided for by the Law
on Tax Procedure. In particular, taxpayers are required to keep commercial
books, accounting documents, notes and inventories, annual and financial
statements, notes on applied accounting policies and other documents related
to the entity; business letters and correspondence; accounts for recording, and
other documents, if they are of relevance for taxation purposes. Taxpayers
need to keep accounting records in line with the regulations in the area of
accounting and in a manner enabling a professional to carry out inspection,
within an appropriate period, of their operations and the business actions
with regard to their occurrence, development and completion (Art. 46 Law
on Tax Procedure). Business books and other records need to be available in
the country (Art. 47). The Republics authorities indicated that such provision
applies to all types of companies and partnerships.
167. Compliance with these accounting keeping requirements is ensured
through a system of fines. Pursuant to the Company Law, companies which
fail to prepare, disclose or deliver annual accounts (as well as consolidated
annual accounts, financial statements and consolidated financial statements,
if so required) face a fine of EUR 2 500 to EUR 5 000 in MKD equivalent
(Art. 599(1)6 CA). The company is also subject to a prohibition to pursue a
business activity from six months to five years. Additional fines apply to
the person within the company responsible for the infringement. Equally,
a penalty of EUR 2 500 to 5 000 applies under the Law on Tax Procedure
to taxpayers who fail to keep business books and records for the purpose of
taxation (Art. 179c(1)2).
168. This means companies and partnerships in the Republic are required
to maintain accounting records which: (i) correctly explain all transactions;
(ii) enable the financial position of the company to be determined with
reasonable accuracy at any time; and (iii) allow financial statements to be
prepared.
169. The Company Law, including Chapter 7 on Trade books, annual
accounts and financial statements and other relevant accounting informa-
tion does not make a distinction between domestic and foreign companies.
The foreign company, according to its form and scope of operations, and
the foreign sole proprietor are therefore expressly obliged to maintain trade
books for their operations in the Republic through the branch office (Art. 592
Company Law). The branch offices of foreign companies and foreign sole
proprietors are required to disclose each year in the trade register (or in
another appropriate register) the annual accounts, the audit report and other
notes, which are relevant to determine the financial situation of the foreign
company of the foreign sole proprietor.
Trusts
170. Trusts are not recognised in the Republic and therefore there are no
special provisions requiring trustees to keep accounting records. The scope
of the tax law obligations requiring all taxpayers that conduct a business
activity to keep proper accounting records is unclear. In particular, it is not
clear whether resident professionals acting as trustees of foreign trusts will
be subject to tax accounting obligations in respect of the trusts and there is no
experience in this area in the Republic as, to date, the issue has never arisen.
There are no other obligations in the Republics laws which require mainte-
nance of accounting information related to foreign trusts administered in the
Republic or in respect of which a trustee is resident in the Republic.
Foundations
171. Foundations are required to keep accounting records pursuant to
the Law on the Accounting Records of the Non-Profit Organizations (Law
on ARNPO OG 24/03 and 17/11). In particular, they are obliged to keep
accounting records, compile and submit accounting statements for the
purposes of accurate, authentic, reliable, comprehensive, timely, regular
and separate expression of the balance positions, the balance of the assets,
liabilities, revenue streams, revenues and expenses and operating results
(Art. 2 Law on ARNPO).
172. Foundations are required to keep a number of business books. They
are the journal, the general ledger and the auxiliary books i.e. the cash
book, the procurement book, the book of inventory of capital assets, the book
of incoming bills and the book of outgoing bills (Art. 6 Law on ARNPO).
Foundations also have to prepare basic financial statements, which include
balance sheet, revenue and expenditure statement and notes on the financial
statements (Art. 17). Such financial statements are submitted to the PRO and
the Central Registry each year.
173. All data registered in the business books and in the other reports
must be comprehensive and complete, timely, up-dated and presented in
sequence, i.e. they must reflect accurately the time of their occurrence. Data
registered in the business books cannot be changed and amended in a manner
that will later disable the determination of the originally registered contents
(Art. 5 Law on ARNPO).
174. Foundations whose total value of assets or annual income is less than
EUR 2 500 in MKD equivalent are required to keep only a cash book and
a book of revenues and expenditures; they are not obliged to compile and
submit financial statements to the Central Registry (Art. 18 Law on ARNPO).
Underlying documentation (ToR A.2.2)
175. Pursuant to the Company Law, trade books are kept on the basis of
reliable accounting documents. The commercial entity is obliged to keep one
copy of each business document sent.
176. Pursuant to the Law on Tax Procedure, business books and records
to be kept by all commercial entities include commercial books, accounting
documents, notes and inventories, annual statement and financial state-
ments, notes on applied accounting policies and other documents related
to the entity, such as business letters and correspondence accounts for
recording and/or, other documents, if they are of relevance for taxation
purposes (Art. 45). The provision contains both a list of the documents that
are required to be kept (commercial books, accounting documents, notes
and inventories, annual statement and financial statements, notes on applied
accounting policies, business letters) and an open clause (other documents, if
they are of relevance for taxation purposes). Taken together, the list and the
open clause ensure companies and partnerships keep comprehensive underly-
ing documentation.
177. For foundations, data entered in business books need to be based on
reliable, true and orderly accounting document. Accounting documents con-
stitute written evidence for the occurred financial exchange, i.e. transaction.
Accounting documents also serve as a basis for audit and control.
The 5-year retention standard (ToR A.2.3)
178. According to the Company Law, commercial entities are obliged
to permanently keep annual accounts and financial statements (Art. 474).
Trade books must be kept for a period of at least ten years from the end of
the financial year to which they refer (Art. 474(2)). Underlying accounting
documentation is to be kept for a period of at least five years from the end
of the financial year when the documentation was used for compiling the
trade books, except for the documentation related to the calculation of sala-
ries, which is to be kept permanently (Art. 474(3)). Such obligations are not
affected by subsequent events, such as the liquidation of the company. The
documents can be kept in the original form or transferred to an electronic or
micrographic data processing media.
179. All documents submitted to the Central Registry upon registration
are kept permanently. Enclosures, including annual accounts of entities, sub-
mitted in paper form are converted into electronic form; the electronic copy
is then permanently stored (Art. 22(3) OSS Law).
180. The Law on Tax Procedure also stipulates that business books and
records have to be kept for 10 years, whilst other documents and the daily
cash turnover have to be kept for 5 years (Art. 48(1). The retention period
starts at the end of the calendar year in which: (i) the last registration was
made; (ii) the inventory, tax balance or annual account was prepared; (iii) the
business letter or correspondence was received or sent; (iv) the entry certifi-
cate was prepared; (v) any type of recording or entering was prepared, and
(vi) the other documents were prepared (Art. 48(2)).
181. Pursuant to the Law on ARNPO, the retention period for a foundations
accounting documents varies according to the type of document (Art. 11(2)):
the final calculations of salaries for the employees, as well as the lists
of salary payment are kept permanently, provided that they contain
essential data on the employees;
accounting documents on the basis of which data are entered in the
business books are kept for five years;
documents related to payment operations are kept for three years and
selling and control blocks, auxiliary calculations and similar docu-
ments are kept for two years.
182. As far as foundations business books, the journal and the ledger
need to be kept for ten years and the auxiliary books (analytical records) for
five years (Art. 8(3)). The retention period starts the last day of the fiscal year
to which they refer (Art. 8(4)). The basic financial statements should be kept
permanently and in their original form (Art. 17(6)).
Availability of accounting information in practice
Companies and Partnerships
183. For the obligations to maintain accounting records under the
Company Law, the Central Registry does not conduct active checks to ensure
that such records are maintained properly by companies and partnerships.
Notwithstanding the lack of active monitoring by the Central Registry, it is
noted that annual accounts and financial statements have to be submitted
to the Central Registry once they are adopted by the respective manage-
ment bodies of the company or partnerships. Penalties are imposed by the
Central Registry on companies and partnerships for failure to submit their
annual accounts and financial statements. During 2010 2012 penalties
under Art. 599(1)6 CA were imposed by the Court based on misdemeanour
proceeding initiated by the Central Registry 19 513 times. These penalties
were imposed on Joint stock companies, 179 times in 2010, 184 times in 2011
and 189 times in 2012; on Limited Liability companies 5236 times in 2010,
5488 times in 2011 and 6513 times in 2012; on Foreign Company branches,
28 times in 2010, 33 times in 2011 and 48 times in 2012; on General partner-
ships, 569 times in 2010, 528 times in 2011 and 515 times in 2012 and on
Limited Partnerships by shares 1 time in 2010, 1 time in 2011 and 1 time in
2012. There were no penalties imposed on Partnerships limited by shares.
184. With effect from the year 2013 (i.e. after the review period), the
Central Registry and the PRO have also initiated a new procedure to strike-
off dormant companies and partnerships from the register if these entities fail
to submit their annual accounts and financial statements for three consecutive
years. As at 30 November 2013, the Central Registry has struck-off 4 272
dormant companies and partnerships. The Central Registry and PRO are
currently reviewing another 6 187 companies and partnerships with a view
of striking them off the register as they have failed to submit their annual
accounts and financial statements for the financial years 2009 to 2011.
185. For the obligations to maintain accounting records under the Law
on Tax Procedure, the PRO enforces the obligation through the normal tax
assessment procedure as the taxpayer would have to justify the income and
deductions in their tax returns. However, as financial statements are pro-
vided to the PRO through the Central Registry, the PRO does not monitor or
enforce the accounting record keeping obligations separately. Nevertheless,
arising from tax audits conducted by the PRO, the PRO has applied penal-
ties provided under the Law on Tax Procedure on a small number of limited
liabilities companies for the failure to maintain accounting records during the
review period (8 in 2010, 13 in 2011 and 8 in 2012).
Trusts
186. The PRO explained that trust arrangements are uncommon in the
Republic and they have never encountered any cases where a resident person
was found to be acting as trustee of a foreign trust during the normal course
of performing its duties. In addition, notwithstanding the fact that there are
no special provisions requiring trustees to keep accounting records, the PRO
has highlighted that assets or income derived in connection with a foreign
trust are subject to tax as any other assets or income of the resident trustee
and the resident trustee is subject to accounting record keeping requirements
under the Law on Tax Procedure for the determination of the resident trus-
tees income as such accounting information is relevant for taxation purposes
in the Republic. The PRO has never received any EOI requests concerning
trusts and no peers have highlighted any concerns relating to trusts in the
Republic.
Foundations
187. In practice, the Central Registry and the PRO do not monitor whether
accounting records are maintained properly by foundations. While some
foundations are required to submit annual accounts and financial statements
to the Central Registry, the level of compliance is dependent on voluntary
compliance by the foundations as the Central Registry is unable to determine
if foundations that have not submitted the annual accounts and financial
statements meets the exemption requirement (i.e. having revenue and assets
below EUR 2 500 in MKD equivalent). As a result, the Central Registry has
never initiated misdemeanour proceeding against foundations for failure to
maintain accounting records. The lack of active monitoring by the Republic
is not a serious deficiency as foundations can only be established for chari-
table purposes in the Republic. In this regard, the risk of any potential abuse
concerning the inappropriate use of foundation as a legal structure in the
Republic is low.
188. The PRO highlighted that foundations are also subject to tax audits
and penalties may be applied if it is established that they have failed to main-
tain accounting records. During the review period, the PRO has conducted
117 tax audits on foundations (26 in 2010, 50 in 2011 and 41 in 2012). These
tax audits were in relation to the calculation and payment of taxes on incomes
which were not related to the goals defined in the statute of the foundation.
The additional tax calculated with regards to the 117 tax audits conducted
totalled EUR 105 383. If a foundation realises profit during the performance
of its activities, this profit must be used for the accomplishment of the goals
defined in the statute and the realised profit cannot be distributed between
the founders, members, members of the bodies, directors, employees or any
other person related to them. The Republics authorities have indicated that if
the use and disposal of the assets of the foundation is in accordance with the
purposes established by the law and the statutes of the foundation, then this
use and disposal will represent expenditure and acknowledged for taxation
purposes.
EOI requests relating to accounting information
189. During the review period, the Republic received 10 EOI requests
requesting for accounting information. The PRO indicates that the infor-
mation is generally collected via tax audits to ensure that the information
provided to the EOI partners is accurate and reliable. The EOI partners have
indicated that they received all the information requested from the Republic.
Conclusion
190. The Republic has taken appropriate steps to enforce on the obliga-
tions to maintain accounting records and in the few EOI requests which
pertain to accounting information, the Republic has provided the information
to its EOI partners. While the provisions requiring the availability of account-
ing information in foundations are not effectively enforced in practice, the
risk of any potential abuse concerning the inappropriate use of foundations
as a legal structure is low and should not be a relevant concern for the Global
Forum.
Factors underl ying
The scope of the accounting
obligations under the Law on Tax
Procedure is unclear and does not
expressly cover professionals acting
as trustees of foreign trusts. There are
no other obligations in the Republics
laws which require maintenance of
accounting information related to
foreign trusts administered in the
Republic or in respect of which a
trustee is resident in the Republic.
The Former Yugoslav Republic of
Macedonia should clarify the scope of
the accounting keeping requirements
under the tax law and ensure that
accounting information is kept for
foreign trusts administered in the
Republic or in respect of which a
trustee is resident in the Republic.
Phase 2 rating
Compli ant
A.3. Banking infor mation
Banking information should be available for all account-holders.
Record-keeping requirements (ToR A.3.1)
191. Banks and savings houses are financial institutions and therefore
subject to the Republics anti-money laundering regime. The supervisory
authority for banks in respect of the AML obligations is the Office for Money
Laundering Prevention and Financing Terrorism (OMLPFT), a legal entity
within the Ministry of Finance and the National Bank.
