International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

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

Montenegro: Montenegro regulates taxation of hydrocarbon production activities

zivkovic.jpg

Jelena Zivkovic

On the February 1 session of the Montenegrin government, the goverment adopted the Draft Law on Taxation of Hydrocarbons, whereby tax policies on profit gained from extracting oil and gas, construction of facilities and related equipment as well as delivery and transport of oil and gas have been defined. The proposed law, when ratified by the Parliament, will create a special regime for corporate income tax applicable to companies dealing with extracting oil and gas. Per the new law, the corporate income tax rate will be 59%.

The proposed law introduces liability of payment of corporate income tax on profits gained from upstream operation related to hydrocarbons. The law will be applicable to upstream operations undertaken on the Montenegrin Sea and in international waters where Montenegro has the right of exploitation in line with international agreements. Also, the law will be applicable to the transport of hydrocarbons.

In accordance with the law, a taxpayer is a locally registered company or a foreign company's branch that is undertaking upstream operations based on a Concession Agreement with the Montenegrin government as well as other parties undertaking upstream activities in line with international agreements.

The draft law defines the following revenue as revenue of upstream operations:

  • Revenue of production, transport, sale and realisation of hydrocarbons;

  • Revenue of interests and other financial revenues, exchange rate difference as well as financial gain of upstream operation;

  • Revenue gained from tangible assets purchased for use in activities of upstream operation; and

  • Value of hydrocarbons stock.

The defined eligible expenses include upstream capital expenses, operational expenses, expenses of reinstallations funds, and financial expenses.

Revenue gained from other activities of the company that are not regulated by this law such as capital gains (including gains of transfer of concession rights for production of hydrocarbons) will be subject to taxation per Law on Corporate Income Tax with a standard corporate income tax rate of 9%.

The goverment plans to direct 20% of tax revenues from upstream activities to the Montenegrin budget, while 80% will be allocated to a special fund, which will be used for funding development projects of national interest.

Jelena Zivkovic (jelena.zivkovic@eurofast.eu)

Eurofast Global, Podgorica Office

Tel: +382 20 228 490

Website: www.eurofast.eu

more across site & bottom lb ros

More from across our site

The Indian company, which is contesting the bill, has a family connection to UK Prime Minister Rishi Sunak – whose government has just been hit by a tax scandal.
Developments included calls for tax reform in Malaysia and the US, concerns about the level of the VAT threshold in the UK, Ukraine’s preparations for EU accession, and more.
A steady stream of countries has announced steps towards implementing pillar two, but Korea has got there first. Ralph Cunningham finds out what tax executives should do next.
The BEPS Monitoring Group has found a rare point of agreement with business bodies advocating an EU-wide one-stop-shop for compliance under BEFIT.
Former PwC partner Peter-John Collins has been banned from serving as a tax agent in Australia, while Brazil reports its best-ever year of tax collection on record.
Industry groups are concerned about the shift away from the ALP towards formulary apportionment as part of a common consolidated corporate tax base across the EU.
The former tax official in Italy will take up her post in April.
With marked economic disruption matched by a frenetic rate of regulatory upheaval, ITR partnered with Asia’s leading legal minds to navigate the continent’s growing complexity.
Lawmakers seem more reticent than ever to make ambitious tax proposals since the disastrous ‘mini-budget’ last September, but the country needs serious change.
The panel, the only one dedicated to tax at the World Economic Forum, comprised government ministers and other officials.