Montenegro: New VAT exemption incentives in Montenegro
As a young country with a small but open economy, Montenegro is steadily adopting various business incentives, with the objective of attracting reputable foreign investors, particularly in selected industries.
The latest incentives relate to a new set of VAT exemption rules which affect investors and the supply of certain products and services. In April 2015, the Ministry of Finance issued a rulebook closely defining the aspects of such exemptions.
The VAT exemptions relate to the construction of facilities. This includes luxury hotels with five or more stars, energy facilities with capacities of 10MW or higher and capacities for food production. Investors can take advantage of the exemptions by filing a request along with the prescribed supporting documentation.
The required supporting documents include construction permits, a statement of a relevant institution stating that the investment could be subject of the incentives, as well as the preliminary value of the project.
Upon acceptance of the request, the Tax Administration issues a resolution as well as control stamps. The investors being granted the exemption are required to provide the control stamps to their suppliers, who in turn need to attach the stamps to their invoices.
The April rulebook also defines the VAT exemption procedure for supplies made on the basis of loan agreements for which the State of Montenegro is a guarantor. This exemption can be exercised by an investor on the basis of the resolution issued by the Tax Administration, provided that the investor provides a copy of the tax resolution to its supplier and the supplier's invoice for VAT exempted deliveries refers to the issued resolution.
The VAT exemption incentives are aimed at reducing the cost of making investments in the country. It is expected that these incentives will encourage investments in priority sectors defined by the Government of Montenegro, specifically in the tourism, energy and agriculture industries.
Tel: +382 20 228 490