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NewsMontenegro, New set of financial and tax laws was proposed

Montenegro, New set of financial and tax laws was proposed

Today, the Parliamentary Committee for Economy, Finance and Budget supported a set of financial and tax laws, which, through higher taxation and the introduction and change of excise duties on certain products, plan higher budget revenues for the state.

The set of laws was proposed by the cabinet of Finance Minister Aleksandar Damjanović. The government requested that they be voted on in an urgent procedure, in order to prevent tax fraud and protect state finances and the budget of local self-governments.

The State Secretary In the Ministry of Finance, Ilija Vukčević, said that the amendments to the Law on Corporate Income Tax concern stronger taxation, i.e. better regulation of transactions related to companies that are residents of Montenegro and those with low taxation, i.e. they do not exchange data with our country.

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– A black or gray list will be created of certain countries or jurisdictions to which significantly more rigid tax treatments will be applied. They will be targeted for stronger taxation when withdrawing capital from Montenegro, in the form of withholding tax – said Vukčević and added that all companies will be covered by transfer pricing rules.

He stated at the Committeee session that those changes have a part that concerns “fine tuning”, i.e. the taxation of lending money to citizens, companies have been put in a somewhat softer position where they have taken into account the fact that when, for example, advances to workers or farmers of a lower amount are given that take into account the social component of that tax treatment.

The representative of the Democratic Front (DF), Branko Radulović, said that they are repairing the consequences of the wrong decision of the Europe now program.

– I said it would happen. If we do not repair what Europe has done, we are now heading for complete ruin. That’s what all international institutions said – said Radulović.

He stated that this can be regulated by excise taxes, by reducing administrative costs or by reducing salaries and pensions.

– The alternative is to have a comprehensive tax base where we will get financial resources more easily. I support this, but I will ask for a reform government, from the financial police to the Supreme State Prosecutor’s Office – said Radulović.

He added that these laws are the result of “one piece of stupidity” and that he is afraid that they will have to raise the value added tax (VAT).

The Democrat MP, Zdenka Popović, said that she would support the proposed act, because it was an urgent need of Montenegro long before.
Speaking about the proposed amendments to the law on games of chance, Damjanović explained that their goal is for the industry to live, to be treated equally, and for the state to earn more money from that area.

– Also, we want to leave room for a fair competition that we haven’t had on the market for the last seven or eight years – said Damjanović.

Organizers of betting games of chance via the Internet will pay the fixed part of the concession, as before, 10,000 EUR per month, but for the first time, a variable concession of ten percent is introduced for the difference between total payments and payment of winnings. Until now, the variable fee was paid by all other operators of games of chance, but Internet operators were exempted.

A change in the payment of the fixed concession for casinos was proposed. Instead of the one-time fee of EUR 2 million that was paid when the concession was issued and the annual fee of EUR 50,000, which was established 19 years ago and which inflation has since devalued, it is proposed to pay the concession in the monthly amount of EUR 41.67 thousand. This concession amount will also apply to online casinos, that is, the arrangement of slot machine games via the Internet and other telecommunications means.

Damjanović stated that he carefully studied the letters from Montenegro beta, delivered on the occasion of those changes, the first of which supports the legal solutions except for one, only to receive a second, strongly intoned letter three days later, where subsequent observations criticize the law.

– I don’t know what happened in those three days. Compared to the existing one, the compensation is high and it can be discussed – stated Damjanović.

He stated that this market with these amendments to the law and the new law is not EUR 15 million, but EUR 30-35 million.

Vukčević said that they are implementing the procedure to further improve the current electronic surveillance, and they have seen solutions that are significantly more advanced in some other countries.

– This supervision will be carried out in four modules, the first of which will be electronic supervision based on the fiscalization of games of chance, on the basis of which every citizen who plays will be able to be an inspector for games of chance and control his payment – said Vukčević.

Importantly, the second module is money laundering, all transactions will be monitored electronically, the third is electronic payment and payment control, and the fourth will refer to the fact that a significant part of the administrative procedure will be able to be carried out electronically.