192. Pursuant to the 2008 AML/CFT Law, financial institutions entities
are obliged to keep the copies of the documents confirming the identity of the
client or the beneficial owner, for the performed procedures for analysis of
the client or the beneficial owner and realised transactions or the transac-
tions being performed, from the client file and the business correspondence
(Art. 27). These records need to be kept at least ten years after the transaction
has been performed; when several transactions constitute a single complex
transaction, the retention period starts from the day of the last transaction.
Failure to comply with these obligations is sanctioned with an amount from
EUR 80 000 to 100 000 in MKD equivalent and with a temporary prohibition
of performing certain activity for a period from two to five years (Art. 49).
193. According to Article 8 of the AML/CFT Law, financial institutions
are obliged to apply client due diligence procedures in the following cases:
when establishing a business relationship;
when carrying out one or several linked transactions amounting to
EUR 15 000 in MKD equivalent;
when there is suspicion of money laundering or financing terrorism,
regardless of any exception or amount of funds; and
when there is doubt about the veracity or adequacy of the previously
obtained client identification data.
194. Pursuant to the banking law, banks must organise their operations
and keep business records, as well as the business and accounting documen-
tation, in a manner confirming that the bank operate, at any time, pursuant
to the provisions of the law (Art. 102 Banking Law). Banks are also required
to keep records on each payment in and out of deposit accounts and, at the
request of the client, issue document recording all payments in and out in the
requested period (Art. 10). Banks failing to keep such records are subject to a
fine from EUR 15 000 to 20 000 in MKD equivalent (Art. 187).
195. As of 2008, the AML/CTF Law provides for an express prohibition
for banks to open and keep anonymous accounts (Art. 26). In addition, the
republics authorities indicated that no such accounts had been opened in
the past. In fact, whilst the previous versions of the AML/CTF laws did not
contain explicit provisions related to anonymous accounts, there were provi-
sions in the relevant sectoral laws that clearly required financial institutions
to determine the identity and addresses of their customers before opening an
account or savings account (Arts.43, 44, 50, 51 of the 1993 Law on Banks and
Savings Houses, and Art. 10 of the 2007 Banking Law for savings books and
deposits of natural persons; Art. 4 of the 1993 Law on Payment Operations
and Art. 9 of the 2011 Law on Payment Operations, as well as Arts.2 and
12 of the 2007 Law on Payment Operations for accounts opened by legal
persons). Customer identification was also required upon reception of store
stocks, bonds or other securities and when renting vaults, providing asset
management services or payment services on behalf of a third person. The
issue will be followed up in the Phase 2 review.
Availability of banking information in practice
196. In practice, the National Bank of Macedonia (NBM) is responsible
for enforcing the obligations set out in the AML/CFT Laws together with the
Financial Intelligence Office (FIO). During 2010 2012 the NBM and the
FIO conducted 76 onsite inspections banks and saving houses to evaluate
whether they comply with the AMC/CFT Laws.
197. The NBM reported that the onsite inspection reveals that in general,
banks and saving houses have met the minimum AML/CFT standards as set
out in the NBM decision (Official Gazette of RM No.103/2010 and 60/2011)
required for managing AML/CFT risk. However, deficiencies were still iden-
tified in 4 banks relating to the
identification and verification of the identity of clients and the ben-
eficial owner;
failure to submit data to the NBM relating to cash transactions and
connected cash transactions;
lack of dedicated resources (e.g. having a separate unit/department)
to implement the AML/CFT Law obligations;
lack of adequate risk profiling of clients.
198. According to the NBM, all these deficiencies identified were subject
to supervisory action where these banks are required to rectify the defi-
ciencies within 1 to 6 months. The follow-up actions will also be reviewed
by the NBM. The NBM is satisfied that it has been adequately addressed by
the banks. The Republics authorities indicate that supervisory action consists
of measures, written notices, written warnings, fines etc. Where deficien-
cies were found in reference to 4 banks, financial penalties were imposed
for 2 of them while the other two banks received a measure with a written
recommendation.
199. The FIO is involved in the supervision of all type of AML/CFT obli-
gated persons. The most common deficiencies identified by the FIO on these
AML/CFT obligated persons includes:
Non-submission of AML/CFT programmes to the FIO;
Non-submission or late submission of transaction report (e.g. trans-
action amount exceeding certain threshold or certain pre-defined
suspicious transactions) to FIO;
Customer due diligence was not carried out correctly or not carried
out in accordance with established procedure;
Identification documents were not properly retained for record
purposes.
200. The Republics authorities indicate that the FIO undertook action in
reference to misdemeanours identified during the audit. In 2010 according to
Article 53-a of the AML/CFT law the FIO issued warnings with recommen-
dations, which also determined the exact date for fulfilment of the specific
recommendations. In 2011 2012 because of changes in the law a training/
education procedure was proposed in accordance with Article 48-a of the
AML/CFT law. However, no penalties were imposed by the PRO between
2010 2012 concerning the identified misdemeanours.
EOI request relating to banking information
201. During the review period, the Republic received 2 EOI requests from
two EOI partners requesting for banking information. Both EOI partners
have indicated that they received all the information requested from the
Republic.
Conclusion
202. The supervisory authorities for banks have exercised its enforcement
powers and have conducted regular onsite inspection to ensure financial
institutions comply with the requirement to maintain banking information
required under the standard.
Phase 2 rating
Compli ant
COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 63
B. Access to Infor mation
Over view
203. A variety of information may be needed in a tax inquiry and jurisdic-
tions should have the authority to obtain all such information. This includes
information held by banks and other financial institutions as well as infor-
mation concerning the ownership of companies or the identity of interest
holders in other persons or entities, such as partnerships and trusts, as well
as accounting information in respect of all such entities. This section of the
report examines whether the Republics legal and regulatory framework gives
the authorities access powers that cover relevant persons and information, and
whether the rights and safeguards that are in place would be compatible with
effective exchange of information.
204. The Republics tax authority has access to a wide range of informa-
tion in its database and the information may be used to respond to an EOI
request. The tax authority may also request other governmental authori-
ties to provide information that is in their possession to respond to an EOI
request. During the review period, the tax authority has responded to two
EOI requests based on information available in its database and eleven EOI
requests based on information obtained from other governmental authorities
and banks.
205. The Republics tax authority also has a broad power to obtain rel-
evant information from any person who holds the information. In cases
where the information is in the possession of a bank, the tax authority issues
a written request to the bank to request the bank to produce the information.
Non-compliance with the written request can be sanctioned with significant
penalties. In cases where the information sought is in the possession or con-
trol of a private person, the tax authority generally conducts a partial tax
audit to obtain the information. This is to ensure that the information col-
lected is accurate and reliable. During the review period, the tax authority has
responded to one EOI request based on information obtained directly from
64 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION
a bank and 15 EOI requests based on information gathered through partial
tax audits.
206. The competent authority does not have search and seizure powers,
but it has the power to enter premises, inspect relevant documents and take
copies thereof. It can obtain written or oral statements by relevant persons.
Taxpayers, however, must always receive advance notification when an audit
will be carried at their premises. Exceptions to advance notification are
permitted only in the context of external audits (i.e. audits conducted at the
taxpayers premises), provided that there is sufficient evidence such notifica-
tion would prevent or hinder the control or in cases when it is necessary to
secure information required by foreign tax authority in accordance with an
international treaty.
207. These powers may be exercised for EOI purposes provided that the
request is made under an international tax agreement and there is reciproc-
ity. No domestic tax interest is required, nor is there a need to notify the
taxpayer of the request or obtain an authorisation by a court. Acts undertaken
to respond to an international EOI request are not subject to appeal in the
Republic.
208. In general, existing bank secrecy provisions in the Republics law are
excluded from effect where information is sought by the PRO acting within
its competence, including in respect of an EOI request. Certain professionals
attorneys, notaries public, tax advisors and auditors may refuse to disclose
information acquired in their professional capacity to the PRO. Nonetheless,
this right to refuse to disclose information does not apply to documents they
hold on behalf of the taxpayer, as long as the taxpayer is obliged to keep such
documents under any of the Republics laws. If the professional refuses to
disclose confidential information or documents the taxpayer is not required
to keep under any of the Republics laws notably, documents or information
concerning a foreign trust tax authorities may only access such information
and documents through a request to third parties (e.g. a bank) or an author-
ised audit at the professional premises. In the latter case, the professional will
be given advance notice. The secrecy provisions in the Republic have not
prevented effective EOI in practice.
B.1. Competent Author it ys abilit y to obtain and pr ovide infor mation
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information).
Bank, ownership and identity information (ToR B.1.1) and accounting
records (ToR B.1.2)
Information gathering powers
209. Under the Law on Tax Procedure, the PRO has broad powers to
obtain all relevant information. It can collect information from the taxpayer
and other persons, ask for experts opinions, collect documents and carry out
on-site inspections. While Chapter 3 of the Law of Tax Procedure (Arts.57
ff.) contains general rules applying to all kinds of tax audits and controls,
Chapter 5 (Arts.84 ff.) dictates terms and procedures applicable to external
controls, i.e. audits carried out at the taxpayers premises. The Republics tax
authorities do not have search and seizure powers.
210. Under the general Chapter 3 rules, the PRO can send the taxpayer a
written request to provide all information necessary for establishing the facts
of relevance to taxation (Art. 60(1)). Requests always need to state to whom,
for what purpose and what such information refers (Art. 60(2)). The PRO
may also ask for specific documents to be produced. The taxpayer for these
purposes does not refer to the foreign taxpayer, but to the person who holds
the information in the Republic.
211. The requested person can provide the information in writing, elec-
tronically, verbally (in this case it is mandatory to draft minutes) or by phone
(Art. 60(6) Law on Tax Procedure). The PRO may require information to
be provided in writing, should it be of relevance for the procedure, or invite
the person obliged to provide information to do so verbally at its premises
(Art. 60(7)).
212. The Law on Tax Procedure expressly states that the PRO can ask
the taxpayer and other persons related to the taxpayers operations to present
their business books, records, business documents and other IDs for the pur-
pose of checking. The PRO needs to state whether the documents requested
are relevant to the taxation of the person invited to present such documents
or to the taxation of third parties. The inspection
19
of such documents may
19. The term inspection used by the Law on Tax Procedure has a broad mean-
ing and it is meant to cover all cases where a tax officer examines a taxpayers
be either conducted at the PROs premises or at the premises of the person
obliged to present them (Art. 62). If the PRO believes a direct inspection
of the relevant documents is necessary to determine or clarify facts relevant
to taxation, the owner or user of objects, premises or land where such docu-
ments or records are kept is obliged to allow the PRO examine them (Arts.63
and 64(1) Law on Tax Procedure). These persons, however, need to be noti-
fied about the inspection in advance (Art. 64(2)). The law does not specify
the meaning of the term in advance (no minimum or maximum delay is
provided) and there is no exception to this prior notification requirement.
213. When a person claims that he/she owns or keeps the rights registered
in his/her name or the items in his/her possession only as a representative
of another person fiduciary, he/she shall be obliged, in the tax procedure,
upon request by the Public Revenue Office, to prove the owner of those
rights, i.e. those items, otherwise, they shall be considered as his/her prop-
erty (Art. 66 Law on Tax Procedure; see also paragraphs 86 and 106 above).
In practice, the PRO submits a written request to the taxpayer asking him
to prove he owns or keeps the rights registered in his name or the items
in his possession only as a representative of another person fiduciary.
The PRO can also obtain and check ownership data through the Central
Registry, where pledges/fiduciary rights (movable and real estate property)
are recorded.
214. Pursuant to Chapter 5 of the Law on Tax Procedure, the PRO can
also carry out external controls (i.e. audits carried out at the taxpayers
premises) of enterprises and other taxpayers (Art. 84). External controls are
normally conducted by authorised inspectors at the taxpayers business prem-
ises (Art. 93) and can concern one or more types of taxes and one or more
taxable periods; they can be used also to determine and re-examine the tax
relations (including business relations) of the taxpayer (Art. 89).
215. The object and the duration of an external audit is determined on a
case-by-case basis in a written external control order signed by the head
of the competent external control unit in the PRO. Such orders are generally
served 4 weeks in advance to large taxpayers and 2 weeks in advance to the
others (Art. 92(1). However, the order does not need to be served in advance if
this is likely to prevent or hinder the control (Art. 92(2)) or in cases when it is
necessary to secure information required by foreign tax authority in accord-
ance with [an] international treaty. This law was changed in 2012 to respond
to a recommendation in the Phase 1 report.
documents and records.
Access to bank information
216. As a general rule, banks including their shareholders and employ-
ees are under an obligation to keep information acquired while performing
banking and other financial activities confidential (Art. 111 Banking Law).
217. Article 112 of the Banking Law, however, provides for exceptions
to banks duty of confidentiality. Exceptions apply in a number of circum-
stances, including upon written request of the Public Revenue Office for the
purposes of conducting procedures that are within its competence (point 3).
The possibility for the PRO access to bank information in a timely fashion
is confirmed by Article 16 of the Law on PRO, which provides that, at the
request of the Public Revenue Office, the data related to the payment system
activities and the participants (i.e. data related to any kind of payment,
account, account holder, and any other information recorded by the Republic
banks integrated electronic system) do not represent confidential business
information for the banks, which are obliged to submit the requested informa-
tion within the deadline established in the request.
218. The Republics authorities confirmed that, given the abovementioned
duty to provide international legal assistance to foreign tax administrations
pursuant to an international tax agreement, the Public Revenue Office can
provide bank information of accounts of individuals or legal entities at the
request of a foreign tax administration, provided that the request is in accord-
ance with the agreement and on a reciprocal basis.
219. The Republics law does not specify the level of detail the request
of the foreign tax administration should have to be in accordance with the
international tax agreement.
220. Finally, the Republics law does not distinguish between informa-
tion requested under a DTC or a TIEA: therefore, as confirmed also by the
Republics tax authorities, the above mentioned provisions apply equally to
double tax conventions (DTCs) and tax information exchange agreements
(TIEAs).
