Tax system

The tax system in Montenegro (main clauses)

The structure of the Montenegrin tax system:

1. Value Added Tax (VAT).

Calculation and the obligation to pay VAT is regulated by the VAT of 01.01.2002 (the "Official Gazette R.CH.G.», №. 65/01, 38/02, 72/02, 21/03 and 76/05) as well as provisions of the Act. VAT calculated and paid at a rate of 17% for implementation of all goods and services, new construction, import goods except:

    * Implementation of socially significant goods and services, as well as imports of goods for which established a 7% rate I;
    * The sale of goods, services, and imports of socially important goods that are exempt from VAT. In addition, from the payment of VAT exempt goods in transit and temporary admission (subject to the release of these goods from customs duties), products with special exemptions, as well as services for the import of goods, etc.;
    * The sale of goods, services, and imports of goods for which established a zero interest rate. The export of goods also apply a zero VAT rate.

In the tax base include: the price of goods or services, as well as excise and other taxes, fees, customs duties and taxes, excluding VAT. VAT is calculated at the time of delivery of goods, or at the time of rendering the service, but the goods are considered delivered or services rendered at the time of invoicing. If the account is not set, the VAT is calculated for eight days from the date of delivery of goods / services. If payment is made partly or wholly to the invoice or prior to the sale of goods or services, VAT is calculated on the date of acceptance of payment from the prepaid amount of the payment. The obligation to calculate VAT when importing goods occurs at the time the obligation to pay customs duties and other customs duties on imported goods. For goods exempt from customs duties and customs fees on imported goods, VAT is calculated at the time the obligation to pay taxes on the importation of goods which, according to customs rules had to emerge, but did not appear.

Calculation of VAT payable in respect of goods sold and services makes himself the taxpayer, minus the amount of VAT paid earlier for the procurement of goods, services or import goods. VAT tax period is a calendar month.

Entrepreneurs whose annual turnover for the previous 12 months does not exceed 18 000 euros, not required to register for VAT.

Comparison: In Croatia, the VAT of 22% in Albania, Bulgaria and Slovenia - 20%, in Macedonia and Romania - 19%, in Serbia - 18%.

2. Excise duties.

Payment of excise duty regulated by the Law on Excise Tax ("Official Gazette R.CH.G.», №. 65/01 and 76/05), adopted in late 2001, which came into force on April 1, 2002 with all amendments thereto, and well as regulations adopted under that law. Excise tax applies to:

    * Alcohol and alcoholic drinks (1.90 euros by volume of alcohol in hectoliters, zero euros per hectoliter of table wine, 35 euros per hectoliter of sparkling wine, 40 euros per hectolitre drinks produced in the fermentation process, 70 euros per hectolitre beverage medium strength beverages and 550 euros per hectoliter of pure alcohol);
    * Tobacco products. Tax on tobacco products has a specific and proportional excise duty. Specific excise duties for all cigarettes is 1.00 euros / kg (0,02 € / per package). Proportional to the excise tax is 26% of the selling prices of cigarettes, which includes himself excise tax and VAT. Selling price for cigarettes, set the manufacturer or importer, and publishes them in the "official statements R.CH.G." excise tax on other tobacco products shall be paid per kilo and products are: cigars, and a mouthpiece for 10 euros, for cut tobacco - 20 euro, on pipe tobacco - 15 euros;
    * Mineral oil, derivatives and alternatives, namely, gasoline and other light oils (from 0.120 to 0.364 euros per liter), kerosene (from 0.069 to 0.120 euros per kilogram), gas oil (from 0.023 to 0.270 euros per liter), oil gases and other gaseous hydrocarbons (0.069 euros per kilogram).

Excised considered the importer or manufacturer of excise goods, as well as the person to whom, in accordance with the law may be postponed obligation to pay the excise tax (excise license holder, free user excise tax).

The obligation to pay excise duty comes if excise products are produced in Montenegro or imported into the customs territory of Montenegro. Payment must be made at the time of payment of customs duties, except in cases of deferred payment of excise duty. Excise on cigarettes commitment comes from the adoption of the control of excise stamps issued by the Tax Authority.

Taxpayer excise tax on a monthly basis to self-assess an excise tax, and provides the calculation of the tax office before 15 th of the month for the previous month. Very rarely, an excise tax on cigarettes shall be paid before the 60 th day from the date of adoption of the control of excise stamps. All products (tobacco, alcoholic beverages), before entering the retail market must be marked control excise stamps. Tobacco products, as well as alcoholic beverages, in the case of exports, marked a special brand of exports. Tobacco products and bottled alcoholic beverages that are sold in the free customs stores, marked the special excise stamps.

