During its review of municipalities’ work in 2025, the State Audit Office found that local authorities do not collect taxes in accordance with legal requirements and fail to efficiently manage the taxes and financial liabilities of entities.

The State Audit Office report states that the policies and measures undertaken by local self-government units, together with the responsible authorities, do not ensure the efficient administration of local taxes, fees and charges.

The audit found that, over a five-year period, municipalities failed to collect at least €50 million. Some of these liabilities are now time-barred, meaning the tax can no longer be collected.

The auditors also noted that most municipalities, particularly rural ones, have not updated the prices used to calculate taxes. As a result, the tax base has been set below its actual value.

According to the report, prices that have remained unchanged for years and do not reflect current market values continue to be used. This leads to an undervalued tax base and lower revenues for municipalities.

An analysis of revenue generated from taxes, fees and charges showed that rural municipalities generally have weaker fiscal capacity than urban municipalities. Petrovec, Ilinden and Čučer-Sandevo are exceptions to this finding.

Tax receivables worth more than 856 million denars have accumulated in 14 municipalities. Kumanovo, Veles, Kočani, Kratovo, Aračinovo, Studeničani and Kriva Palanka were classified as municipalities with low fiscal capacity.

Tetovo, Saraj and Gazi Baba demonstrated medium fiscal capacity, while Čair, Aerodrom, Karpoš and the City of Skopje were identified by the auditors as units with advanced fiscal capacity.

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