Access to information in Practice
221. During the period of review the PRO received 30 requests for infor-
mation. These requests related to a variety of different types of information,
including banking information, accounting information, information on
the owners of companies and information concerning transactions between
national entities and other persons. Where the PRO receives a request
for information then the procedure to obtain the information will differ
depending on whether the information is (i) in its own possession, (ii) in the
possession of another governmental authority, or (iii) must be obtained from
a person in the Republic. In this latter case, a separate procedure will apply
in the case of bank information.
Operational Guidelines
222. In 2012 operational guidelines were adopted by the PRO to set down
clear procedures for the handling of EOI requests. Prior to this time, the
Department followed the process for handling EOI requests in the OECD
Manual. The procedures used before and after the adoption of the guidelines
is substantively the same (although the guidelines now provide expressly for
the provision of status updates to its partners, see section C.5, below), how-
ever the issuance of guidelines formalised the procedure. The Republic also
confirmed that prior to 2012 other guidelines existed which focused on the
implementation of double tax agreements. The guidelines are issued by the
Director of the PRO and come into effect immediately upon signature (art. 11,
Law on PRO). As such, the operational guidelines create clear obligations
on the part of officials in the PRO outside the Department. The Department
organised special training sessions early in 2013 for PRO staff responsible
for implementing the operational guidelines to ensure that they are aware of
their responsibilities.
Information in the possession of the PRO
223. The operational guidelines provide clear procedures where informa-
tion is held by the PRO. The Department has direct access to certain types of
information, such as tax return information, annual accounts, tax assessments
and audits, VAT registration and payment information. For information that
is held by the PRO, but to which the Department does not have direct access,
the Department submits a request to the relevant organisational unit of the
PRO. This request is usually sent within two or three business days. The
request to the organisational unit must include the following elements:
The identity of the persons/individuals in respect of whom the infor-
mation is requested: name and tax identification number (TIN) for
legal entities; name, surname and personal identification number
(EMBG) for individuals
The identity of the foreign individual/legal entity in relation to which
information is requested
Description of the situation described in the request submitted by the
foreign tax authority
The actual information requested, why the information is needed
and the information necessary to be provided (invoices, contracts,
forms, etc.)
The time period for the requested information
The documentation received from the foreign tax authority which is
important in the procedure for obtaining information from the relevant
organisational unit
Deadline by which the information should be obtained.
224. The operational guidelines specify that the organisational unit of the
PRO must immediately act upon that request. The deadline for submission
of the information and documentation requested is not more than 60 days. If
the organisational unit is unable to obtain the information within 60 days it
must notify the Department and explain the reasons why it was not possible
to provide the information in the foreseen timeframe. Generally the informa-
tion is provided within 30 days, and in practice, the Department has not had
the need to further clarify with the organisational unit what information is
needed to respond to the request.
225. During the period under review, the Department responded to
2 requests for information held by the PRO. These cases related to tax
return information and each was completed within 30 days. The Republics
authorities report that, for the most part, requests relate to the examination
of business relations which has to be obtained from the taxpayer through a
partial external audit or are related to information which must be obtained
from other governmental authorities.
Information in the possession of another governmental authority
226. Each institution in the Republic that has an official register or a public
database must provide information contained in such register or database at
the request of the PRO where it is needed for EOI purposes (Art. 15, Law on
PRO). The authorities with which the PRO regularly co-operates in obtaining
information to respond to EOI requests include the Customs Administration,
Central Registry, Central Security Depository, Cadastral Registry, Ministry
of Interior, Financial Police, Clearing Houses, Employment Service Agency,
Pension and Disability Insurance Fund, Health Fund, and the Securities and
Exchange Commission.
227. The PRO has direct access to the databases maintained by the fol-
lowing authorities:
Central Registry for information relating to the current status of
legal entities and changes thereto, such as taxpayer identification
number (TIN), personal identification number (PIN), managers,
owners, nominal capital, address, telephone number, information
about the bank accounts maintained by the entity (account number
and name of bank), registered activity, and date of original
registration as well as scanned copies of the original documents filed
with the registry. The PRO also has direct access to information relat-
ing to owners of all types of legal entities.
Customs Administration for information relating to the import and
export of goods for legal entities for specific period by customs
declaration number.
Ministry of Interior for information relating to physical persons
who are residents of the Republic, including address, name, date of
birth, and PIN.
Employment Agency for information the employment status of
persons.
228. In addition, banks in the Republic are required to transmit to the PRO
on automatic basis information related to bank balances of legal persons that
are registered for VAT purposes. This information is provided on a monthly,
quarterly or annual basis, depending on the particular taxpayer concerned.
229. In the case of other agencies, or for information from the listed agen-
cies which is not available electronically, the PRO makes a written request.
230. If the information can be accessed electronically, then the PRO
obtains the information and answers the request as soon as possible. If the
information cannot be provided electronically, then the PRO sends a written
request to the relevant governmental authority requesting that the information
be provided as soon as possible.
231. In the period under review the PRO received 11 requests that required
information be obtained from another governmental authority, including
information on the physical status of persons in the Republic (entry and exit),
the ownership of real property, or proof of death of an individual. In these
cases the information was usually provided within 6 months (and sometimes
as quickly as 30 days). While this process is generally very quick, some infor-
mation takes more time for the government agency to obtain. For example,
where the information pertains to the entry or exit of persons to the Republic,
this information is held by the Ministry of Interior. The Ministry of Interior
does not centralise this information and must collect it from its local offices.
In cases where this information was collected, the response time was some-
what longer, but in any case within a year, and the peers were satisfied with
the quality and timeliness of the response.
Information in the possession of a bank
232. As noted above, banking information is not subject to bank secrecy
and the bank is obliged to provide such information to the PRO within the
time period specified in the request (Art. 16, Law on PRO; art. 112, Law of
Banks).
233. When the requested information is possessed by a bank, the
Department sends a written request to the specified bank to provide the
information. The bank is obliged to provide the information within the period
specified in the written request, usually within 5 working days. The PRO
reports that, in practice, there is no requirement to first approach the taxpayer
in these cases.
234. During the period under review, the PRO received 2 requests for
banking information. For the first request, the PRO had to perform an audit
of the taxpayer to obtain all the information requested by the EOI partner.
In the course of the audit, the information concerning the taxpayers bank-
ing transaction was obtained from the records held by a taxpayer in the
Republic, and so it was not necessary to obtain that information from the
bank. Information was obtained directly from a bank to respond to a second
request. It should be noted that two other peers indicated that they had asked
for banking information, however, the Republics authorities viewed these
requests as requests for accounting information (one question related to the
existence and repayment of a loan, the second related to payments made to
employees). The information in these cases was obtained from the taxpayer
in the Republic and the peers were satisfied with the quality of these replies.
235. It should be noted as well that during the review period a doubt arose
as to whether the exchange of banking information was consistent with the
Republics data protection law. Following discussions with various authorities
within the Republic and a study of the OECD commentary on article 26 of
the Model Tax Convention, the authorities agreed that no such conflict exists.
In one case, an EOI partner had asked for a range of information including
banking information concerning residents of its country that were in receipt
of a government pension from the Republic. The Department approached the
government pension fund to obtain information on the identity of the persons
involved and their banking information. The government pension fund raised
the question of the conflict with data protection laws and sought the advice of
the Data Protection Agency. The Data Protection Agency issued an opinion
affirming the ability of the PRO to obtain and provide bank information,
consistent with the data protection laws. The bank information in this case
was obtained and provided to the EOI partner.
Obtaining information in criminal cases
236. Where information is requested in the context of a criminal inves-
tigation or requires the interrogation of individuals, the PRO does not have
authority to conduct these inquiries. In these cases, the information must be
obtained by the Financial Police or Minister of Interior. The PRO can ask
the Financial Police for assistance and co-operation in cases when investiga-
tion is needed. If the PRO identifies the criminal activity of a person in the
Republic, then the Financial Police will be involved. However, if the wrong-
doing does not involve a person in the Republic, then the PRO can proceed
on its own, this means that the PRO will use its full authority to gather and
provide the required information to the requesting tax administration.
237. In three cases, the EOI partner wanted to know whether a loan agree-
ment between individuals existed, which could only be established through
interviews of the persons concerned. For these purposes the Financial Police
were involved. These cases took longer than a year. The Republics authori-
ties have explained that these delays were due to the absence of the physical
persons from the Republic, the distance of their habitation from the premises
of the Financial Police in Skopje and their unwillingness to co-operate with
officials of the Financial Police because in these types of cases the Financial
Police have no legal basis for detention of the natural person at the premises
of the Financial Police.
Information in the possession or control of a private person
238. When the requested information is in possession or control of a tax-
payer in the Republic, the Department initiates a tax audit of the person in
accordance with Article 87 of the Law on Tax Procedure for the purpose of
obtaining the information. As described above, the Republics legal frame-
work provides for a general power to obtain information for tax purposes
(Art. 60, Law on Tax Procedure). However, the authorities explain that this
power to date, has not been used for EOI purposes. The Republics authorities
provide two reasons for this. First, because the use of this power requires that
the PRO informs the person holding the information of the purpose for which
it is needed. Secondly, the use of this power does not allow the PRO to cross-
check or independently verify the information provided. In addition, the PRO
authorities expressed doubts as to the effectiveness of a call for information
pursuant to this rule, indicating that a taxpayer would want a warrant from a
tax officer to have access to tax books and records, and the only authorised
person who can obtain a warrant is an external auditor. However, the issuance
of such a warrant does not appear to be required by Article 60 of the Law on
Tax Procedure.
239. As a result, in each case where information was requested that was
not in the possession of the PRO or another governmental authority, the
PRO initiated an audit on the person in the Republic holding the informa-
tion. Therefore, as a matter of practice, the power available to the PRO under
Article 60 is not effective for EOI purposes.
240. The tax audit is performed by tax auditors from the authorised PRO
Regional Office. The tax auditor is generally required to provide a report
setting out the findings of the audit to the Department within 60 days of the
completion of the audit. The Department remains in contact with the auditor
and ensures that priority is given to the audits for EOI purposes and that the
deadlines are respected. The information collected in the course of an audit
may be from the person subject to the audit or from third parties (Art. 59, Law
on Tax Procedure). On the basis on this report (and other documentation, if
necessary), the Department prepares and sends the response to the foreign
Tax Administration.
241. During the period under review the PRO processed 15 requests for
which a tax audit was performed to obtain the requested information. The
PRO has indicated that most of the requests which have not been answered
within 90 days are related to the conduct of a tax audit. The PRO now priori-
tises the tax audits that relate to an EOI request, and so this has reduced the
delays in these cases. In addition, there is no longer a need to provide advance
notice of the audit, which has also improved timeliness.
242. In order to launch an audit, the PRO must issue an external control
order (Art. 91(4), Law on Tax Procedure). The external control order must
indicate the type of tax and the factual situation being audited. Where an
audit is launched for EOI purposes, the type of tax is omitted from the exter-
nal control order, and the factual situation is simply described as business
relations. The description of these items is relevant to the PROs ability to
audit the particular taxpayer, since a taxpayer cannot be audited a second
time for the same tax in respect of the same year. By omitting the reference
to the type of tax and indicating simply business relations as the situation
being reviewed, the PRO ensure that they are always able to open an audit in
an EOI case, even where that taxpayer has already been audited. Similarly,
the PRO preserves its own ability to subsequently launch an audit for that
period.
243. To date, these particular issues have not been problematic. Nevertheless,
the law appears to be very specific in how it describes the content of an exter-
nal control order. The practice of omitting one of the required elements raises
a doubt as to the possibility of such an order being challenged. The PRO has
expressed concern in other areas that taxpayers may challenge their authority to
obtain information (e.g. in respect of the application of article 60 for EOI pur-
poses) and consequently there appears to be some risk here.
244. A second issue arose concerning the time during which an audit
can be conducted. During the period of review the PRO dealt with two
cases where not all of the information could be obtained because part of the
information related to periods more than 5 years in the past. These periods
are statute barred from reassessment under the Republics tax laws (Art. 110,
Law on Tax Procedure). The time limit is 10 years in the case of tax evasion.
The limitation period is interrupted if an intervening audit occurs, that is the
5 years begins to run anew following the completion of an audit. Although
this time limit refers to the limit for the calculation of tax, PROs authori-
ties interpret this in a way that it applies equally to an EOI request where no
type of tax is specified and no further tax is being calculated, and so would
also apply for the purposes of access under Article 87, Law on Tax Procedure.
245. In the two cases, the PRO was able to partial responses for the years
during which an audit was still open. It should also be noted that this limita-
tion would not apply in the case of bank information, for which a separate
power is available, and that the PRO already has a large volume of informa-
tion within its possession. The existence of a statute of limitations for audit
purposes is not per se problematic, particularly in circumstances where
the limitation period is 5 years and in many cases where the obligation to
maintain records may not extend past the 5 year period. Nonetheless, where
information is in the possession of a person the tax authorities should have
the power to obtain it for exchange purposes. This would appear to be possi-
ble using the power under Article 60, however, this is not the case in practice.
Given that the PRO relies heavily on the availability of a tax audit to obtain
information for exchange purposes, and that the inability to obtain informa-
tion that relates to periods more than 5 years earlier than the current tax year
has impeded the exchange of information in practice, the Republic should
clarify its laws and procedures to ensure that its access powers can be fully
implemented for EOI purposes.
Use of information gathering measures absent domestic tax interest
(ToR B.1.3)
246. The concept of domestic tax interest describes a situation where a
contracting party can only provide information to another contracting party
if it has an interest in the requested information for its own tax purposes.
247. The Law on Tax Procedure expressly states that ratified international
taxation agreements shall have priority over national tax laws (Art. 2(1)5).
