At a panel debate organized by Finance Think on the parafiscal or hidden tax, fees and charges levied by central and local government, independent agencies and regulatory bodies, President of the Macedonian Chambers of Commerce, Danela Arsovska, stressed that they represent burden on the economy.
According to the analysis of the Chamber, in the last 10 years the number of parafiscal charges has been continuously increasing, introducing examinations, concession payments, and issuance of documentation by institutions on various grounds. Apart from the money they spend, companies waste time in lengthy administrative procedures with numerous documentation that is not up-to-date and considered obsolete and unnecessary. In addition, the existing system of hidden fees is unpredictable, unstable and seriously affects the competitiveness of the Macedonian economy and creates uncertainty for companies. For comparison, the burden on the non-tax economy is significantly higher than the tax burden.
Macedonian Chambers of Commerce maintains a register of companies’ complaints about what are the biggest parafiscal charges that make it difficult for businesses, and appeals for their reduction or cancellation by the competent institutions.
As one of the parafiscal charges, the companies refer to the confirmation fee for the periodic health check of the employees of the company, for which the amounts specified in the tariff are paid. This fee is a confirmation that every employee can also get from their family doctor’s regular checkup through health insurance for which the companies are also continuously paying for the employees. In this case the double payment by the companies is highlighted and this expense is referred to as one of the three largest and most frequently mentioned parafiscal charges.
Another example is the cash register fee, regulated by the Cash Payment Registration Act, which in addition to cash registers, companies pay thousands of denars per fiscal maintenance device, an unfunded fee charged whether the company uses a maintenance service or not. The fee is calculated for a SIM card which enables connection to the PRO system which costs around 300 denars but the difference from the cost of the sim card to the total amount is thousands of denars per fiscal device each year.
One of the priorities is to change the basis on which the firm is calculated, a parafiscal charge that companies pay annually to local governments. The current fixed amount of the company does not reflect the real situation, as all companies pay the same amount which is a huge expense for micro companies as opposed to large companies paying the same amount. Specifically, the firm is the same for companies with 1 or 1000 employees, and is additionally detected as a huge burden for startup companies in the first year of formation. The amount needs to be scaled according to certain size criteria of the company so as not to constitute an unbearable annual burden for micro and small enterprises as well as for entrepreneurs.
Para-fiscal burden subindicators according to the World Economic Forum point out that unnecessary administrative costs in Macedonia are highest compared to Montenegro, Serbia and Croatia. The same applies to regulatory-related costs, as well as transparency in the adoption of legislation and regulations.
In this regard, reforms are necessary, ie, control is needed when introducing parafiscal charges and abandoning the current practice of each institution, agency, administration, municipality, to make decisions directly on new charges and their amount. Prior to their adoption, the business should be consulted on the justification of a particular charge, with a timely notice and appropriate rationale and an appropriate analysis of whether the new cost to companies is necessary. In addition, reforms to cut existing non-tax duties should also be prioritized.
Eliminate double payment for the same purpose, make the amounts reasonable and match the service received in return, abolish non-service parafiscal charges, ensure predictability and transparency so central authorities cannot and local government without notice and proper justification analysis to impose or increase charges.
The most important and last requirement is to establish a register of those duties that cannot be abolished, which will provide for the highest prices that can be prescribed and audited annually, as the digitization processes have authorities less costs and the costs for companies and citizens should be reduced accordingly.