3. Customs duties.

Montenegro's customs system was formed by three major laws: the Law on Customs ("Official Gazette R.CH.G.», № 07/02, 38/02, 72/02, 21/03, 31/03 and 29/05) , "Law on Customs Tariff (" Official Gazette R.CH.G. »№ 75/05) and Law on Customs (" Official Gazette R.CH.G. »№ 71/02 and 29/05) as well as the provisions of these bylaws. The law "On Customs regulates the customs regime in Montenegro, duties and rights of persons who participate in the process of customs clearance. The law "On Customs Tariff" governs the customs nomenclature and the amount of customs duties. The rate of customs duty ranges from 0 to 30%, the average rate 6.17%. In some cases, is determined by some specific amount per unit weight of goods, such as agricultural products. In turn, export duties are not available. The law "On Customs regulates the work of customs authorities, rights, duties and responsibilities of customs officials.

4. Tax on corporate income.

Payment of income tax regulated by the Law on Profit Tax of Legal Entities "(" Official Gazette R.CH.G. », № 65/01, 80/04), from 2001, and amendments thereto of 2004.

Legal entities, both resident and non-residents, carrying out their activities on the territory of Montenegro with a view to profit, are taxpayers income tax. The subject of taxation of residents is considered income derived by a resident outside of Montenegro. Subject to tax non-resident is considered to be income received by non-resident in the territory of Montenegro.

Source of income means all income received as a result of:

    * The sale of goods produced in Montenegro;
    * Services rendered in Montenegro;
    * Receiving interest, dividends;
    * The exploitation of natural resources;
    * The sale of movable and immovable property located in Montenegro;
    * Sale of movable and immovable property, if the seller is located in Montenegro;
    * Risk insurance in the territory of Montenegro;
    * Other income derived from activities in Montenegro.

Exception: The Central Bank of Montenegro, state funds and public institutions, the founder of which is Montenegro, or a local government, except for income received from the sale of goods and services on the market.

Interest income tax rate is 9% of the main types of income this year will decline to 7%. This is the lowest rate in comparison with neighboring countries and the second in Europe after Lithuania.

For dividends and proceeds from equity in income of another entity, or royalties earned income - tax rate is 15% and interest income - 5%. Amounts of capital gains (capitalgains) included in the total tax base. Withholding tax is not payable on dividends and shares in the profits used to increase the available capital of the taxpayer.

Exemptions from income tax: for the first 3 years are exempt from income tax entrepreneurs and established business in undeveloped areas of Montenegro.

Profit tax is not payable:

    * Central Bank of Montenegro and public organizations, founded by local and republican governments;
    * Based on investments in securities, as well as in the case where capital gains on securities are invested in the purchase of new securities or reinvested within 12 months after their creation. Proceeds from the sale of securities held by the taxpayer for more than two years in circulation, shall be exempt from taxation.

Exception: The taxpayer carried out the investments in fixed assets for the development of its own activities - income tax is reduced by 25% of the amount invested.

When in operation the company has hired new staff for a period not less than two years, the tax base reduced by the amount of accrued wages, plus matching contributions for compulsory social insurance, which pays for the employer. Such benefits, apply within one year from the date of hiring new workers.

Accrual and payment of income tax occurs at the expiration of the fiscal year (calendar year, except in cases of liquidation or activity has been undertaken during the year), according to the tax basis carried over that period.

During the year the income tax paid as a monthly advance, the amount is determined on the basis of statements of income tax for the previous year. Advance payment is paid until the end of this month for the previous month, amounting to 1 / 12 tax liability for the previous year.

5. Income tax on individuals.

Accrual and payment of income tax on individuals regulated by the Law "On income tax from natural persons" (Official Gazette R.CH.G. »№. 65/01 and 37/04), on 01.07.2002 r, and the provisions adopted at its base.

Taxpayer income tax is a natural person, resident or non-resident who receives income in Montenegro from sources approved by the Law. In the case where profits are a few individuals, the income tax paid by each of them, in proportion to their share in earnings.

Income tax is not paid:

    * Members of foreign diplomatic missions in Montenegro and their families if they are not citizens of Montenegro;
    * Members of consular missions and their family members if they are not citizens of Montenegro;
    * Politicians and experts for technical support of the United Nations and specialized agencies;
    * Honorary consuls of foreign countries, but only in respect of income received from the States, appointing them to the post of honorary consul;
    * Politicians, experts and administrative staff of international organizations, if they are not citizens of Montenegro, or do not have a residence in Montenegro.

From payment of income tax exempted the following forms of income:

    * Material and other assistance provided in connection with the destruction or damage to property resulting from natural disasters and other emergencies;
    * Payment of health insurance, except for payments of wages;
    * Income from the inheritance or gift;
    * Income from gambling, lotteries, insurance, things of life and property;
    * Organized social and humanitarian assistance;
    * Scholarships and loans to pupils and students;
    * Benefits on retirement.