This principle is further specified by Art. 178 of the Law on Tax Procedure,
which enables the PRO to provide international legal assistance to the
foreign tax authorities asking for exchange of information on the basis of
international agreement. Article 18 also requires the PRO to co-operate with
foreign authorities according to international agreements ratified by the
Republic. All together, these provisions enable the PRO to use its informa-
tion gathering powers to obtain information requested by foreign authorities
regardless of whether the Republic has an interest in the requested infor-
mation for its own tax purposes. This has been further confirmed by the
Republics authorities.
248. Even in the absence of an international tax agreement, the PRO can
extend international tax assistance to a foreign tax authority, provided that
(Art. 178(2) Law on Tax Procedure):
there is reciprocity;
the foreign authority commits to use the information and docu-
mentation received only for the purpose of tax, offense or criminal
procedure, as well as to make such information and documentation
available only to persons, administration bodies, i.e. judicial bodies
in charge of a certain tax case or carrying out of offense, i.e. criminal
procedure regarding such case;
the jurisdiction to which legal assistance is extended is willing to
avoid double taxation on the basis of mutual understanding;
fulfilling the request does not jeopardise the public order or other
interests vital to the Republic, and
there is no danger that extending legal assistance will result in dis-
closure of official or professional secret or cause great harm to the
resident taxpayer.
249. Overall, the Republics domestic legislation is clear in imposing the
PRO a duty to implement international taxation agreements especially in
the field of exchange of information and to co-operate with the foreign
partners tax authorities. Such duties are not conditional upon the existence
of a domestic tax interest in the information or assistance requested by the
foreign tax administration.
250. In practice, the PRO has been able to obtain information even where
there was no interest in the information for domestic purposes. However, as
noted above in section B.1.2, the operation of the access powers do not seem
perfectly adapted for EOI purposes, and some questions arise as to the appli-
cation of both art. 60 and the audit procedure in these cases.
Enforcement provisions to compel production and access to
information (ToR B.1.4)
251. The PROs powers include the ability to obtain the relevant tax
information both from the taxpayers and third parties, the authority to enter
premises and require documents to be submitted. As noted previously, the
PRO can require taxpayers or third persons to provide the requested informa-
tion both orally and in writing.
252. Pursuant to Art. 177 of the Law on Tax Procedure, all courts and
government bodies, including local government authorities are obliged,
upon request by the Public Revenue Office, to provide the necessary legal
and administrative assistance as regards taxation. Article 15 of the Law on
PRO specifies that the state bodies and the other public legal bodies provide,
in response to a request of the PRO, information from the official registers
and other public databases they maintain. As part of its duties, the OPMLFT
submits to the PRO a written notification when there are grounds to suspect
that tax related criminal acts are being performed. These powers to compel
production and access to information may be used for EOI matters, and pre-
vail over existing confidentiality provisions.
253. Any person who fails to comply with a request of information from
the PRO is subject to a penalty ranging between EUR 2 500 and 3 000
(Art. 179-b Law on Tax Procedure).
254. Banks and other financial institutions that refuse to comply with
a request for information by the PRO are subject to penalties. Pursuant to
Art. 187, paragraph 1, item 33 of the Banking Law, a fine of MKD 15 000
to 20 000 (EUR 250 to 330) applies to banks breaching their obligation to
disclose confidential information to the PRO. In addition, the AML/CFT
Law envisages penalties between EUR 80 000 and 100 000 for banks fail-
ing to provide the OPMLFT information on certain types of transactions
above EUR 15 000 (Art. 49 Banking Law). Equally, banks failing to provide
information requested by the OPMLFT are subject to penalties between
EUR 2 500 and EUR 5 000 (Art. 51).
Refusal to provide information in practice
255. During the review period there have been no EOI cases where a
person refused to provide information pursuant to a valid request by the PRO.
In two cases where information could not be obtained, the refusal to provide
the information was based on the fact that in those cases tax audits were initi-
ated beyond the statutory reassessment periods (see, section above). During
the review period a total of 25 misdemeanour procedures were conducted for
cases where the taxpayer during external audit did not provide the necessary
information, business books, notes and other documentation.
Secrecy provisions (ToR B.1.5)
256. Bank confidentiality is protected under Art. 111 of the Banking
Act, pursuant to which documents, data and information acquired while
performing banking and other financial activities to individual persons and
transactions for individual persons and the deposits of individual persons
represent a bank secrecy the bank is obliged to protect and hold. As detailed
above in paragraph 174, however, Article 112 of the Banking Law provides
for an exception to the banks duty of confidentiality for requests made by the
PRO within its competence.
257. With reference to professional privileges, the Law on Tax Procedure
expressly provides certain categories of professionals with a right to refuse
to provide information to the tax authorities. In particular, Article 69 pro-
vides that the following entities can refuse to provide information on facts
relevant to taxation of the taxpayer:
family members (related persons) of the taxpayer;
priests, attorneys, notaries public, tax advisers, auditors, doctors,
medical staff having acquired information in their capacity; and
persons enjoying immunity under the law.
258. Pursuant to the Law of Tax Procedure, members (related persons) of
the taxpayer are the taxpayers: spouse; direct relatives of first degree; sib-
lings; children of the siblings; spouses of the siblings, siblings of the spouses
and parents of the spouses; siblings of the parents; sustainer and foster
parent (Art. 4). For professionals, the right to refuse information also applies
to assistants and persons undergoing training in the respective profession,
provided that the supervising professional so decides (Art. 69(2)).
259. Pursuant to the Attorneys Law, attorneys preserve the confidential-
ity of the information disclosed to them by their clients (Art. 17). Breach of
confidentiality by an attorney is considered a particularly serious infringe-
ment of the legal profession (Art. 30) and can lead to the application of a
number of disciplinary measures, such as official warning, a fine to the
amount of a ten-fold annual membership, and temporary work ban up to a
year (Art. 31).
260. A certified auditor is required to respect the confidentiality of the
information obtained as a result of professional and business relations
and shall not reveal the information to third parties without a special and
appropriate approval, unless he has a legal and professional right to reveal
it (Art. 37(1) Audit Law). The use of the title tax advisor is not regulated by
the Republics law.
261. The Notary Law requires a notary public to keep as secret all that is
of personal nature, which the notary public learned of during his/her work
as notary public, except if the law and the will of the party state something
else (Art. 30). The law does not specify which information is considered of
personal nature.
262. The Republics authorities have indicated that the right to refuse
to provide information and documents is a personal right of the requested
family member or professional which can be claimed when the PRO requests
information be provided. But this right cannot be invoked to prevent the PRO
from accessing documents the family member or professional holds on behalf
of the taxpayer, if the taxpayer is obliged to keep them. In fact, pursuant to
Article 71(2) of the Law on Tax Procedure, a person that, on behalf of the
taxpayer, keeps documents, business books, records and other items shall
have to present them for inspection if the taxpayer was obliged to keep them
himself/herself. The Republics authorities clarified this provision covers all
documents the taxpayer is required to keep under any law (and not only under
the tax law). Therefore, professional privilege does not attach to company
registers, accounting documents, contracts and other documents the client
is obliged to keep under the company laws, or AML/CTF laws, or tax laws.
263. Professional privilege may nonetheless justify the family members
or the professionals refusal to present for inspection documents the taxpayer
is not required to keep under any of the Republics laws, such as documents
concerning foreign trusts. The Republics authorities have indicated they
would be able to access these documents through requests to third parties
(e.g. a bank) or through an authorised external control at the family mem-
bers or the professionals premises (pursuant to Chapter 5 of the Law on Tax
Procedure) during which the PRO can gather privileged information from the
persons books, records, or documents.
264. In essence, the Republics tax law allows certain persons including
professionals such as attorneys, notaries public, tax advisors and auditors
to refuse disclosure of information acquired in their capacity, pursuant to
confidentiality provisions in the relevant professional laws. Both the tax and
the sectoral laws intend to protect the confidentiality of information shared
with certain professionals only to the extent that it is confidential information
acquired in their professional capacity and does not extend to documents the
professional is holding on behalf of the taxpayer, when the latter is obliged to
keep them under any of the Republics laws or to documents which the pro-
fessional happens to hold and which are accessed during an external control
at the professionals premises. Whilst the scope of these provisions might go
beyond the international standard, this would in practice only be relevant for
information on foreign trusts and have therefore a very limited scope (see
paras.101ff. above).
Effect of Secrecy Provisions in practice
265. The access to banking information in practice has been described in
sections B.1.1 and B.1.2, above. As regards the other secrecy provisions, there
have been no cases where they have impacted EOI in practice. In addition,
the PRO has used their access powers domestically to obtain information
from auditors, and in particular the PRO has been able to obtain items such
as working papers. In respect of family members, this protection would only
apply where the family member has no business relation with the taxpayer.
To the extent that the family member serves in a professional capacity, such
as serving as the accountant for a spouses company, the protection from
disclosure would not apply.
Phase 2 rating
Largel y Compli ant
Factors underl ying
Article 60 of the Tax Procedure Law
has not been used in practice for EOI
purposes. The audit procedure has
generally worked in practice, but is not
perfectly adapted for EOI purposes
and there have been instances where
these limitations have prevented
effective exchange of information.
The Republic should ensure that
the access powers available to
its competent authority are used
effectively to obtain information in all
cases and where necessary clarify
its laws and procedures to ensure
that its access powers can be fully
implemented for EOI purposes.
B.2. Notification r equir ements and r ights and safeguar ds
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information.
266. The Terms of Reference provides that rights and safeguards should
not unduly prevent or delay effective exchange of information. For instance,
notification rules should permit exceptions from prior notification (e.g. in
cases in which the information request is of a very urgent nature or the
notification is likely to undermine the chance of success of the investigation
conducted by the requesting jurisdiction).
267. The Republics Law on Tax Procedure does not require the PRO to
notify the taxpayer of an EOI request, nor does it require the PRO to notify
the taxpayer during a tax audit that the information provided has been
required by a foreign tax administration. Equally, there is no requirement
for banks and financial institutions to notify the taxpayer upon receipt of a
request for information by the PRO.
268. Persons other than the taxpayer can be required to provide informa-
tion or documents only when information received from the taxpayer is not
sufficient (the facts of the taxpayer do not serve the purpose or fail to yield
results: Art. 60(3); see para.167). The taxpayer in these circumstances
refers to the person in the Republic who holds the information, and not to the
foreign taxpayer that is under investigation.
269. The PRO is also required to give taxpayers advance notification
when inspections need to be carried out at their premises. (Art. 64(2)). This
advance notification is mandatory for all on-site inspections. The law does
not specify the meaning of the term in advance (see paragraph 169 above).
The Republics authorities indicate notification is normally served 2-3 days in
advance of the planned inspection; upon request by the taxpayer, it is possible
to agree on a different date.
270. For the external control procedure, advance notification is gener-
ally served 4 weeks in advance to large taxpayers and 2 weeks in advance
to the others (see paragraph 172 above). There is, however, an exception:
such advance notice can be waived when it is likely to prevent or hinder the
control or in cases when it is necessary to secure information required by
foreign tax authority in accordance with [an] international treaty. This law
was changed in 2012 to respond to a recommendation in the Phase 1 report
(Art. 92(2) Law on Tax Procedure). Further, the Republic has used its exter-
nal control powers under both the old and new law during the review period.
No issues regarding either the old law or the new law were discovered in the
Phase 2 review.
271. Pursuant to the Law on Tax Procedure, taxpayers may lodge appeals
only against tax administrative acts (Art. 172). Those acts are defined as acts
adopted by the PRO when undertaking actions in a tax procedure against a
taxpayer provided that they have direct legal effect on the taxpayer (Art. 42).
As acts undertaken to respond to an international EOI request do not have a
direct legal effect on the taxpayer, they are not subject to appeal.
272. Certain procedural rights also come into play in the context of an
external control order. The auditor must inform the taxpayer if he or she
detects facts that would have tax consequences for the taxpayer. Draft min-
utes of the audit must be provided to the taxpayer, who is then given the
opportunity to comment and agree on final minutes during a face-to-face
interview. The taxpayer can bring further information at this meeting, and if
valid, these can be included. Following this, the taxpayer has 8 days to bring
any final objections, comments or information. However, these procedures
would not prevent the exchange of the information obtained in the course of
the external control.
273. In the context of a request for information concerning the business
relations between a resident of the Republic and a resident of a foreign juris-
diction, the minutes would describe the relationship with the foreign resident.
No specific reference would be made to the EOI request or the purpose of the
audit. During the period of review, there have been no instances where these
rights have impeded effective exchange of information.
Phase 2 rating
Compli ant
COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION 83
C. Exchanging infor mation
Over view
274. This section of the report examines the Republics network of agree-
ments against the standards and the adequacy of its institutional framework
for effective exchange of information in practice.
275. Jurisdictions generally cannot exchange information for tax pur-
poses unless they have a legal basis or mechanism for doing so. The legal
authority to exchange information may be derived from bilateral or multi-
lateral mechanisms (e.g. double tax conventions, tax information exchange
agreements, regional multilateral agreements on mutual assistance, the Joint
Council of Europe/OECD Convention on Mutual Administrative Assistance
in Tax Matters) or arise from domestic law. Within particular regional group-
ings information exchange may take place pursuant to exchange instruments
applicable to that grouping (e.g. within the EU, the directives and regulations
on mutual assistance).
276. The Republic has signed Double Tax Conventions (DTCs) that
provide for exchange of information with 45 jurisdictions, of which 4 are
currently not in force and a Tax Information Exchange Agreement (TIEA)
with 1 jurisdiction, which is currently not in force. The Republic currently
has two DTCs with Belgium, the recently signed DTC with Belgium is not
in force. The new agreement was signed in 2010 to update the old agreement
with Belgium (the old agreement currently applies to the Republic until the
new agreement enters into force and the new agreement is therefore counted
as one of the agreement currently not in force). The Republics agreements in
the main follow the form and substance of the OECD Model Tax Convention.
