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Macedonia Plans to Set up Tax Haven

Government plans to establish a tax haven that will encourage wealthy corporations to move their operations to Macedonia have won a mixed response.

Photo by: Julien Jorge

Financial experts have broadly welcomed plans by Prime Minister Nikola Gruevski to set up tax havens on the ground that they will boost employment in the financial and legal sectors.

The plan took a step towards realisation after parliament on Wednesday gave a green light to a package of constitutional changes that, among other things, allows for the opening of such zones.

To expedite matters, the government said it will soon propose a draft law on the matter.

“Investment funds might choose to open custody accounts in Macedonia due to the lower expenses… which would mean employment for economists and lawyers,” Goran Markovski, head of KB Publikum Invest, an Investment funds management company in Skopje, said.

Others, however, warn against turning the country into a destination for illegal capital that may damage the country’s reputation.

“I doubt we will gain any benefit and that financial conditions in Macedonia will improve,” warned former police minister Pavle Trajanov, now an MP in the ruling coalition led by Gruevski’s VMRO DPMNE party.

“Crime money pours into these kinds of zones,” he said. “Some of that capital originates from acts of terrorism. We do not wish to become another Cyprus, where [Serbia’s former ruler] Slobodan Milosevic kept his money,” Trajanov added.

Former Macedonian Governor, Petar Goshev also warned about the possibility of illegal capital pouring in the country, damaging the rating of Macedonia’s economy, and jeopardizing its aspirations to one day join the European Union.

Prime Minister Gruevski insisted the plan will not attract criminal money, but will boost employment.

“We aim to open an international financial zone on an area of 10 to 20 hectares where we will copy the financial laws from countries such as the United States, Britain or Germany, which will additionally boost its credibility,” he said.

“The regulations will be taken from these top economies and companies that decide to move their HQs here will be offered additional tax and other benefits,” he explained.

The government plans to give more details about the draft law soon after the constitutional changes are adopted by parliament, which should happen by mid-October.