Press release from 24th Cabinet session

The Montenegrin Cabinet, at its 24th session held on 13 May 2021, chaired by Deputy Prime Minister Dritan Abazović, adopted the Draft Law on Amendments to the Law on Tax Administration. Bearing in mind that the taxation of property whose origin cannot be proven by legal income is one of the effective tools in the fight against corruption and tax evasion, the proposed amendments provide a legal basis for taxation of income earned by a taxpayer or other person on the acquisition of property, which he did not report to the tax authority, i.e. he did not include it in the tax base, which will contribute to strengthening tax discipline and increasing budget revenues.

In accordance with the proposed changes, financial institutions in Montenegro will be required to identify accounts held or controlled by residents of an EU Member State or another country, to collect information on the balance, transactions from these accounts and income of those persons based on certain types of income and capital and to provide that information to the tax authority for the purpose of exchanging information with the competent authorities of other states. Also, legal entities, residents of Montenegro, which are members of a group of related parties, and which perform activities in another country, will be obliged to submit to the tax authority, in order to exchange information with competent authorities of other countries, provide data on activities, income and income tax paid in another country, for each member of the group of related parties.

The Draft Law harmonises the current law with EU directives in the area of administrative cooperation in the exchange of information in the field of taxation, which creates a legal framework for the development of information exchange systems between competent authorities that will strengthen national tax systems and improve tax collection.

The Cabinet approved the Draft Law on Amendments to the Law on Excise Duties which, in order to combat the negative effects that the use of tobacco products, alcoholic beverages and products with added sugar have on the health of citizens, as well as the need to further align the excise duty on cigarettes with the requirements of Directive 2011/64/EU, and the need to increase budget revenues, planned changes to the excise policy, from 1 July of the current year. The proposed legal solution, in addition to excise duties on cigarettes, will redefine the amount of excise duty on other tobacco products, so that it is proposed to increase the amount of excise duty from 45.00 euros/kg to 55.00 euros/kg for fine-cut tobacco, for other tobacco for smoking is proposed to be increased from 25.00 euros/kg to 35.00 euros/kg, while for excise duty on non-combustible tobacco paid per kilogram of net weight, an increase to 70% of the minimum excise duty is proposed.

The proposed law plans to increase the excise tax on carbonated beverages with added sugar or other sweetening or flavoring agents from 25 euros to 35 euros per hectoliter, and to introduce new type of excise product, excise duty on sugar products, cocoa and ice cream which will be paid in the amount of 0.6 euros/kg.

It is planned to increase the amount of excise duty on beer, which would be paid in the amount of 7.00 euros per hectolitre of beer (instead of 5.00 euros as provided by the current legal solution) and to increase the excise tax on sparkling wines from existing 35 to 40 euros per hectolitre, excise duties on other sparkling fermented beverages from 35 to 40 euros per hectolitre and to introduce excise duties on other non-sparkling fermented beverages of 35 euros per hectolitre.

This law proposes that petroleum products and biofuels that are put into free circulation on the territory of Montenegro must be marked in accordance with the regulation governing the field of energy. In this way, it will be possible to suppress the illegal trade in petroleum products, as well as increase budget revenues based on excise duties on mineral oils.

An increase in the excise tax on tobacco and tobacco products and the introduction of a new excise product would increase the budget revenue, which is estimated at around 16.8 million euros. The total annual fiscal effect based on the increase in excise duties on carbonated beverages with added sugar or other sweetening or flavoring agents is estimated at around EUR 4.0 million. By increasing the excise tax on alcohol and alcoholic beverages, the total annual fiscal effect is projected at around 4.2 million euros, while the fiscal effect from the introduction of excise duty on sugar, cocoa and ice cream products would amount to around 6.2 million euros.

The Cabinet adopted the Draft Law on Amendments to the Law on Local Self-Government Financing, which will be valid legal solutions harmonised with the amendments to the Law on tax on income of natural persons, in order to implement the Government's commitment that the funds on the basis of undeclared revenue represent the revenue of the budget of Montenegro.

The Cabinet adopted the Draft Law on Amendments to the Law on Patents with a Report from the Public Debate. Having in mind the planned ratification of the European Patent Convention, and the fact that the Law on Ratification of the Agreement between the Government of Montenegro and the European Patent Office on Extension of European Patents, which entered into force on 1 March 2010, was a transitional phase towards future ratification, there was a need for amendments to the Law on Patents.

By ratifying the Convention, which the European Union insists on in the accession process, Montenegro will gain the status of a full member of the European Patent Office, with the right to vote.

The Cabinet adopted the Draft Law on the ratification of the Convention on the Grant of European Patents (European Patent Convention) of 5 October 1973, with amendments to Article 63 of the European Patent Convention of 17 December 1991 and amended on 29 November 2000.

The Cabinet adopted the Decree on Postponement of Customs Duties and Value Added Tax on Import of Products, which determines the possibility of deferred collection of customs debt (customs and VAT) due in April, May and June 2021, to customs debtors who, due to the COVID-19 epidemic, have a problem with regular servicing their obligations or their business may be endangered in any way. It is possible to postpone the payment of the customs debt for 60 days from the day of acceptance of the customs declaration. Also, it is prescribed that a third party is obliged to provide a bank guarantee, if he has undertaken the obligation to pay the customs debt instead of the debtor.

