Reinvested Profit

Reinvested Profit: Reduce Your Corporate Income Tax Through Business Investments

Anevski Partners – your trusted partner in accounting and tax planning – explains one of the most beneficial tax reliefs available in the Republic of North Macedonia.

What is Reinvested Profit?

Reinvested profit is the portion of the net profit earned in the previous year that the company does not distribute as dividends to the owners, but instead allocates and invests in development goals. According to Article 28 of the Law on Corporate Income Tax, the tax base for the current year is reduced by the amount of investments made from this profit.

In other words: if you generate profit in 2025 and invest it in 2026 in equipment, machinery, real estate, or software, you can reduce your corporate income tax for 2026.

Which Investments Qualify?

Only investments in the following are allowed:

• Tangible assets: real estate, plants, equipment (including assets acquired through financial leasing)
• Intangible assets: computer software and patents

Do not qualify:

• Passenger vehicles
• Furniture, carpets, household appliances
• Audio-visual equipment
• Works of art
• Anything intended for administrative purposes

Important Conditions for Using the Relief

To benefit from this reduction, you must meet the following conditions:

1. The profit must be generated in the previous year and shown in the annual financial statements (Item 255 from the Income Statement).
2. A decision by the management body must allocate part (or all) of the profit for investments and record it as a special reserve (Account 942 – Other reserves).
3. The investment must be made in the current year.
4. The assets must remain in the company’s ownership for at least 5 years (otherwise, the tax must be repaid).
5. It must be documented that the investment is intended for expanding the business activity.

Important note! In the Tax Balance (Form DB), the amount on Line 48 is determined as the lowest of the following three values:

• Allocated profit for investments from the previous year
• Tax base in the current year
• Actually executed investments

Example (Simple Calculation)

Suppose your company generated a net profit of 3,000,000 MKD in 2025 and decides to reinvest the entire amount. In 2026, you purchase equipment worth 2,800,000 MKD.

→ In the Tax Balance for 2026, you enter 2,800,000 MKD as a reduction of the tax base on Line 48. With a 10% tax rate, you save 280,000 MKD in corporate income tax!

Why Professional Accounting Matters?

Many companies miss this tax relief because of:

• Incorrect allocation of profit in the decision
• Improper recording in the accounting books
• Insufficient documentation
• Errors when filling Line 48 in the Tax Balance

Anevski Partners provides you with:

• Preparation of the profit allocation decision
• Correct accounting entries (reserves, fixed assets, depreciation)
• Optimization of the Tax Balance
• Representation before the Public Revenue Office (UJP) and documentation control
• Full support so you don’t have to repay the tax after 5 years

Contact Us Today

Don’t leave your reinvested profit “sitting idle” – turn it into real business growth and tax savings!

Anevski Partners Kliment Ohridski 35/4/3/8, 7000 Bitola

Phone: +389 78 228 626

Email: contact@anevski-partners.com

Website: www.anevski-partners.com

Our team of certified accountants and tax advisors is ready to help you maximize this opportunity.

Anevski Partners – Optimal solutions from a trusted partner.