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The Government of the Republic of Macedonia, through the Ministry of Economy, is drafting a Law on Financial Support to Investments. The final draft of this law is expected to enter parliamentary procedure in the middle of April 2018.

The Government, within the framework of its activities for improving the existing state of the economic growth and competitiveness, concluded that there is a need for adoption of Industrial Policy Measures that will encourage the investments and will improve the competitiveness of the Macedonian economy.

Furthermore in this direction, the Government recognised the need for its inclusion and contribution to encourage economic growth and development in the Republic of Macedonia. This will provide equal framework and opportunities, under certain conditions, so that business entities will receive financial support that will improve their economic growth and which will consequently contribute to increased overall economic growth and development in the Republic of Macedonia.

Until now, granting financial support has been regulated by the Law on Technological Industrial Development Zones and the Law on establishing the Agency for Foreign Investments and Export Promotions, but it was necessary to address this issue, in the same way, for all business entities in the Republic of Macedonia.

The bill proposes that beneficiaries of financial support can be business entities which carry out production activities, show revenue grow and have the same average number of employees, i.e. have an increase in the average number of employees in the last year. In the same time, the bill defines who cannot be a beneficiary of state financial support, whereby several categories of entities are listed: business activity of public interest determined by law; licensed business activity; regulated business activity; beneficiaries of the right to concession, if this is their dominant business activity; business activities related to dedicated production (armament and military equipment); and business entities which produce excise goods. Financial support, under this Law, cannot be granted to entities: that use subsidies, which perform activities in the field of agriculture and fisheries; which carry out construction activities related to construction and sale of apartments and apartments buildings, and only specifically for the part of the activity, construction and sales of apartments; and who perform activities in the ICT sector, unless the activity is related to establishing organizational forms for technological development and research.

Two types of financial support are foreseen:

1. Financial support for investments
2. Financial support for improving competitiveness.

Types of financial support for investments are:

New employment support;
Support for establishing and promoting cooperation with suppliers from the Republic of Macedonia;
Support for establishing organizational forms for technological development and research;
Support for investment projects of significant economic interest;
Support for growth of capital investments and revenues;
Support for the purchase of funds from companies in difficulty.

Types of financial support for competitiveness are:

Support to increase market competitiveness;
Support for entering and penetrating new markets and increasing sales.

The procedure for granting financial support will be carried out by the Directorate for Technological Industrial Development Zones and the Agency for Foreign Investments and Export Promotions.

Disclaimer: The information in this article is for general informational purposes and does not constitute legal advice.

Monday, April 2, 2018 12:00 AM