By introducing measures for support of economy and tax policies the Republic of Macedonia succeeded to promote itself into excellent business destination with enormous economic potential, Pascal Hughes, well-known business analyst writes in the column published in the US newspaper The Hill.
A decade ago, the small Balkan country of Macedonia – relatively fresh from independence – was suffering from continental Europe’s highest rate of unemployment. Taxes were among the highest in the region and the business climate was hostile. The World Bank, at that time, rated it as one of the worst westernized countries to do business in.
Today, while weathering storms in domestic politics and facing up to geopolitical pressure, the small country struggling on the fringe of Europe has been transformed into the small country with big potential, the rising star on Europe’s front line. Unemployment has fallen by more than 10 percent, taxes are the worlds most competitive, and tourism is rapidly on the rise, he said in the column.
Focusing on measures to support the domestic economy, the government attracted foreign investment, opened new factories and created a favorable business climate that in turn created 160,000 new jobs – a significant impact on a population of just 2 million people. Unemployment is still too high, but the trajectory is incredibly positive – decreasing to 24 percent from the previous 38.
And one change stands out above all others. Tax. According to Business Insider, the average tax rate in the country is now 7.4 percent, which makes this country a global leader. Macedonia is the only country in the world with a general business tax rate lower than 10 percent.
Benefiting from the ability to trade easily with Europe, but not yet restricted by the EU’s tax regime, Macedonia has introduced the region’s lowest tax rates through a stand-out system of flat and low personal income tax and corporation tax, and offering companies who reinvest their profit zero percent.
In a similar vein, the government decreased the VAT in several sectors from 18 to 15 percent, on products and sectors aimed at driving the economy. This vibrancy is making an impact. Anyone who followed CNN’s highly respected blow-by-blow reporting of the U.S. election, especially on election night, will have seen the regular ‘Invest Macedonia’ commercials. This clever marketing drive is helping introduce the country to a new global audience. And the global business audience should take notice.
The first bold firms have started to make inroads, choosing to open factories and production lines, and take advantage of the high-skilled, dedicated workforce. Major investment is already coming from firms based in Germany, the UK, America, China and Japan. The big question is, who’ll be next.
Macedonia is coming of age and it has a very exciting a prosperous future ahead.
Pascal Hughes has worked in Investment Banking in the City of London for close to 20 years most recently as a Managing Director in Fixed Income, Currencies and Commodities at UBS bank. Prior to that he was a Managing Director in Global banking and Markets at HSBC. He began his career at Deutsche Bank in 1994 where he worked for 10 years.