ANALYSIS
How Frequent Legislative Amendments Influence Taxation
Author : Ljupka Noveska , Attorney in cooperation with Karanovic & Nikolic
In recent years in Macedonia there have been frequent amendments of laws in all sectors , including the area of taxes and social contributions . Since the dissolution of parliament in April 2016 , the general public as well as legal professionals have had an opportunity to reflect on all of the recent legislative amendments that have greatly influenced the business sector and average citizens alike .
One of those that stands out was with the uncoordinated attempt to subject all freelance contracts to payment of full social contributions , which led to the relevant laws being amended four times in a one year period . This case showed that legislative bodies failed to properly analyze the impact and coherence of new laws within the country ’ s legal system . Due to the lack of analysis , problems frequently appear in the implementation phase of new legislation . To solve these problems , new amendments of the legislation are usually required , and the system is stuck in a diabolic circle .
How does all this impact the tax system ? The rate of change of Macedonia ’ s laws destabilizes the system and makes it inefficient . For example ,
• Since its adoption in July 2014 , the Law on Corporate Income Tax has already been amended twice ;
• The Law on Personal Income Tax has been amended 25 times , including five times since July 2015 ;
• The Law on Value Added Tax as amended 24 times since 1999 ;
• The Law on Property Taxes was the most constant in the group with nine amendments since its adoption in 2004 , though three amendments were adopted in the last 9 months ; and
• The Law on Tax Procedure has been amended 15 times since 2006 .
It ’ s important to note that these counts do not include technical corrections of the laws nor decisions of the Constitutional Court to annul certain provisions .
The tax system should be flexible enough to follow trends and the needs of the market . However , a more structured approach to legislative amendments is required to ensure comprehensive enforceability of the country ’ s tax laws . Meanwhile , public disclosure of binding tax opinions by the Public Revenue Office , as well as more frequent requests for authentic interpretations of certain provisions of laws from parliament would help harmonize practice while avoiding so many legal amendments .
Spring 2016 Issue 49 17