Along with the above income, income tax is not applied with hot meals, travel, awards and anniversaries, etc.

Basis for payment of income tax generates taxable income, which represents the difference between profit and costs incurred for this activity.

Income tax is calculated using tax scale:

Sources of income are considered - personal income (gross income from employment and work), self-employment, property and property rights, capital and capital gains.

Tax on personal income is calculated and paid by the employer or payer of income tax from legal entities in their work with a monthly tax scale:

Taxation of independent activity. Income from independent activities is considered to be income received as a result of: economic activity, free activity, to provide professional and intellectual services and other kinds of voluntary activities which are not the main activity of the taxpayer, and periodically carried out for profit. Taxable income from independent activities is taxable income of the taxpayer.

Advance payment of income tax from independent activities is paid monthly to the end of this month for the previous month in the amount of 1 / 12 tax liability for annual tax report for the previous year. Taxpayers receiving income from conducting periodic self-employment, failure to provide actual costs are recognized as the standard costs of 35% of the revenue and tax income tax rate is 20%.

All taxpayers income tax on profits, depending on the kind of ongoing activities are divided into several groups and each group, depending on the size of the realized profit is divided into subgroups.

1. Those who receive income from assets and property rights, such as: leasing of movable and immovable property from the time-limited transfer of copyright, industrial property and other property rights.

For them, the taxable income is the difference between total revenues, implemented from the lease and renting of movable and immovable property, copyright and industrial property rights, and the cost of obtaining these revenues in the same tax period. In this case, the tax rate is 20%. Standard costs are taken 35% of the profits, but revenues from the rental - 50%.

2. Those who receive income from capital gains, such as: interest income, profit-sharing in activities, promotions, receiving income from the use of property and services to owners and owners of capital for their own purposes. Income tax payers shall calculate and pay income taxes while earning the income of 15%, except for non-residents, to which the tax rate - 5%.

Taxable income from capital gains is the income earned from the sale of real estate, shares in the assets of legal entities and securities (assets), if the sale occurred within two years from the date of purchase.

Taxable income based on capital gains is the difference between the sale price and the purchase price of assets, adjusted for the growth of retail prices on the purchase date until the date of sale of assets. Resident pays tax at the same time providing an annual tax report.

The tax on capital gains derived by non-residents, payable at a rate of 15% stake.

The taxpayer is required at the end of the fiscal year to the end of April this year, give the tax office's annual report for the previous year, which will be independently calculated the income tax, net of advances paid. In the case of overpayment, the amount of the overpayment may be refunded or credited to the taxpayer in advance of the next tax period.

6. Contributions to mandatory social insurance (pension and disability insurance, medical and unemployment insurance)

The obligation to pay contributions for compulsory social insurance is regulated by the Law on Pension and Disability Insurance ("Official Gazette R.CH.G." 54/03, 39/04 and 79/04) entered into force on 01.01.2004, the Law "Medical Insurance" (Official Gazette R.CH.G. »№ 39/04), on 10.06.2004, and the Law" On social insurance contributions ("Official Gazette R.CH.G.» № 23/93 , 45/98).

Base amount for calculating the contribution of gross personal income, which includes the net personal income taxes and contributions paid by the employee upon receipt.

Rates of assessment for personal income of employees (wages, etc.) are as follows:

Basis for calculating the contributions of net income, which can not be below the average wage in the Republic of Montenegro in the month for which the fee is paid.

Limit for payment of contributions - the Law on Pension and Disability Insurance "defined maximum annual basis for the payment of contributions to pension insurance and disability insurance.

7. Turnover tax on real estate.

As the Montenegrin legal and natural persons and foreign natural and legal persons shall pay the same sales tax on real estate, amounting to 3% of the market value of the property, except in cases where international treaties provide for other conditions.

In this case, the real estate is any real estate purchase (contract of sale, exchange, inheritance, gift, payment or exemption from real estate joint stock company, the acquisition of real estate due to the liquidation and bankruptcy, pursuant to a court or other competent authority, and other ways of acquiring real estate from the other persons). A real estate are:

    * Land (for construction, agricultural, forest, etc.);
    * Construction projects (buildings and parts thereof, irrespective of destination).

Exception: the real estate is not considered a purchase of newly constructed buildings, as well as facilities that were constructed, commissioned and paid for after the entry into force of the law on value added tax (VAT). These facilities are subject to taxation under the Law "On value added tax (VAT).

8. The tax on use of motor vehicles, aircraft and aircraft.

Tax on the use of motor vehicles to pay legal and natural persons who are owners of registered cars and motorcycles. Tax on the use of motor vehicles by their owners to pay for a year, based on engine size:

    * From 25 euro for passenger cars not more than 1 300 cm3 to 1,500 euros for passenger cars more than 5,000 cm3;
    * Motorcycles from 10 to 300 euros.