All but two (the agreements with Austria and Switzerland) of the agreements
that are in force provide for exchange of tax information to the international
standard. There are no special provisions in the Republics law that would
prevent the conclusion of a TIEA instead of a DTC and the Republic has
signed a TIEA with one jurisdiction.
84 COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION
277. The Republics network of agreements covers most of its main trad-
ing partners and neighbouring countries, namely Bulgaria, Croatia, Germany,
Italy, Montenegro, Russia, Serbia and Slovenia. In addition, a multilateral
agreement between the Republics tax administration and the tax authorities
of Bosnia and Herzegovina, Bulgaria, Montenegro and Serbia, concluded in
2006, provides for enhanced co-operation among the contracting administra-
tions, including exchange of information spontaneously or upon request.
278. All exchange of information provisions in the Republics agreements
contain confidentiality provisions to ensure that the information exchanged
will be disclosed only to persons authorised by the agreements. While each of
the articles might vary slightly in wording, these provisions generally contain
all of the essential aspects of Article 26(2) of the Model Tax Convention and
Article 8 of the Model TIEA.
279. The agreements concluded by the Republic also ensure that the con-
tracting parties are not obliged to provide information which would disclose
trade, business, industrial, commercial or professional secrets or trade pro-
cess or to make disclosures which would be contrary to public policy. There
are no legal restrictions on the ability of the Republics competent authority
to respond to requests within 90 days of receipt by providing the information
requested or by providing an update on the status of the request. In practice,
the Republic has not always provided status updates where information could
not be exchanged within 90 days, however the new guidelines now require
status updates to be sent to treaty partners where this is necessary.
C.1. Exchange of infor mation mechanisms
Exchange of information mechanisms should allow for effective exchange of information.
280. The Republic is signatory to 45 DTCs (two of which are with
Belgium) and 1 TIEA providing for exchange of information, of which 41 are
in force. The Republics tax administration also exchanges information under
a multilateral administrative agreement with the tax authorities of Bosnia and
Herzegovina, Bulgaria, Montenegro and Serbia. This multilateral agreement
between the Republic and some of its neighbouring jurisdictions is a purely
administrative agreement. As such, it came into force upon signature by the
contracting administrations, without need for ratification by the Republics
assembly. However, as the agreement is an administrative co-operation agree-
ment, its provisions do not possess the force of law.
Foreseeably relevant standard (ToR C.1.1)
281. The international standard for exchange of information envis-
ages information exchange upon request to the widest possible extent.
Nevertheless it does not allow fishing expeditions, i.e. speculative requests
for information that have no apparent nexus to an open inquiry or investiga-
tion. The balance between these two competing considerations is captured in
the standard of foreseeable relevance which is included in paragraph 1 of
Article 26 of the OECD Model Tax Convention and Article 1 of the OECD
Model TIEA. Paragraph 1 of Article 26 of the OECD Model Tax Convention
reads as follows:
The competent authorities of the contracting states shall exchange
such information as is foreseeably relevant to the carrying out of
the provisions this Convention or to the administration or enforce-
ment of the domestic laws concerning taxes of every kind and
description imposed on behalf of the contracting states or their
political subdivisions or local authorities in so far as the taxation
thereunder is not contrary to the Convention. The exchange of
information is not restricted by Articles 1 and 2.
282. The Republic has bilateral tax treaties providing for international
exchange of information (EOI) in force with 41 jurisdictions. Double taxation
conventions (DTCs) have been signed with four further jurisdictions (Egypt,
Kazakhstan and Kuwait) and one TIEA with Argentina but are not yet in
force. The Republics new treaty with Belgium to update the existing DTC,
still has not been ratified.
283. Most of the Republics DTCs provide for the exchange of information
that is necessary for carrying out the provisions of the Convention or of
the domestic tax laws of the Contracting States. The remaining treaties the
DTCs with Belgium, Estonia, Ireland, UK, Moldova, Morocco, Norway and
the TIEA with Argentina use the term foreseeably relevant in place of
necessary. The new DTC with Belgium and the TIEA with Argentina are
currently not yet in force. The Republics authorities indicate they interpret
these terms pursuant to the Commentary to Article 26 of the OECD Model
Tax Convention, where the term as is necessary is recognised to allow
for the same scope of exchange as does the term foreseeably relevant.
20
In
practice, the Republics competent authority applies its treaties in a manner
that is consistent with Article 26 and no requests were determined as not being
foreseeably relevant.
20. The word necessary in paragraph 1 of Article 26 of the 2003 OECD Model Tax
Convention was replaced by the phrase foreseeably relevant in the 2005 ver-
sion. The commentary to Article 26 recognises that the term necessary allows
for the same scope of exchange as does the term foreseeably relevant.
284. The wording of paragraph 1 of Article 26 in the agreement with
China is different to that of Article 26 (Exchange of Information) of the
OECD Model Tax Convention in that there is also specific reference to
exchange of information for the prevention of evasion of taxes. This wording
does not go beyond the international standard.
285. The Republics DTC with Switzerland provides for the exchange
of information that is necessary for carrying out the provisions of the
agreement, but does not provide for the exchange of information in aid of
the administration and enforcement of domestic laws. The agreement with
Switzerland also incorporates additional language, noting that it applies to
such information (being information which is at their disposal under their
respective taxation laws in the normal course of administration) as is neces-
sary . The bracketed text is not in line with the international standards either.
It is recommended that the Former Yugoslav Republic of Macedonia renegoti-
ate this agreement so that it provides for effective exchange of information (see
also para.219). The Republic has not yet made efforts to renegotiate this treaty.
In respect of all persons (ToR C.1.2)
286. For exchange of information to be effective it is necessary that a
jurisdictions obligations to provide information is not restricted by the resi-
dence or nationality of the person to whom the information relates or by the
residence or nationality of the person in possession or control of the infor-
mation requested. For this reason the international standard for exchange of
information envisages that exchange of information mechanisms will provide
for exchange of information in respect of all persons.
287. Most of the Republics treaties contain the sentence indicating that
the exchange of information is not restricted by Article 1 (Persons Covered
article). The DTCs with Bulgaria, Qatar, Poland, Russia, Switzerland, Turkey
and Ukraine do not contain this language. The EOI provision of most of these
treaties nonetheless applies to carrying out the provisions of the agreement
or of the domestic laws of the contracting States concerning taxes covered
by the agreement insofar as the taxation thereunder is not contrary to or
in accordance with the agreement. In principle, these treaties would not
be limited to residents because all taxpayers, resident or not, are liable to the
domestic taxes listed in Article 2 (e.g. domestic laws also apply taxes to the
source of income of non-residents).
288. The treaty with Switzerland restricts exchange of information to
carrying out the provisions of the agreement. In this case, exchange of infor-
mation is limited to residents because Article 1 of the treaty indicates that it
applies to persons who are residents of one or both of the Contracting States.
Exchange information held by f inancial institutions, nominees,
agents and ownership and identity information (ToR C.1.3)
289. Jurisdictions cannot engage in effective exchange of information if
they cannot exchange information held by financial institutions, nominees or
persons acting in an agency or a fiduciary capacity. Both the OECD Model
Tax Convention and the OECD Model TIEA, which are primary authoritative
sources of the standards, stipulate that bank secrecy cannot form the basis for
declining a request to provide information and that a request for information
cannot be declined solely because the information is held by nominees or
persons acting in an agency or fiduciary capacity or because the information
relates to an ownership interest.
290. The agreements with Ireland, Kazakhstan, Kosovo, Luxembourg,
The United Kingdom, Moldova, Morocco and Norway include the provision
contained in Article 26(5) of the OECD Model Tax Convention, which states
that a contracting State may not decline to supply information solely because
the information is held by a bank, other financial institution, nominee or
person acting in an agency or a fiduciary capacity or because it relates to
ownership interests in a person. The same provision is also included in the
new DTC with Belgium which is not yet in force. The TIEA with Argentina
also includes the provision contained in Article 5(4) of the OECD Model
TIEA, which states that each Contracting Party shall ensure that its com-
petent authorities for the purposes specified in Article 1 of the Agreement,
have the authority to obtain and provide upon request: a) information held
by banks, other financial institutions, and any person acting in an agency
or fiduciary capacity including nominees and trustees. This TIEA is not yet
in force. The Republics other bilateral agreements do not contain such a
provision.
291. The absence of wording akin to paragraph 5 of Article 26 of the
OECD Model Tax Convention does not automatically create restrictions on
exchange of bank information. The Commentary on Article 26(5) indicates
that whilst paragraph 5 (added to the Model Tax Convention in 2005) rep-
resents a change in the structure of the Article, it should not be interpreted
as suggesting that the previous version of the Article did not authorise the
exchange of such information. The Republics authorities confirmed that the
absence in the EOI provisions of their agreements of paragraphs containing
similar language as those in Article 26(4) and 26(5) of the OECD Model Tax
Convention would not prevent them exchanging bank and other protected
information.
292. However, for some of the Republics partners which have domes-
tic restrictions on access to information, the absence of a provision akin
to Article 26(4) and 26(5) of the OECD Model Tax Convention means
these agreements do not establish an obligation to exchange all types of
information. This is particularly the case for the agreements with Austria and
Switzerland, which, as a consequence, cannot be considered in line with the
standard. It is recommended that the Republic renegotiate these agreements
so that they provide for effective exchange of information (see also para.212).
As discussed earlier during the review period a doubt arose as to whether
the exchange of banking information was consistent with the Republics data
protection law. However the issue was clarified by the Republic and the bank-
ing information was obtained and provided to the EOI partner (see discussion
in section B.1).
Absence of domestic tax interest (ToR C.1.4)
293. The concept of domestic tax interest describes a situation where a
contracting party can only provide information to another contracting party
if it has an interest in the requested information for its own tax purposes. A
refusal to provide information based on a domestic tax interest requirement
is not consistent with the international standard. EOI partners must be able
to use their information gathering measures even though invoked solely to
obtain and provide information to the requesting jurisdiction.
294. The agreements with Estonia, Ireland, Kazakhstan, Kosovo,
Luxembourg, The United Kingdom, Moldova and Morocco contain
Article 26(4) of the OECD Model Tax Convention, obliging the contracting
parties to use information-gathering measures to exchange requested infor-
mation without regard to a domestic tax interest. The remaining DTCs do
not contain such a provision. The Commentary to Article 26(4) indicates that
paragraph 4 was introduced in the 2005 Model Tax Convention to express an
implicit obligation contained in this Article to exchange information in situa-
tions where the requested information is not needed by the requested State for
domestic tax purposes. The TIEA with Argentina also contains Article 5(2)
of the OECD Model TIEA, which also expresses an obligation to exchange
information in situations where the requested information is not needed for
tax purposes of the requested State.
295. In addition, a domestic tax interest requirement may exist in some
of the Republics partner countries. In such cases, the absence of a specific
provision requiring exchange of information regardless of any domestic tax
interest will serve as a limitation on the exchange of information which can
occur under the relevant agreement. In practice, the PRO has been able to
obtain information even where there was no interest in the information for
domestic purposes. However, as noted above in section B.1.3, the operation of
the access powers do not seem perfectly adapted for EOI purposes, and some
questions arise as to the application of both art. 60 and the audit procedure in
these cases.
Absence of dual criminality principles (ToR C.1.5)
296. The principle of dual criminality provides that assistance can only
be given if the conduct being investigated (and giving rise to the information
request) would constitute a crime under the laws of the requested country if
it had occurred in the requested country. In order to be effective, exchange of
information should not be constrained by the application of the dual criminal-
ity principle.
297. None of the EOI agreements concluded by the Republic apply the
dual criminality principle to restrict the exchange of information. The
Republics authorities have indicated that they have received EOI requests
related to both civil and criminal tax matters. No dual criminality conditions
were applied.
Exchange of information in both civil and criminal tax matters
(ToR C.1.6)
298. All of the EOI agreements concluded by the Republic provide for the
exchange of information in both civil and criminal tax matters. The Republic
has confirmed that they have received EOI requests related to both civil and
criminal tax matters. Further where a request received relates to a criminal
tax matter the PRO has to invoke a different process than when the request
relates to a civil tax matter. The Republic has stated that the PRO does not
have the authority to conduct investigations. All matters concerning finan-
cial investigations falls under the authority of the Financial Police and the
Financial Office can co-operate with the PRO in certain financial investiga-
tions regarding tax matters. Therefore, where investigations are required for
criminal tax matters the PRO requests the assistance and co-operation of the
Financial Police.
299. The first paragraph of the exchange of information article in the DTC
with China mentions that the information exchange will occur in particular
for the prevention of fiscal evasion. The use of the term in particular does not
prevent EOI taking place also in the cases where no tax evasion is involved,
i.e. in civil tax matters. The Republic has not received any EOI requests from
China and therefore this has not been tested in practice.
Provide information in specif ic form requested (ToR C.1.7)
300. There are no restrictions in the exchange of information provisions
in the Republics exchange of information agreements that would prevent the
Republic from providing information in a specific form, as long as this is
consistent with its own administrative practices.
In force (ToR C.1.8)
301. For effective exchange of information a jurisdiction must have exchange
of information arrangements in force. Where exchange of information agree-
ments have been signed the international standard requires that jurisdictions
must take all steps necessary to bring them into force expeditiously.
302. Of the 46 bilateral tax treaties which the Republic has concluded,
only five are not in force (see Annex 2 for signing and entry into force dates).
Of these five agreements, one has been signed within the past twelve months
(the new TIEA with Argentina was signed 26 April 2013). The DTC with
Egypt, signed on 22 November 1999 is still awaiting ratification by the treaty
partners and was ratified by the Republics Assembly in 2002. In addition,
the Former Yugoslav Republic of Macedonia has concluded a new DTC with
Belgium, signed on 6 July 2010, which is awaiting ratification by Belgium.
