Montenegrin government announces tax reduction

Montenegrin government announces tax reduction

Podgorica, March 27, 2015/ Independent Balkan News Agency

By Adnan Prekic

One of the major advantages of the Montenegrin economy in the international market has for a long time now been the generous tax regime. Foreign investors who invested in Montenegro could expect favorable taxes and many other benefits. But, economic crisis, beyond 2009, have conditioned a modified tax policy. The country then first increased the rate value of added taxes from 17 to 19 percent. After that, there was the introduction of a whole series of the so-called “crisis tax”, which filled state budget during the years of crisis. Montenegro in the last year has recorded a significant economic growth because of which the government announced that all “crisis taxes” must be abolished.

Prime Minister Đukanović has stressed the need for the government to resist pressure to increase taxes, saying that any tax increase is unacceptable. He added that he is explicit that “no initiative to increase taxes can be accepted, but on the contrary, that we have to reduce taxes, especially the ones we have introduced as “crisis taxes”, in order not to melt Montenegro’s advantage for foreign investment”.

On the other hand, the Prime Minister referred to the need to raise awareness of responsibility towards the state through regular payment of taxes.

Montenegrin budget for 2015 amounts to 1.33 billion euros and the expenditures to 1.56 billion euros. The budget deficit without the expenditures for the construction of the highway, amounted to 29.7 million euros. With the money that was planned to begin construction of the highway the deficit amounted to  235.7 million euros, or 6.65 percent of the total budget.

The government plans a debiting in the amount of 633 million euros. The largest part of the debt will be spent on refinancing old debt obligations  arising from earlier periods. The draft law of next year’s budget anticipates a capital budget of  284 million euros. From that money, 206 million will be allocated to finance the priority sections of the highway. The remainder of the capital budget will be allocated to the continuation of initiated projects from previous years.