Montenegro: Tax amendments include reduced VAT rates, progressive taxation of corporate profits

Tax amendments published in the official gazette on 31 December 2021

Progressive taxation of corporate profits

The Montenegrin Parliament approved a set of tax amendments that extends the scope of a reduced value added tax (VAT) rate and introduces progressive taxation of corporate profits.

The tax amendments were published in the official gazette on 31 December 2021. 

VAT rate

Scope of application of a reduced VAT rate of 7% is extended to include the supply of services related to preparation and serving of food and beverages (except alcoholic beverages, carbonated beverages with added sugar and coffee) in facilities for the provision of catering and accommodation services.

The amendment is effective as of 8 January 2022.  

Progressive taxation

Progressive taxation of corporate profits is introduced as of 1 January 2022:

  • Profits up to €100,000 are subject to 9% tax
  • Profits ranging from €100,000 to €1,500,000 are subject to 12% tax
  • Profits over €1,500,000 are subject to 15% tax

The withholding tax rate is increased to 15%.

Other amendments

  • A new set of rules concerns the taxation of payment of interest and royalties and distribution of dividends/shares in profits to related parties from European Union (EU) member states. These new set of rules will be applicable from the date of accession of Montenegro to the EU.
  • A decrease of the corporate income tax liability by 6% is eliminated as of 1 January 2022.

The tax amendments also include transfer pricing provisions. Read TaxNewsFlash

Read a January 2022 report prepared by the KPMG member firm in Montenegro


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