Tax on motor vehicles annually reduced by 5% at the same time reducing the amount can not exceed 50% of the total amount of tax. Tax on the use of water vessels is paid annually for the first time when registering watercraft, and then when renewing permission to use. The amount of tax depends on the length of the watercraft, the presence or absence of the cockpit and engine power in kW, from 5 to 3,000 euros. Tax on the use of water vessels is reduced by 5% for each year of operation of the vessel. However, the amount of reduction may not exceed 50% of the total amount of tax.

9. Sales tax on motor vehicles were in use, swimming facilities, aircraft and aircraft.

The obligation to pay tax on the sale of motor vehicles were in use, swimming facilities, aircraft and aerial vehicles, defined by the Law "About the tax from sales of vehicles were in use, swimming facilities, aircraft and aerial vehicles" ("Official Gazette R.CH . G. », № 55/03). Buyer pays tax at a rate of 5% of market value if sales of these vehicles does not provide VAT. Tax benefits apply only in case of inheritance or donation.

10. Tax on insurance premiums (contributions).

This tax is paid by insurance companies, regardless of whether the insurance activities carried out individually or through their representatives. The tax rate is 6% of contributions for auto insurance, and 3% of contributions for the Casco car insurance. Tax liability paid up to 10 th of this month for the previous month. The obligation to pay tax on insurance contributions introduced by the Law "On taxes on insurance fees (" Official Gazette R.CH.G. », № 27/04 and 37/04).

11. Republican fees (administrative, judicial, registration).

Obligation to pay the administrative fee determined by the Law on Administrative Fees ("Official Gazette R.CH.G.», № 55/03 and 81/05). The size of the Republican charges determined by tax rates and depends mainly on the type of activity. Obligation to pay court fees determined by the Law "On judicial duties" ("Official Gazette», № 76/05). Fees are collected from individuals and legal entities for the acts and acts carried out during the trial. The size of the court determined the tariff for collection of fees, depending on the complexity of the action being taken in the judicial process, as well as the type of litigation. Obligation to pay the registration fees determined by the Law "On economic enterprises (" Official Gazette R.CH.G. », № 6 / 02). This tax is charged for registration of companies in the Economic Court of Arbitration. The registration fee ranges from 1 to 50 euros depending on the type of activity and form a company which is subject to registration.

12. Local taxes (taxes, fees and compensation).

Local taxes, duties and compensation shall be established by the local administration and consist of:

12.1. Local taxes:

    * Estate tax, which is 0,08-0,8% of market value depending on its type, location, quality and year of construction, details, see: Expenditure for the purchase and maintenance of real estate;
    * An additional tax to income tax on individuals, the rate of surcharge can be up to 13% for municipalities and for the residents of the capital to 15% of the base amount, which is income tax on individuals;
    * The consumption tax which is payable on the sale of alcoholic beverages and soft drinks at public catering enterprises, their rate may be up to 3% for municipalities and enterprises to the capital to 5%. The taxpayer of this tax is legal or physical entity that provides catering services. Base amount for calculating the tax on consumption, generates retail price of drinks, which does not include value added tax and consumption tax;
    * A tax on the company or its name. The taxpayers of this tax - legal and natural persons who are taxpayers of income tax on individuals or income tax from legal entities and which are registered for commercial activities. This tax is paid an annual amount determined by the local government, with its size should not exceed 300 euros for each enterprise or company name. Individuals and legal entities are exempt from this tax in the first 12 months of the company;
    * Tax on gambling (machines), and entertaining games - may take up to 20 euros from the machine;
    * A tax on undeveloped land, the rate of local tax - 0,03-0,30 Euro / sq m).

12.2. Local fees (housing fees, administrative fees and utility charges).

Obligation to pay the housing fee is regulated by the Law on the housing assembly ("Official Gazette R.CH.G.», № 11/04 and 13/04) to pay an administrative fee - the Law on Administrative Fees ("Official Gazette F . CH.G », № 55/03 and 81/05) and the position of the municipality, to pay utility fees - the Law on municipal charges and fees (" Official Gazette R.CH.G. », № 38/92, 30 / 93, 3 / 94, 27/94 and 45/98) .12.3. Fee (for the conversion of urban land, tax on use of urban land - "Official Gazette R.CH.G.», № 42/04).

13. Compensation for the use of natural resources, public interest (forest and water resources, mineral resources, roads, and seafood).

Concession compensation paid for the use of natural resources, public interest, namely: compensation for the use of forest resources, compensation for the use of mineral ores, and compensation for the use of public roads, compensation for the use of seafood, environmental compensation, compensation for organizing gambling. Obligation to pay the above compensation is governed by special provisions (Law on forest resources, the Law on Water Resources, the Law "On mineral resources", the Law on seafood, etc.).