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FYR of Macedonia/ 5.1 General legislation  

5.1.5 Tax laws

According to the Law on Value Added Tax, the turnover of cultural institutions, as well as that of other taxpayers who perform cultural activities, is exempt from VAT, provided they have approval from the Ministry of Culture. A privileged tax rate of 5% is applied to the turnover of publications, instead of the general rate of 18% that also applies to audio and visual products.

The Law on Income Tax stipulates that donations and sponsorship made to public culture institutions from personal or company income can be calculated as deductible expenses up to a rate of 3% of the total income.

The Law on Personal Income Tax states that professional independent artists can deduct a fixed percentage share of their income as expenses generated by their creative work. The rates vary depending on type of activity and range between 25% to 60%; for example, sculptures 60%; painting 50%; classical music, ballet, theatre and film performances 30%; for pop and folk music 25%, etc. Income tax is not charged on earnings generated from awards or on scholarships to pupils and students granted by government agencies and foundations.

The Law on Customs Duty list the following items which do not bare to pay import fees: printed material; objects and materials in the field of culture that are imported according to international agreements; goods that are brought into the country free-of-charge and are used for non-profit making cultural purposes; goods that are not produced in the country that are used for non-profit making cultural activities and are not intended for further sale; objects imported by museums, galleries, and the National and University Library that are intended for public use; objects exhibited during fairs and exhibitions; objects intended for cultural and artistic events and film-making; works of art that artists declare as their own works; awards and other objects received at foreign exhibitions, performances, etc., and objects received from foreign donors.

In January 2007, the Law on Sponsorship and Donations came into force. The Law encourages private persons and companies to sponsor humanitarian activities that are in the public interest (including arts and culture). The Law provides deductions (up to 20%) on the total yearly personal income for private donations, but not more then 24 000 MKD (400 EUR)! Companies obtain deductions if they have donated more than 5% of their total yearly income. It is estimated that in the period January 2007 - June 2008, 2.5 million EUR was donated from the private sector for humanitarian purposes (including art and culture). More donations were registered in the first half of 2008 (1 591 000 EUR) than for all of 2007 (915 712 EUR).

On the other hand, more recent trends in donations and sponsorship in 2009 have shown that numerous Macedonian firms and companies have withdrawn from sponsoring most of the festivals and institutions. Sponsors say that the main reason is the current economic recession, but the cultural workers say that it is just another excuse. For example, until 2008 the budget of the Ohrid Summer Festival consisted of a minimum of 50% of sponsorship and donations, while in 2009 the share was barely 1/3. Almost the same has happened with the budgets of Struga Poetry Festival, the Manaki Brothers Film Festival, Skopje Summer Festival etc. Still, it looks like there is no recession for other forms of entertainment - pop and folk concerts, sport events etc. - as the organisers do not complain of a lack of sponsorship and financial donations.

In 2010 the Parliamentarian Committee for Culture had a debate on some key issues of the Law on Sponsorship and Donations. Some of the recommendations were: to simplify the procedure for sponsorship, to suggest bigger tax reductions, to clearly mark the cultural projects of public / national interest, to encourage companies to sponsor and donate to culture etc.

However, 2012 showed again that most of the sponsorship and donation funds go to pop and folk concerts and sports events and just a small percentage to culture. Most of the marketing experts argue that additional tax reductions and benefits should be offered.

Chapter published: 06-10-2015

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