Once ratified, this agreement will replace the existing DTC with Belgium,
in force since 1983. The two remaining DTCs (Kazakhstan, signed on
4 December 2012 and Kuwait, signed on 10 September 2012) are still await-
ing ratification by the Republics treaty partners.
303. Pursuant to the Constitution, international agreements are concluded
by the President of the Republic or by the Government, when it is so deter-
mined by law (Art. 119). They are then ratified by the Assembly (Art. 68).
The Republic is generally able to bring a signed agreement into force within
twelve months. The Republic has confirmed that the same ratification process
applies to all types of international agreements including TIEAs and DTCs.
304. Negotiations are conducted by the Ministry of Finance. Once the
texts of the agreements have been agreed, the text along with a report is
submitted to the Government of the Republic, so that they may review and
endorse the text of the agreement. Once this is done the Republic is then
ready to sign the agreement. The other country is informed of this through
the Ministry of Foreign Affairs who is responsible of organising the signing.
After signing the Ministry of Finance submits to the Ministry of Foreign
Affairs a proposal that will be submitted to the Government of the Republic.
The Government in turns submits this proposal to the Parliament. This pro-
cess starts no later than 30 days from the date of signing as prescribed by law.
Once the agreement is ratified by Parliament the other country is notified by
the Ministry of Foreign Affairs.
Be given effect through domestic law (ToR C.1.9)
305. For information exchange to be effective the parties to an exchange
of information arrangement need to enact any legislation necessary to comply
with the terms of the arrangement.
306. As detailed in section B.1 of this report, pursuant to the Law on Tax
Procedure ratified international tax agreements prevail over domestic tax
laws. In addition, the PRO is under an obligation to co-operate with foreign
tax authorities from partner jurisdictions and can use its information gather-
ing powers for the purposes of responding to an EOI request made under a
ratified international tax agreement.
Phase 2 rating
Compli ant
C.2. Exchange-of-infor mation mechanisms with all r elevant par tner s
The jurisdictions network of information exchange mechanisms should cover
all relevant partners.
307. Ultimately, the international standard requires that jurisdictions
exchange information with all relevant partners, meaning those partners
who are interested in entering into an information exchange arrangement.
Agreements cannot be concluded only with counterparties without economic
significance. If it appears that a jurisdiction is refusing to enter into agreements
or negotiations, in particular with those jurisdictions that have a reason-
able expectation of requiring information in order to properly administer and
enforce its tax laws, it may indicate a lack of commitment to implement the
standards.
308. The Republics EOI network covers a variety of jurisdictions,
including:
24 of 28 EU member countries;
8 of the G20 economies and 21 of the 33 OECD members; and
34 of 122 Global Forum members.
21
21. Albania, Austria, Argentina, Azerbaijan, Belgium, China, Czech Republic,
Denmark, Estonia, Finland, France, Germany, Hungary, Ireland, Italy,
Kazakhstan, Latvia, Lithuania, Luxembourg, Morocco, The Netherlands,
Norway, Poland, Qatar, Romania, Russia, Slovak Republic, Slovenia, Spain,
Sweden, Switzerland, The United Kingdom and Turkey.
309. The Republics treaty network mainly covers jurisdictions situated in
Europe and Asia, which are, in respect of the Republics economic relation-
ships, clearly relevant. The Republic notably shares agreements with most of
its main trading partners and neighbouring countries, namely with Bulgaria,
Croatia, Germany, Italy, Montenegro, Russia, Serbia and Slovenia.
310. In addition, the Republics tax administration co-operates and
exchanges information with the tax administrations of Bosnia and
Herzegovina, Bulgaria, Montenegro and Serbia under a multilateral adminis-
trative agreement concluded in 2006. The 2006 Agreement has a wide scope,
containing detailed provisions on the exchange of information for tax pur-
poses. It allows the parties to provide assistance to each other in the cause of
preventing and investigating violations of tax regulations as well as to secure,
upon request, mutual assistance in providing information used for compliance
purposes. Mutual assistance can be provided in all tax administrative, tax vio-
lation and tax criminal investigative matters (Art. 2(2) of the Agreement) and
it does not appear to be limited to a particular kind of tax. Beyond providing
for assistance in response to specific requests, the Agreement contains general
provisions concerning spontaneous exchanges; service of documents; and
presence and participation of representatives from requesting jurisdictions at
examinations. The Agreement, however, is an administrative agreement and
does not possess the force of law.
311. Comments were sought from the jurisdictions participating in the
Global Forum in the course of the preparation of this report, and no jurisdic-
tion advised the assessment team that the Republic had refused to negotiate
or conclude an EOI agreement with it. The Republic has recently concluded
its first tax information exchange agreement (TIEA) with Argentina but that
agreement is not yet in force. The Republics Ministry of Finance reported
that so far it has not received a request for starting negotiations for the conclu-
sion of TIEAs with other jurisdictions.
312. The Republics most recent agreement is the TIEA with Argentina,
signed on 26 April 2013. Since the Phase 1 review of the Republic they
have concluded agreements with Kazakhstan, Azerbaijan and Israel, which
were included on the lists of commenced negotiations at that time. In addi-
tion, the Republics authorities reported that they have made a proposal for
negotiations with 50 priority states. The Republics ongoing programme
of negotiations is based on the guidelines set by Governments Decisions.
The Republics authorities have indicated that these Decisions give priority
to negotiations with EU members, OECD and G-20 member jurisdictions
and jurisdictions with which the Republic has high mutual trade exchanges,
such as the US, Greece, Kosovo, Canada, Portugal, Cyprus
22, 23
and Malta.
However, such guidelines do not limit the Republics ability to negotiate an
EOI agreement when so requested by another jurisdiction.
Factors underl ying
The Republic should continue to
develop its EOI network and conclude
agreements to the standard with all
relevant partners.
Phase 2 rating
Compli ant
22. Footnote by Turkey: The information in this document with reference
to Cyprus relates to the southern part of the Island. There is no single author-
ity representing both Turkish and Greek Cypriot people on the Island. Turkey
recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and
equitable solution is found within the context of the United Nations, Turkey shall
preserve its position concerning the Cyprus issue.
23. Footnote by all the European Union Member States of the OECD and the
European Union: The Republic of Cyprus is recognised by all members of the
United Nations with the exception of Turkey. The information in this document
relates to the area under the effective control of the Government of the Republic
of Cyprus.
C.3. Confidentialit y
The jurisdictions mechanisms for exchange of information should have adequate
provisions to ensure the confidentiality of information received.
Information received: disclosure, use and safeguards (ToR C.3.1)
313. Governments would not engage in information exchange without the
assurance that the information provided would only be used for the purposes
permitted under the exchange mechanism and that its confidentiality would
be preserved. Information exchange instruments must therefore contain
confidentiality provisions that spell out specifically to whom the information
can be disclosed and the purposes for which the information can be used. In
addition to the protections afforded by the confidentiality provisions of infor-
mation exchange instruments, countries with tax systems generally impose
strict confidentiality requirements on information collected for tax purposes.
Confidentiality rules should apply to all types of information exchanged,
including information provided in a request, information transmitted in
response to a request and any background documents to such requests.
314. All of the exchange of information articles in the Republics double
tax agreements have confidentiality provisions modeled on Article 26(2) of
the OECD Model Tax Convention and the TIEA with Argentina contains a
confidentiality provision modeled on Article 8 of the OECD Model TIEA.
Pursuant to these provisions, information provided by foreign tax authori-
ties can only be used for the purpose for which they are required and can be
detected only in judicial proceedings.
315. In addition, tax officials are under a general obligation to keep infor-
mation obtained in the course of a tax procedure confidential. Pursuant to the
Law on Tax Procedure, officials are obliged to keep as tax secret all docu-
ments, information, data or other facts about the taxpayer obtained in tax
or criminal proceedings as well as trade secrets and data on inventions and
patents (Art. 9). The obligation to keep tax data confidential continues after
the official leaves the tax administration. Officials breaching the duty to keep
tax information confidential are subject to disciplinary measures, as well as
to criminal charges and misdemeanour procedure (Art. 35 Law on PRO).
316. The obligation to keep tax information confidential is not infringed if
documents, facts or data are disclosed during tax or criminal proceedings or
with the written consent of the taxpayer, or if the breach of the duty of confi-
dentiality is expressly excluded by the law (Art. 9(3) Law on Tax Procedure).
All other information exchanged (ToR C.3.2)
317. The confidentiality provisions in the agreements and in the
Republics domestic law do not draw a distinction between information
received in response to requests and information forming part of the requests
themselves. As such, these provisions apply equally to all requests for such
information, background documents to such requests, and any other docu-
ment reflecting such information, including communications between the
requesting and requested jurisdictions and communications within the tax
authorities of either jurisdiction.
Confidentiality in practice
318. The Competent authority does not have an electronic archiving
system; therefore all original requests are kept in paper form. Requests
are handled by the Department for Cooperation with Other Bodies and
International Exchange of Information of the PRO. The Department keeps
special records of all received requests for information submitted by for-
eign tax authorities. Requests are received by the authorised person for
exchange of information under DTCs who is responsible for reviewing the
request. After the request is reviewed by the authorised person for exchange
of information under DTCs it is taken to the archive department where it is
given a unique number. The request then is processed to the Department,
reviewed by the head of the department and then assigned to a tax officer
in the Department who checks whether it is valid and complete. These cases
are kept in locked cabinets that are only accessible by the personnel of the
competent authority, which is located in the office of the head of the depart-
ment. After three years the records are then archived. Once archived they
are assigned an archive sign and time period for storing, for these cases the
period is 5 years. Once archived they are also kept in locked premises which
are only accessible by the members of the competent authority.
319. The department sometimes relies on different organisational units of
the PRO to gather information to answer an EOI request. Once the request
is valid the source from which the requested information can be obtained is
determined i.e. the department submits a request to the other organisational
units of the PRO in charge of providing the information requested. The
department has electronic access to the databases of some units, however,
where there is no electronic access the Republic must send a written request
to gather the necessary information. The Republics authorities have con-
firmed that this request only contains the material that is necessary to receive
an answer, it must include the following:
(a) The identity of the persons/individuals for which the information
is requested: name and tax identification number (TIN) for legal
entities; name, surname and personal identification number (EMBG)
for individuals;
(b) The identity of the foreign individual/legal entity in relation to which
the information is requested;
(c) Description of the situation elaborated in the request submitted by
the foreign tax authority;
(d) The actual information requested, why is the information needed
and the information necessary to be provided (invoices, contracts,
forms, etc.);
(e) The time period for the requested information;
(f) The documentation received from the foreign tax authority which
is important in the procedure for obtaining information from the
relevant organisational unit; and
(g) The deadline by which the information should be obtained.
320. Article 9 of the law on PRO states that all officials have an obliga-
tion to keep information secret that they come across in the process of their
work, and they are bound by these obligations until they retire or change their
job position, however this duty does not cover the restrictions on the use of
material.
321. There is no special label when communicating within the PRO
structure. However, all correspondence concerning EOI matters between the
headquarters, PRO regional and other units are sent through special delivery
which is the physical delivery of the documents (for regional and other units
in Skopje) and by post (for regional and other units located in the other cities),
but to the specified persons. When communicating within the PRO it is only
done by paper, there is no email or other communication. When requesting
information outside of the PRO the recipient is only provided with a sufficient
level of detail to allow them to deliver the information that is requested of
them.
322. Where the documents are received in a foreign language which is
important for the organisational unit of the PRO in charge of obtaining the
information request, the Department will translate the relevant sections
of those documents. The vast majority of requests are received in English.
Translation from English is done within the Department, however where
another language is needed then the Law on Tax Procedure (Art. 40) requires
that the translation be made by a certified translator. In which case, the trans-
lators are certified court translators that hold a licence issued by the Ministry
of Justice and they are hound by a duty of confidentiality.
323. When gathering information from a third person the person is always
the subject of an audit. The person being controlled or audited does not know
why the information is being requests through this audit. They are not noti-
fied that the audit is as a result of an EOI request and as such are not privy to
any information concerning that request.
Phase 2 rating
Compli ant
C.4. Rights and safeguar ds of taxpayer s and thir d par ties
The exchange of information mechanisms should respect the rights and
safeguards of taxpayers and third parties.
324. The international standard allows requested parties not to supply
information in response to a request in certain identified situations. Among
other reasons, an information request can be declined where the requested
information would disclose confidential communications protected by the
attorney-client privilege. Attorney-client privilege is a feature of the legal
systems of many countries.
325. However, communications between a client and an attorney or other
admitted legal representative are, generally, only privileged to the extent
that the attorney or other legal representative acts in his or her capacity as
an attorney or other legal representative. Where attorney-client privilege is
more broadly defined it does not provide valid grounds on which to decline
a request for exchange of information. To the extent, therefore, that an attor-
ney acts as a nominee shareholder, a trustee, a settlor, a company director
or under a power of attorney to represent a company in its business affairs,
exchange of information resulting from and relating to any such activity
cannot be declined because of the attorney-client privilege rule.
326. The limits on information which must be exchanged under the
Republics arrangements mirror those provided for in the international stand-
ard. That is, information which is subject to legal privilege; would disclose
any trade, business, industrial, commercial or professional secret or trade pro-
cess; or would be contrary to public policy, is not required to be exchanged.
327. However, the right of some professionals including notaries public,
attorneys, tax advisers and auditors to refuse to disclose information to the
PRO, coupled with the lack of clarity as to whether such professionals always
need to be notified in advance of an on-site inspection at their premises,
might limit the Republics ability to exchange information to the standards.
328. The PRO has advised that under Article 69 of the Law on PRO there
is a list of relevant persons that are obliged to give information to the PRO.
