7.5 C
Herceg Novi
Thursday, April 25, 2024
spot_img
Supported byspot_img
spot_img
NewsMontenegro, balance between state needs and real tax potential is a prerequisite...

Montenegro, balance between state needs and real tax potential is a prerequisite for tax policy

When creating a tax policy, a balance should be established between the needs of the state and the real tax potential of the economy, and the best way to achieve that balance is through an open and permanent dialogue between the state and the business community. This was announced from the panel discussion „Tax policy in Montenegro – an instrument for collecting state revenues vs. An instrument for creating a business environment. How to achieve a balance?“ which was held as part of the Top Business Montenegro initiative.

The discussion was moderated by Ratko Nikolić, founder of BI Consulting and chief analyst of TBM, while Minister of Finance Aleksandar Damjanović, professor at the Faculty of International Economics, Finance and Business of the University of Donja Gorica, Milorad Katnić, president of the Council of Foreign Investors in Montenegro, presented his views on this topic. And President of the Board of Directors of Montenegrin Commercial Bank (CKB) Tamaš Kamaraši and President of the Chamber of Commerce of Montenegro (PKCG) Nina Drakić.

At the very beginning, moderator Ratko Nikolić pointed out the specificity of Montenegro as a tax-attractive business destination, and made a short retrospective of the conduct of tax policy from independence to the present day.

Supported byElevatePR Digital

Montenegro, as a specific euroized economy (it uses the EURO and is not a member of the EMU or the EU payment system), does not have the instruments of monetary policy in its hands. In the first years after independence, Montenegro wanted to profile itself as a country with low tax rates and it can be said that it succeeded. Not as a tax haven, it is far from a Monte Carlo or Andorra, but on a regional scale we were tax competitive. A reasonable explanation for such an approach lies in the fact that in other elements that make up the business environment (legal regulation, knowledge and personnel, access to finance, political stability, infrastructure – traffic accessibility,…) the country was not sufficiently developed and attractive – said Nikolić.

As he stated, over time, there have been significant changes in that system, first through corrections in the VAT rate from 2013 and 2017, then through some temporary tax measures, so that the biggest changes in income tax rates will take place in 2021. Natural persons, as well as corporate income tax through the introduction of progressive taxation.

In the end, apart from the correction of tax rates, we have proposals for some new tax forms, as well as an open discussion on the topic of reviewing the policy of low tax rates, which additionally has an unsettling effect on the business community, increases business uncertainty and threatens the predictability of the business environment. Therefore, we believe that it is time to ask whether the role of tax policy as an instrument for creating a favorable and predictable business environment has been neglected – concluded Nikolić.

In order to better understand these complete challenges, the panelists clarified the very definition of tax collection and the great impact it has on various spheres of life.

Tax policy is the most important instrument of economic policy, especially for countries that do not have their own currency. It is not the only, but it is the most important instrument of economic policy. It represents the institutional collection of revenue for the needs of public services, but it is also much more than that. Taxes affect employment, investments, income, the gray economy and migration – stated Milorad Katnić, a professor at the Faculty of International Economics, Finance and Business.

Katnić pointed out the importance of collecting taxes and pointed out that they are the price of civilizational progress. And the president of the Chamber of Commerce of Montenegro (PKCG) Nina Drakić spoke about the comprehensive impact of taxes.

From the point of view of the business community, it is very important that the policy be transparent, so that the business community can know in time what taxes they will have to pay and accordingly form business and business plans. The economy is currently involved in the drafting of regulations between 25% and 28%, which is not at an adequate level. The economy pays taxes and is the engine of development in our economy – said Drakić.

The problem addressed by all the panelists is the gray economy, and how tax policy affects the level of gray economy in a country. The right way to solve this problem is to encourage taxpayers to do business in the legal zone, which the Government of Montenegro is aware of.

We passed a dozen laws that concern the heart of the gray economy. We are trying to increase the inflow of tax revenues and strengthen tax discipline in the current year. We are trying to maintain our credibility, as evidenced by record foreign investments again. This means that Montenegro is still perceived as a country with attractive tax rates, a country worth investing in – said Finance Minister Aleksandar Damjanović.

As the president of the Council of Foreign Investors, Tamas Kamaraši, said, foreign investors, in addition to the tax policy, also consider a number of other parameters when making a decision to invest in a country.

 

Sign up for business news updates & special reports.

 

Supported by

RELATED ARTICLES

Supported byElevatePR DIgital
Supported by
Supported by
Supported by
error: Content is protected !!