Cabinet cuts personal income, profit tax rates.

Cabinet cuts personal income, profit tax rates. The cabinet has adopted a bill for amending the personal income and profit tax laws, reducing the tax rates to 12% in 2007 and 10% as of the beginning of 2008. The bill has to pass the approval of the parliament in order to come into force. Presently, the personal income tax has three brackets with rates of 15%, 18% and 24%, while the profit tax rate is 15%. Reinvested profits will not be taxed. There will be also preferential tax treatment in free economic zones, which will be renamed to technological industrial development zones. According to the original budget for this year, revenues from personal income and profit taxes are expected to be MKD 8.1bn (EUR 132mn) and 3.2bn respectively, out of total budgeted tax revenues of MKD 57.6bn. PM Nikola Gruevski comments that the change will make the country very competitive in terms of investment climate. He said that introduction of flat taxation in other European countries have raised investments significantly. Gruevski adds that the tax cuts are broadly accepted by the IMF.