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Montenegro to maintain competitive tax system

To prevent consequences similar to those in the European countries regarding current debt crisis, the Montenegrin government plans to implement a number of economic measures by the end of the year, which will mostly concern public sector spending.

The government announced that the measures would not include any tax increases. However, there are possibilities to consider decreases in the salaries of a public sector.

According to the officials, debt crisis in the Eurozone countries cannot bypass Montenegro as the foreign direct investment flow comes from or through these countries.

The good news is that the government will continue with the improvement of the competitive tax system, which is the main advantage of Montenegro. Recent statistic claims that just for the first half of 2011, economic growth of Montenegro was increased by 2.1% which is very close to the prediction of the 2.5% for the whole year. As the main generators of the economic growth remains with the sectors such as tourism, trade, energy, engineering and processing industry, the government's efforts to facilitate the new investments and business climate for the foreign companies and entrepreneurs is ongoing.

From a tax perspective, the Montenegrin transparent tax system can offer numerous benefits such as for investments in the north part of the country the 9% profit tax obligation is eliminated for the first three year of the operation. It is worth mentioning that, even though some countries in the region have increased VAT rate as a part of the austerity measures, Montenegro's VAT rate of 17% remained unchanged.

Most recently, Montenegro has signed some very important double tax treaty agreements. The most recent being with Serbia and United Arab Emirates for income and capital. Signing of such bilateral agreements not only expected to enhance further and bigger investments into Montenegro but also crucial and necessary for the small open economy such as Montenegro.

Sead Dado Salkovic (sead.salkovic@eurofast.eu)
Eurofast Global Podgorica Office/Montenegro
Tel: +382 20 228 490
Website: www.eurofast.eu

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