Montenegro has recently sharpened its focus on fiscal
consolidation with a target to achieve budget surplus and to
establish a declining trend in the level of public debt from
2019. On the revenue side, additional measures will be aimed at
further harmonising the excise policy with the EU's rules.
Additionally, the government is set to increase the standard
VAT rate by two percentage points as of 2018, an adjustment
which will not disturb the Montenegrin tax system.
The fiscal strategy has a redefined social policy, and the
protection of certain categories (particularly pensioners) was
taken into account. The effects of fiscal consolidation
measures are expected to be reflected in the macro-fiscal
indicators in such a way that it is predicted that the budget
deficit will continue to decline and enter the surplus zone by
4.5% of GDP from 2020. Changes and amendments to the Excise Act
envisage changes for products that do not directly affect the
standard of living of citizens, such as tobacco products, ethyl
alcohol and carbonated water with added sugar.
For these three types of products, an excise calendar has
been established by law, according to which excise taxes will
be increased once a year until 2020. Montenegro plans to
introduce two new excise products – non-combustible
tobacco and liquids for charging electric cigarettes. With the
amendments to the law on excise taxes, a new excise product is
also included: coal, to which excise duty will be applicable
from January 1 2019.
The basic amendments and supplements to the VAT Law refer to
the increase of the standard rate from 19% to 21%, effective as
of January 1 2018. The aim of these changes is to reduce the
public debt to a level of 67% by 2020.
The increased rate is expected to contribute to the increase
of budget revenues. Amendments have only dealt with the
standard rate, while the reduced one has remained
Jelena Zivkovic (email@example.com)
Tel: +382 20 228 490