Committee members also discussed the proposed amendments to the Law on Real Estate Sales Tax, which stipulate that real estate sales tax rates are progressive.

The tax rate Is three percent for the sale of real estate whose value does not exceed EUR 150,000. In the case of real estate worth over EUR 150,000, the tax liability is EUR 4,500 plus five percent on the amount over EUR 150,000.

Vukčević said that, at a time when we have a large influx of money in Montenegro and when real estate prices are jumping, it is the right time to tax those who have the most.

– We believe that this is in accordance with the principles of fairness in taxation and that it is something that should already exist in our tax system – said Vukčević.

Popović announced that she will fully support the aforementioned changes.

– Of course, all those who have the money to buy a property of 200,000, 300,000 or 500,000 EUR should pay this tax as stipulated by law – said Popović.

She said that it should have been introduced earlier.

– Just from economic citizenship, since it was introduced in 2019, until today, we have had incredible real estate sales. Imagine if we had this rate since then, how full our budget would be. But it’s never too late – said Popović.

When it comes to the Proposal for Amendments to the Law on Excise, Damjanović said that the law is being proposed for two reasons.

– One is that excise policy in general should be constantly on the news, especially in times when we have unstable prices on the market of excise products and large discrepancies within the system, and on the other hand, because the redefinition of excise policy is in negotiations with the World Bank (WB). One of the conditions for credit support in the form of DPL – said Damjanović.

He also believes that It is not an unpredictable policy, as could be heard from certain business organizations.

Damjanović announced that through the mentioned changes with several members, the excise policy is harmonized with the excise regimes in the region and Europe, which will enable additional revenues for the state.

– There is no single reason why an increase in any excise duty on any product listed in this nomenclature should be reflected in an increase in the prices of those products, because the margins on those products are enormous and by far the highest in the region – warned Damjanović.

The Director General of the Directorate for Tax and Customs System, Biljana Peranović, said that there are several directions of action – these are tobacco, sugar products, plastic and carbonated and non-carbonated water with added sugar.
– When it comes to excise duty on tobacco, from January 1 next year we should be fully compliant with the EU directive, according to which the total excise duty cannot be below EUR 90. It will be EUR 91.6 for us – explained Peranović.

When it comes to products made from sugar, cocoa and ice cream, the excise duty is 0.5 EUR per kilogram.

– When it comes to excise duties on carbonated and non-carbonated water with added sugar, there was an increase in carbonated water from 25 to 35 EUR per hectoliter, while an excise tax on still water with added sugar was introduced in the amount of 25 EUR per hectoliter – she specified Peranović.

When it comes to single-use plastics, the proponent only expanded the coverage of those products in accordance with the customs nomenclature. The Democrat MP, Danilo Šaranović, said that he would support the proposed changes. He stated that the citizens’ objective impression is that consumer prices are much higher than can be derived from the inflation rate in Montenegro.

– This is a consequence of a small market, low competitiveness and a negotiated economy among monopolists and oligopolists, and it is a reflection of the circumstances that today consumer margins in Montenegro are much higher, and even up to twice as much for certain products, than they were before the beginning of this crisis on which we all get out of – claims Šaranović.

Popović said that she is skeptical about introducing an excise tax on still water with added sugar. She believes that that category should be exempted, in order to protect domestic producers.

– Children are the biggest juice consumers. We cannot forbid them to drink, especially homemade juices, which are produced here in Montenegro – said Popović.

Speaking about the proposed amendments to the Law on the Prevention of Illegal Business, Peranović said that it is a matter of banning loans when it comes to taxpayers who have outstanding obligations to the state.

– Companies make loans to other companies, and they have not settled their obligations towards employees or the state. There is a ban and penalties are foreseen in that sense – added Peranović.

The proposal for amendments to the Law on Budget and Fiscal Responsibility, which is also part of the set of laws discussed today at the Committee, envisages, among other things, the establishment of the Fiscal Council as a separate, independent institution, as well as its responsibilities.

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