The Cabinet adopted the Programme of construction, maintenance, reconstruction and modernisation of the railway infrastructure for April 2021 (ongoing maintenance) in the amount of 520,000.00 euros.

The Cabinet adopted the Fourteenth Semi-Annual Report on the overall activities within the process of integration of Montenegro into the European Union for the period July - December 2020 and the Twenty-Eighth Quarterly Report on overall activities in the process of integration of Montenegro into the European Union for the Period October - December 2020. The reports will be submitted to the Parliament of Montenegro for consideration.

The Information on creating conditions for the needs of conducting the census was adopted. As part of the preparations for the upcoming census, the Ministry of Public Administration, Digital Society and Media coordinates with the competent institutions the implementation of activities on data entry in the Registry of house numbers, streets and squares - Address Registry by municipalities. By analyzing the submitted data, it was concluded that the conditions for the data entry procedure to be entered in all local self-government units have not been met.

The National Plan for Protection and Rescue from Chemical and Biological Risks has been adopted. The plan includes a set of measures and actions taken to detect, prevent, mitigate and eliminate the consequences of natural disasters, technical and technological accidents, as well as other major accidents that may endanger the population, material goods and the environment. 

The Cabinet adopted the Information on initiated proceedings for revision and termination of validity of the integrated permit for TPP "Pljevlja" by the Agency for Nature and Environmental Protection. The information points out that due to force majeure, i.e. circumstances that appeared after the issuance of the integrated permit and the initiation of public procurement procedures, which were caused by the COVID-19 pandemic, it was not possible to start the ecological reconstruction of the TPP earlier. It was stated that EPCG, in accordance with the assumed international obligations, the legislation of the Energy Community and the EU, relevant internal regulations and the issued integrated permit, initiated appropriate public procurement procedures in a timely manner, i.e. that the said procedure was initiated and implemented before force majeure caused by the pandemic, which could not have been predicted, avoided or eliminated.

Having in mind the existing legal ban on commissioning TPP Pljevlja after the completion of the overhaul, as the planned 20,000 working hours were indisputably spent, a possible suspension of the integrated permit revision procedure and a decision on its termination would result in a ban on commissioning of TPP Pljevlja from 1 June 2021, after the overhaul is completed.

On that occasion, the Cabinet assessed that until the completion of the negotiations between the Ministry of Capital Investments and the Energy Community, it is necessary to terminate all initiated procedures for termination and revision of the integrated license, due to inconceivable damage to the energy sector and the state of Montenegro.

The Information on initiating activities on the construction of a solar power plant at Velje Brdo site was adopted. The Information emphasises that the Ministry of Capital Investments, as part of activities to promote Montenegrin energy potentials, through direct communication with potential investors, recognised the increased interest of investors in the construction of facilities using renewable energy sources. In that context, significant interest was expressed in the construction of a solar power plant at Velje Brdo site in Podgorica.

Having in mind the commitment to the development of the energy sector based on the construction of new generation capacities that use renewable sources as a resource, in order to reduce electricity imports, increase security of supply and reduce greenhouse gas emissions, the Cabinet instructed the Ministry of Capital Investments form the Commission, which will prepare tender documentation which would regulate all conditions and necessary steps in order to build a solar power plant at Velje Brdo site. After the Cabinet accepts the tender documentation, the Ministry will announce a public invitation, according to which it would conduct a tender procedure for the selection of investors.

The Report on the implementation of the Action Plan for the implementation of the Integrated Border Management Strategy in 2020 and the Action Plan for 2021 were adopted.

The Cabinet adopted an Action Plan for the implementation of the Schengen Action Plan for 2021.

The Cabinet adopted the Proposal basis for negotiations and conclusion of the Agreement between the Government of Montenegro and the Government of Hungary on the mutual recognition of certificates of immunization. Having in mind the situation related to the COVID-19 pandemic, the Cabinet assessed that the conclusion of the Agreement on Mutual Recognition of Immunization Certificates will facilitate the movement of citizens between the two countries, which will be of great economic benefit during the upcoming tourist season. Also, a significant number of Montenegrin students and citizens live and work in Hungary, so this measure will significantly affect the improvement of the quality of their life and work.

The Information regarding the Decision of the Agency for Protection of Competition on the incompatibility of the Law on Investment in Consolidation and Development of the Company for Transportation of Passengers and Goods in Air Traffic "Montenegro Airlines" Podgorica with the Law on State Aid Control was adopted. The information states, among other things, that the Agency for Protection of Competition at the session of the Council on 6 May 2021, passed a Decision that the Law on Investment in Consolidation and Development of the Company for Transportation of Passengers and Goods in Air Traffic "Montenegro Airlines" Podgorica, is not in line with the Law on State Aid Control. In this regard, the Ministry of Capital Investments is in charge of preparing the text of the Draft Law on the termination of the said Law.

The Cabinet, among other things, adopted the Information on the provision of funds and procurement of used official vehicles through financial leasing with the obligation to return the leased object to the lessor for a period of 12 months for the needs of the Police Directorate. An amount of 715,000 euros has been allocated for this purpose.