All professionals are required to provide information and it is only with
regard to family members where a criminal act is found that they are not
obligated to disclose the information immediately to the PRO. Additionally,
with respect of family members, this protection would only apply where the
family member has no business relation with the taxpayer. To the extent that
the family member serves in a professional capacity, such as serving as the
accountant for a spouses company, the protection from disclosure would not
apply. However, if the family member refuses to provide the information then
the information can be gathered through exchange of information with other
institutions which the competent authority calls third party information. In
practice, the PRO has used their access powers domestically to obtain infor-
mation from auditors, and in particular the PRO has been able to obtain items
such as working papers.
Phase 2 rating
Compli ant
C.5. Timeliness of r esponses to r equests for infor mation
The jurisdiction should provide information under its network of agreements
in a timely manner.
Responses within 90 days (ToR C.5.1)
329. In order for exchange of information to be effective, the information
needs to be provided in a timeframe which allows tax authorities to apply it to
the relevant cases. If a response is provided but only after a significant lapse
of time the information may no longer be of use to the requesting authorities.
This is particularly important in the context of international co-operation
as cases in this area must be of sufficient importance to warrant making a
request.
330. There are no specific legal or regulatory requirements in place which
would prevent the Republic responding to a request for information by pro-
viding the information requested or providing a status update within 90 days
of receipt of the request.
331. The Republics authorities have developed operational guidelines
outlining the procedures to be followed when it comes to exchange of infor-
mation with other tax administrations. The guidelines are based on the law
on PRO, the law on Tax Procedure, the law on general administrative pro-
cedures, international agreements and the OECD manual. Before 2012 there
were other guidelines in place but these only focused on the implementation
of double tax agreements. Before 2012, the Republic followed the OECD
practices regarding EOI and later developed guidelines in an effort to put
these practices in paper form. The unit has had the same procedures, struc-
ture and practices before and after the development of these guidelines. The
guidelines are submitted to the General Director of the PRO for his signature
and approval and in accordance with Article 11 of the law on PRO it enters
into force on the same day as it is signed by the General Director.
332. The guidelines establish deadlines for exchange of information and
outlines that the PRO is required to respond to an EOI request within 90 days
of reception and if they are unable to respond within this time frame they are
required to inform the foreign tax authority about this and explain why the
information cannot be obtained within 90 days.
333. The Republic has confirmed that where requested information is in
the possession or control of a taxpayer in the Republic, the Department rou-
tinely initiates a tax audit in accordance with Article 87 of the Law on Tax
Procedure (see further discussion in section B.1 above). The Republic has
indicated that tax audits are deployed in order to ensure the accuracy of the
information sent to its treaty partners. It is noted that most of the responses
that have been responded to outside of the 90 day time period was due to the
deployment of audits. However, since the establishment of the new guidelines
the PRO is in constant contact with the tax auditors responsible for these
audits to ensure that priority is given to these cases. Additionally, where
information is held by the Ministry of Interior, for example information
pertaining to the entry or exit of persons to the Republic, it must be col-
lected from local offices. In cases where this information was collected, the
response time was in most cases within a year. Although these processes have
caused delays during the period under review the peers have indicated that
they are happy with the quality and timeliness of the information provided to
them by the Republic.
334. The Republic received 30 requests from thirteen treaty partners over
the three years under review (January 2010-December 2012), all based on
DTCs. The number of requests received is stable over the years: 13 requests
received in the 2010, 11 in 2011 and 6 in 2012. In practice, the Republics
response time is good and has been consistent during the three years under
review.
Number of r equests r eceived by the Republic dur ing the r eview per iod
2010 2011 2012 Total Average
Num. % Num. % Num. % Num. %
Total number of requests received* (a+b+c+d+e)
13 100% 11 100% 6 100% 30 100%
Full response**: 90 days 4 30.77% 4 36.36% 1 16.67% 9 30%
180 days (cumulative) 8 61.54% 8 72.73% 5 83.33% 21 70%
1 year (cumulative) (a)
11 84.62% 9 81.82% 6 100% 26 86.67%
1 year+ (b)
1 7.69% 1 9.09% 0 0% 2 6.66%
Declined for valid reasons (c)
0 0% 0 0% 0 0% 0 0%
Failure to obtain and provide information requested (d)
1 7.69% 1 9.09% 0 0% 2 6.66%
Requests still pending at date of review (e)
0 0% 0 0% 0 0% 0 0%
* The Republic counts each written request from an EOI partner as one EOI request even where more
than one person is the subject of an inquiry and/or more than one piece of information is requested.
** The time periods in this table are counted from the date of receipt of the request to the date on which
the final and complete response was issued.
335. In summary, the Republic was in a position to provide final responses
within 90 days in 30% of the cases with another 70% having been processed
within 180 days. The remaining requests were responded to within 1 year,
except for four requests. The Republic has confirmed that in cases where
the final response was provided within 90 days this was because the infor-
mation was already held within the PRO. For the other cases, except for the
four requests which were responded to for more than a year, the Republic has
confirmed that these cases required audits to be launched which require more
time to gather the information or the information was held by other agencies
and institutions which also require more time to gather.
336. The requests where it took the Republic more than 1 year to provide
a full response required the involvement of the Financial Police. These cases
involved the interview of physical persons that must be conducted by the
Financial Police. As such, this co-ordination required more time in order to
provide the information to treaty partner. For the two requests where there
was a failure to obtain and provide information, the requested information
had to be obtained by conducting a tax audit on the taxpayer. However,
some of the information requested related to periods more than 5 years in
the past. As discussed in section B.1.1, these periods are statute barred from
reassessment under the Republics tax laws. These requests also required
the Competent Authority to request additional information from other insti-
tutions. In these cases partial information was provided to the requesting
competent authority.
Acknowledgment of requests and status updates
337. In practice, the tax officer in receipt of an EOI request must deter-
mine whether the request is valid. If the request is complete and valid the
guidelines require the foreign competent authority to be notified as soon
as possible that the request has been received and they are provided with
approximate timeframes for submission of the requested information. If the
request is invalid, incomplete or there are no legal grounds for obtaining the
information requested, then the foreign competent authority is notified about
the problems relating to the request.
338. It is the practice of the competent authority not to request information
directly from the taxpayer, but rather to deploy a partial external audit. The
Republics authorities have stated that this is because they want to ensure the
accuracy of the information exchanged. After the audit has been deployed the
competent authority does not receive any information from the auditor until
the audit is fully completed. This means that the competent authority cannot
provide partial responses to the foreign competent authority until the audit is
complete. Before 2012 there was a 180 day deadline established in practice to
send replies to a request received from a foreign tax administration, however
after the introduction of the guidelines the new deadline to send a reply to a
request received from a foreign tax administration is now 90 days. This dead-
line is regulated in the new Operative guidelines which were introduced in
the Republic in April 2012. There is still no provision for interim information
to be sent to the PRO by the auditor, however the guidelines now prescribe
that where information could not be sent to the foreign competent authority
within 90 days, the Department should inform the foreign tax authority about
that as well as explain why the information cannot be obtained in the foreseen
timeframe. Some peers have noted status updates were not always received
from the competent authority during the period under review. The Republic
is therefore encouraged to communicate with their EOI partners concerning
the status of outstanding matters.
339. All foreign tax administrations with whom the Republic has a rela-
tionship has been advised of the authorised persons and their contact details
within the unit responsible for receiving and signing all correspondences.
Organisational process and resources (ToR C.5.2)
340. The Republics legal and regulatory framework relevant to exchange
of information for tax purposes is presided over by the Republics Minister of
Finance and effectively managed by the PRO General Directorate (Arts.4(1)
and 6(1) Law on PRO). The Minister of Finance, or his authorised representa-
tive, acts as competent authority under the Republics EOI agreements.
341. The processes of the PRO before 2012 were the same as they were
after 2012, however in order to streamline the processes of the PRO for
exchange of information guidelines were drafted and introduced. The PRO
has confirmed that the guidelines are a reproduction of the processes that
were always followed in the Republic in reference to EOI. The PRO is a state
body under the umbrella of the Ministry of Finance and has the capacity of a
legal entity. The parts of the PRO are the headquarters (HQ), the Large Tax
Payers Office (LPO), five regional offices, 8 local offices and 72 tax coun-
ters. The General Tax Inspectorate is one of the eleven departments in the
HQ and has specific sub units including the unit for co-operation with other
institutions and international exchange of information which is responsible
for EOI. This General Tax Inspectorate has four persons involved in the
exchange of information with other tax administration. These are the General
Tax Inspector who holds a Bachelors degree of Economics and 25 years of
experience in the fields of accounting and tax auditing, the Deputy General
Tax Inspector who holds a Bachelors of Economics with more than 30 years
of experience in the fields of accounting and tax auditing, the Head of the
Department for sharing of information and for Exchange of information
with other bodies who also holds a Bachelors of Economics with 25 years
of experience in the fields accounting and tax auditing and the Tax Advisor
who holds a Bachelors of Economics with 7 years of experience in the field
of co-operation and exchange of information with other tax administrations.
342. The Guidelines outline the procedures to be followed for EOI and
also outline the responsibilities of the employees in specific circumstances.
The following procedures have been regulated through the guidelines:
Processing of requests received from foreign tax administrations;
Sending requests raised by the PRO or other tax administrations; and
Spontaneous exchange of information.
343. All requests received are forwarded to the relevant person in charge.
When a request is received it is registered in the official registry with in the
PRO. To register the request an International exchange received request
form is used, which is populated by the tax advisor as soon as the request
is received. This form includes the reference number and the date of the
request, the reference number is the number usually assigned to any incoming
correspondence in the PRO, this is always quoted in any correspondence
pertaining to that request; the name of the country sending the request;
the name of the foreign legal entity which is concerned with the request
for information; name of the local legal entity concerned by that request or
that is somehow related to the foreign legal entity; the type of information
requested. The same form is also used when responding to a request to record
the following information, date the information was sent other external
organisations of the PRO or internationally; date the information was sent
to the foreign tax authority; and a section for additional notes or comments.
344. The validity of the request is then analysed for completeness. The
authority determines whether a request is complete by asking the following
questions: was the request signed by the person authorised to sign the request;
does the request include all necessary information; does the request comply
with the provisions of the relevant agreement; can the information requested
be obtained on the basis of the domestic laws of the Republic; and does the
request include sufficient information to identify the tax payer. Once the
request is analysed the PRO determines whether they must go back to the
foreign competent authority or whether they must approach other units within
the PRO or other third parties to gather the information.
345. The guidelines specify how the PRO must request information from
other organisational units. Once the next action is identified the request (not
the entire request) is forwarded to the other units of the PRO or other third
parties. In cases when the PRO already has information within its own data-
base or the sectors of the PRO can provide that information, the unit will then
pull that information from the PROs database. If the information is secured
through co-operation with the regional offices or other organisational units
of the PRO, the information is secured quickly. The guidelines do not specify
timelines to gather this type of information; however the Republics authori-
ties have confirmed that in reality this is being done almost immediately, it
usually takes 2 or 3 business days. When the information requested is in the
hand of a taxpayer who is the subject of the request, the unit deploys a par-
tial external audit in order to secure the information requested. This audit is
deployed by the relevant regional office in the territory of which the taxpayer
is located. The respective regional office is expected to send feedback to the
unit in the HQ concerning the outcome of the audit. On the basis of that feed-
back the unit drafts the response and sends the information to the requesting
tax authority, the deadline to completely respond to request received is
90 days. This process is reflected in the guidelines developed in 2012.
346. The Republic has explained (see discussion in section B) that they
prefer to conduct audits to ensure the accuracy of the information needed
to satisfy request for information received. The PRO now prioritises the tax
audits that relate to an EOI request, and so this has reduced the delays in
these cases. In addition, there is no longer a need to provide advance notice
of the audit, which has also improved timeliness. However, the PRO has only
received 30 requests to date and with the increase of their treaty network it
is expected that the number of requests received will increase in the future.
Therefore, the Republic is encouraged to monitor their processes for gath-
ering information as the number of EOI cases increase to ensure that EOI
requests are responded to in a timely manner.
Absence of unreasonable, disproportionate or unduly restrictive
conditions on exchange of information (ToR C.5.3)
347. Exchange of information assistance should not be subject to unrea-
sonable, disproportionate, or unduly restrictive conditions. There are no other
unreasonable, disproportionate or unduly restrictive conditions on exchange
of information existing in practice.
Thi s el ement invol ves i ssues of practi ce that are assessed in the Phase 2
revi ew. Accordingl y, no Phase 1 determinati on has been made.
Phase 2 rating
Compli ant
Factors underl ying
The Republic did not provide status
updates where a request could not
be answered within 90 days on a
systematic basis. The procedures
outlined in the new guidelines are
new and the Republic is required
to monitor that status updates are
provided to its treaty partners where
relevant.
The Republic should monitor that
status updates are provided to
the requesting jurisdictions where
relevant.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 105
Summar y of Deter minations and Factor s
Under lying Recommendations
Overall Rating
LARGELY COMPLIANT
Determinati on
Factors underl ying
J urisdictions should ensure that ownership and identity information for all relevant entities
and arrangements is available to their competent authorities. (ToR A.1)
Phase 1 determination:
The element is in place.
Phase 2 ratings:
Largel y Compli ant
The Republic did not have
a regular oversight program
in place to monitor the
compliance of the obligations
to maintain accurate and
updated ownership and
identity information for limited
liability companies, foreign
companies and partnerships
during the review period.
The Republic should monitor
the compliance of the legal
obligations to maintain
accurate and updated
ownership and identity
information for limited liability
companies, foreign companies
and partnerships and exercise
its enforcement powers as
appropriate to ensure that
such information is available in
practice.
106 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS
Determinati on
Factors underl ying
J urisdictions should ensure that reliable accounting records are kept for all relevant entities
and arrangements. (ToR A.2)
The scope of the accounting
obligations under the Law
on Tax Procedure is unclear
and does not expressly
cover professionals acting
as trustees of foreign trusts.
