Montenegro: Montenegro hikes VAT rate and amends excise duties

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Montenegro: Montenegro hikes VAT rate and amends excise duties

intl-updates-small.jpg

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 unchanged.

zivkovic.jpg

 

Jelena Zivkovic

Jelena Zivkovic (jelena.zivkovic@eurofast.eu)

Eurofast

Tel: +382 20 228 490

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

Shared transaction semantics, governed data and reusable ERP design may prove the most significant benefits of the UK's move to Peppol
As pillar two reshapes global tax competition, the UK faces a crucial challenge: how to remain attractive to multinationals without sacrificing tax revenues
Pillar two may be raising less than expected, but professor René Matteotti says the regime is still changing multinational tax behaviour
Multinationals importing goods into Brazil may need to align TP files and customs documentation more closely as authorities gain new tools to challenge related-party transactions
The private equity-backed deal hands Grant Thornton immediate and impressive US scale, but World Tax data suggests the firm still has work to do to gain recognition
From Instagram content to £100m transactions, the founder of Thomas & Co International discusses building a modern tax and accounting firm for business founders
Growing GAAR scrutiny is driving taxpayers to look beyond legal form and demonstrate the commercial rationale underpinning tax-efficient structures
Pillar two has been clients’ ‘biggest headache’ but also a driver of growth for MHA, which believes it has the edge over its big four rivals
Public country-by-country reporting is exposing multinational tax data to investors, journalists and competitors, creating fresh risks for businesses
Pillar two compliance is creating unprecedented data demands for multinational tax departments, making closer collaboration with FP&A teams essential for accurate reporting and audit readiness
Gift this article