There are no other obligations
in the Republics laws which
require maintenance of
accounting information related
to foreign trusts administered
in the Republic or in respect of
which a trustee is resident in
the Republic.
The Republic should clarify
the scope of the accounting
keeping requirements under
the tax law and ensure that
accounting information is kept
for foreign trusts administered
in the Republic or in respect of
which a trustee is resident in
the Republic.
Phase 2 ratings:
Compli ant
Banking information should be available for all account-holders. (ToR A.3)
Phase 2 ratings:
Compli ant
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Phase 2 ratings:
Largel y Compli ant
Article 60 of the Tax
Procedure Law has not been
used in practice for EOI
purposes. The audit procedure
has generally worked in
practice, but is not perfectly
adapted for EOI purposes and
there have been instances
where these limitations have
prevented effective exchange
of information.
The Republic should ensure
that the access powers
available to its competent
authority are used effectively
to obtain information
in all cases and where
necessary clarify its laws
and procedures to ensure
that its access powers can
be fully implemented for EOI
purposes.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 107
Determinati on
Factors underl ying
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Phase 2 ratings:
Compli ant
Exchange of information mechanisms should allow for effective exchange of information.
(ToR C.1)
Phase 2 ratings:
Compli ant
The jurisdictions network of information exchange mechanisms should cover all relevant
partners. (ToR C.2)
The Republic should continue
to develop its EOI network
and conclude agreements to
the standard with all relevant
partners.
Phase 2 ratings:
Compli ant
The jurisdictions mechanisms for exchange of information should have adequate provisions
to ensure the confidentiality of information received. (ToR C.3)
Phase 2 ratings:
Compli ant
The exchange of information mechanisms should respect the rights and safeguards of
taxpayers and third parties. (ToR C.4)
Phase 2 ratings:
Compli ant
108 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS
Determinati on
Factors underl ying
The jurisdiction should provide information under its network of agreements in a timely
manner. (ToR C.5)
Thi s el ement invol ves
i ssues of practi ce
that are assessed in
the Phase 2 revi ew.
Accordingl y, no
has been made.
Phase 2 ratings:
Compli ant
The Republic did not provide
status updates where a
request could not be answered
within 90 days on a systematic
basis. The procedures outlined
in the new guidelines are new
and the Republic is required to
monitor that status updates are
provided to its treaty partners
where relevant.
The Republic should monitor
that status updates are
provided to the requesting
jurisdictions where relevant.
ANNEXES 109
Annex 1: Jur isdictions r esponse to the r eview r epor t
24
The Republic of Macedonia
25
would like to express immense gratitude to
the PRG assessment team, which with our team worked hard to prepare the
Phase 2 report.
Fulfillment of the international standards for transparency and exchange
of information is one of the main goals of the Republic of Macedonia, and
in this line in the future will continue to enlarge the tax treaty network with
other jurisdictions.
There have been some developments in EOI network since the report
was finalized. Harmonization of the treaty with Turkmenistan, the DTC
with India was signed, the DTC with Bosnia and Herzegovina was ratified,
DTC with Iran entered in force and DTCs with Azerbaijan and Luxemburg
become effective.
24. This Annex presents the jurisdictions response to the review report and shall not
be deemed to represent the Global Forums views.
25. The name used in the Annex is the name that the jurisdiction attributed to itself.
For OECD purposes, the name of the reviewed jurisdiction is the one used in the
main report.
110 ANNEXES
Annex 2: List of all exchange-of-infor mation mechanisms
Treat y par tner Type of EOI arrangement Date si gned Date in force
1 Albania
DTC (Double Tax
Convention)
15 J an 1998 2 Sep 1998
2 Argentina
TIEA (Tax Information
Exchange Agreement)
26 Apr 2013 --
3 Austria DTC 10 Sep 2007 20 J an 2008
4 Azerbaijan DTC 19 Apr 2013 12 Aug 2013
5 Belarus DTC 19 May 2005 26 J an 2006
6 Belgium
DTC* 21 Nov 1980 26 May 1983
DTC 6 J ul 2010 --
7 Bulgaria DTC 22 Feb 1999 24 Sep 1999
8 China DTC 9 J un 1997 29 Nov 2007
9 Croatia DTC 6 J ul 1994 11 J an 1996
10 Czech Republic DTC 21 J un 2001 17 J un 2002
11 Denmark DTC 20 Mar 2000 14 Dec 2000
12 Egypt DTC 22 Nov 1999 --
13 Estonia DTC 20 Nov 2008 21 May 2009
14 Finland DTC 25 J an 2001 22 Mar 2002
15 France DTC 10 Feb 1999 01 May 2004
16 Germany DTC 13 J ul 2006 29 Nov 2010
17 Hungary DTC 13 Apr 2001 14 Mar 2002
18 Iran DTC 12 J ul 2000 17 J anuary 2014
19 Ireland DTC 14 Apr 2008 23 J un 2009
20 Italy DTC 20 Dec 1996 8 J un 2000
21 Kazakhstan DTC 2 J ul 2012 --
22 Kosovo DTC 7 Apr 2011 13 Apr 2012
ANNEXES 111
Treat y par tner Type of EOI arrangement Date si gned Date in force
23 Kuwait DTC 20 Mar 2012 --
24 Latvia DTC 8 Dec 2006 25 Apr 2007
25 Lithuania DTC 29 Aug 2007 27 Aug 2008
26 Luxembourg DTC 15 May 2012 23 Aug 2013
27 Moldova, Republic of DTC 21 Feb 2006 28 Dec 2006
28 Montenegro** DTC 4 Sep 1996 22 J ul 1997
29 Morocco DTC 11 May 2010 14 Sep 2012
30 Netherlands DTC 11 Sep 1998 21 Apr 1999
31 Norway DTC 19 April 2011 1 Nov 2011
32 Poland DTC 28 Nov 1996 17 Dec 1999
33 Qatar DTC 28 J an 2008 26 Sep 2008
34 Romania DTC 12 J un 2000 16 Aug 2002
35 Russian Federation DTC 21 Oct 1997 05 J ul 2000
36 Serbia** DTC 4 Sep 1996 22 J ul 1997
37 Slovak Republic DTC 5 Oct 2009 27 Apr 2010
38 Slovenia DTC 15 May 1998 20 Sep 1999
39 Spain DTC 20 J un 2005 1 Dec 2005
40 Sweden DTC 17 Feb 1998 15 May 1998
41 Switzerland DTC 14 Apr 2000 27 Dec 2000
42 Chinese Taipei DTC 9 J un 1999 9 J un 1999
43 Turkey DTC 16 J un 1995 28 Nov 1996
44 Ukraine DTC 2 Mar 1998 23 Nov 1998
45 United Kingdom DTC 8 Nov 2006 8 Aug 2007
* The agreement, signed by the former Socialist Federal Republic of Yugoslavia (SFRY), continues to
apply to the Republic.
** The Republic signed the DTC with the former Federal Republic of Yugoslavia which continues to
apply to its relations Serbia and Montenegro.
112 ANNEXES
Annex 3: List of laws, r egulations and other r elevant mater ial
Constitution (Official Gazette no. 52/1991, 1/1992, 31/1998, 91/2001,
84/2003, 107/2005 and 3/2009)
Criminal Code (Official Gazette no. 37/1996, 80/1991, 4/2002, 43/2003,
19/2004, 81/2005, 60/2006, 73/2006, 7/2008, 139/2008, 114/2009 and
51/2011)
Law on Criminal Procedure (Official Gazette no. 150/2010)
Law on General Administrative Procedures (Official Gazette no. 38/2005,
110/2008 and 51/2011)
Law on Litigation Procedure (Official Gazette no.79/2005; 110/2008,
83/2009 and 116/2010)
Commer cial laws
Company Law (Official Gazette no. 28/2004, 84/2005, 25/2007, 87/2008,
42/2010, 48/2010 and 24/2011)
Law on Central Register (Official Gazette no. 50/2001; 49/2003; 109/2005
and 88/2008 and 35/2011)
Law on One stop-shop system and keeping a trade register and register
of other legal entities (OSS Law) (Official Gazette no. 84/2005;
13/2007; 150/2007, 140/2008 and 17/2011)
Law on Technological Industrial Development Zones (Official Gazette
No.14/2007, 103/2008, 130/2008 139/2009 and 156/2010)
Law on the Protection of Competition (Official Gazette No. 145/2010)
Law on Associations and Foundations (ACF Law) (Official Gazette
No. 52/2010)
Law on the Accounting Records of the Non-Profit Organizations
(ARNPO Law) (Official Gazette no. 24/2003 and 17/2011)
ANNEXES 113
Tax laws
Profit Tax Law (Official Gazette no. 80/1993, 33/1995, 43/1995, 71/1996,
05/1997, 28/1998, 11/2001, 02/2002, 44/2002, 51/2003, 120/2005,
139/2006, 160/2007 159/2008, 85/2010 and 47/2011)
Personal Income Tax Law (Official Gazette no. 80/1993, 3/1994, 70/1994,
71/1996, 28/1997, 8/2001, 50/2001, 52/2001, 02/2002, 44/2002,
96/2004, 120/2005, 139/2006, 160/2007, 159/2008, 20/2009, 139/2009
and 171/2010)
Law on Value Added Tax (Official Gazette no. 44/1999, 59/1999, 86/1999,
11/2000, 8/2001, 21/2003, 19/2004, 33/2006, 101/2006, 114/2007,
103/2008, 114/2009, 133/2009, 95/2010, 102/2010 and 24/2011)
Law on Public Revenue Office (Law on PRO) (Official Gazette
no. 81/2005, 81/2008, 105/2009, 145/2010)
Law on Tax Procedure (Official Gazette no. 13/2006, 88/2008, 159/2008,
105/2009, 133/2009, 145/2010 and 171/2010 and 53/2011)
Anti-money launder ing laws
Law on money laundering prevention and other criminal proceeds and
financing terrorism (AML/CTF Law) (with amendments as of
January 2008 and April 2010)
Financial laws
Law on Securities (Official Gazette no. 95/2005, 25/2007, 07/2008 and
57/2010)
Law on Investment Funds (Official Gazette no. 12/2009)
Banking Law (Official Gazette no. 67/2007, 90/2009, 67/2010)
Law on National Bank (Official Gazette no. 158/2010)
Law on Banks and Savings Houses Act (excerpts) (Official Gazette
no. 31/1993, 78/1993, 17/1996, 37/1998 and 25/2000)
Other laws
Attorneys Law (Official Gazette no. 59/2002, 60/2006 and 29/2007)
Audit Law (Official Gazette no. 158/2010)
Notary Law (excerpts) (Official Gazette no. 55/2007, 86/2008 and 139/2009)
114 ANNEXES
Annex 4: People inter viewed dur ing on-site visit
Public Revenue Office
Deputy General Tax Inspector and Authorised Person for Exchange of
Information under DTC
Head of Department Co-operation with other Institutions and International
Exchange of Information
Tax Adviser Co-operation with other Institutions and International
Exchange of Information
Ministr y of Finance
Junior Associate Tax and Customs Policy Department
Centr al Register
Registrar of Central Register
Head of Department Register Department and Registrar Assistant
Adviser Department of Register of Annual Accounts
Centr al Secur ities Depositor y
Head IT Division
Secur ities and Exchange Commission
Senior Advisor
ANNEXES 115
National Bank
Head of Division
Adviser
Financial Inteligence Office
Head Sector for Prevention of Money Laundering and Inspection
Surveillance
Adviser Inspection Supervision Unit
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
The OECD is a unique forum where governments work together to address the
economic, social and environmental challenges of globalisation. The OECD is also at the
forefront of efforts to understand and to help governments respond to newdevelopments and
concerns, such as corporate governance, the information economy and the challenges of an
ageing population. The Organisation provides a setting where governments can compare
policy experiences, seek answers to common problems, identify good practice and work to co-
ordinate domestic and international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel,
Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland,
Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom
and the United States. The European Union takes part in the work of the OECD.
OECD Publishing disseminates widely the results of the Organisations statistics gathering
and research on economic, social and environmental issues, as well as the conventions,
guidelines and standards agreed by its members.
OECD PUBLISHING, 2, rue Andr-Pascal, 75775 PARIS CEDEX 16
(23 2014 19 1 P) ISBN 978-92-64-21770-6 2014-01
GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES
Peer Review Report
Phase 2
Implementation of the Standard
in Practice
Global Forum on Transparency and Exchange of Information
for Tax Purposes
PEER REVIEWS, PHASE 2: FORMER YUGOSLAV
REPUBLIC OF MACEDONIA
This report contains a Phase 2: Implementation of the Standards in Practice review, as well
as revised version of the Phase 1: Legal and Regulatory Framework review already released
for this country.
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by over 120 jurisdictions which participate in the work of the
Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the standards of transparency and exchange of information for tax purposes. These
standards are primarily reected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax
Convention on Income and on Capital and its commentary as updated in 2004, which has
been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. Fishing expeditions are not authorised, but all foreseeably relevant information must
be provided, including bank information and information held by duciaries, regardless of the
existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identied by the Global Forum as
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1
reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange
of information, while Phase 2 reviews look at the practical implementation of that framework.
Some Global Forum members are undergoing combined Phase 1 plus Phase 2 reviews.
The ultimate goal is to help jurisdictions to effectively implement the international standards
of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus represent
agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, and for copies of the published review reports, please visit
www.oecd.org/tax/transparency and www.eoi-tax.org.
FORMER YUGOSLAV REPUBLIC
OF MACEDONIA
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Consult this publication on line at http://dx.doi.org/10.1787/9789264217713-en.
This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and
statistical databases.
Visit www.oecd-ilibrary.org for more information.
ISBN 978-92-64-21770-6
23 2014 19 1 P
9HSTCQE*cbhhag+

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