Press release: The 45th Cabinet session

The Montenegrin Cabinet, at its 45th session held on 4 November 2021, chaired by Prime Minister Zdravko Krivokapić, adopted the Information on the proposal of the economic programme "Europe Now!". Starting from the strategic commitment, defined as "achieving smart, sustainable and inclusive economic growth that will contribute to improving the quality of life of all its citizens", the Government has developed an economic programme - "Europe Now!" whose main goals are: standard of living, employment growth, reduction of the "grey economy" in the labour market, improvement of the business and investment environment. The set of proposed measures, primarily in the area of tax policy, includes:

• increase of the minimum wage to EUR 450;
• reduction of the tax burden on labour;
• introduction of progressive taxation as a more efficient model of taxation, which imposes higher tax rates on those with higher incomes.

The Programme enables the general growth of net salaries for all employees, with the highest growth of as much as 80% achieved by employees who have received the minimum salary so far. Increasing the minimum wage has a positive effect on the standard of employees with the lowest incomes, while the introduction of progressive income taxation redistributes income from those with higher income to those with lower income. The Information emphasises that the Programme is based on the readiness of the state to waive part of the income in favour of the employee and the employer, thus creating an environment for creating new jobs and expanding the tax base.

Also, the Programme presents all tax policy measures that will be implemented to meet the ultimate goals of the programme, respecting the principles of macroeconomic stability, long-term sustainability of public finances and attractiveness of Montenegro as an investment destination, while creating a basis for reducing unfair competition, i.e. "the grey economy", especially on the labour market, which consequently provides employees with greater legal security.

The Programme, which was developed according to the extremely conservative microsimulation model developed within the technical support of the International Monetary Fund, will provide in the medium term a multiplier effect on economic flows through: job creation, increasing household consumption, reducing informal economy, which will affect the creation of conditions for increasing budget revenues and long-term sustainability of public finances. The Cabinet assessed that the proposed measures will bring the necessary dose of optimism in society, encourage young people to stay in Montenegro, especially in its less developed regions, and at the same time enable an increase in household consumption, by increasing disposable income.  

The Cabinet adopted the Draft Law on the Protection of Trade Secrets. The main goal of this regulation is greater legal security and efficient legal protection of trade secrets from unlawful acquisition on the market, which seeks to increase the competitiveness of companies and research and development entities whose comparative advantage is based on trade secrets. Also, this Law harmonises the national legislation with the legislation of the European Union. The Law, among other things, defines the term trade secret, specifies when obtaining, using or disclosing a trade secret is considered legal or illegal, as well as determines the measures, procedures and legal remedies available to the owner of a trade secret in case of unlawful acquisition, use and disclosure of trade secrets.

The Cabinet adopted Amendment 1 and Amendment 2 to the Draft Law on Amendments to the Law on Corporate Income Tax, which will be submitted to the Parliament of Montenegro. These amendments propose a transition from proportional (tax rate of 9% regardless of the amount of taxable profit) to progressive taxation of corporate profits depending on the amount of taxable profit at rates of 9%, 12% and 15%. It was emphasised that micro and small companies, which make up over 90% of companies in Montenegro and make a profit of up to 100,000 euros, will have the same income tax of 9%, according to the new legal solution. In this way, protection is provided for economic entities that make a profit up to the prescribed amount. The proposed solution would increase budget revenues by about 25m euros.

The current corporate income tax rate in Montenegro is the lowest compared to countries in the region, as well as in EU member states. Bearing in mind that the average corporate tax rate in the European Union, which was 20.8% in 2020, is still higher than the highest corporate tax rate proposed by this amendment, it was pointed out that Montenegro remains a competitive investment destination.

The Cabinet adopted the Draft Law on Amendments to the Law on Sports. The reasons for the amendments to the Law is the need to harmonise it with internationally binding conventions related to anti-doping. With the proposed amendments to the Law, Montenegro is fulfilling its international obligations arising from the ratification of the UNESCO International Convention against Doping in Sport and the Council of Europe Anti-Doping Convention.

The Decision on the formation of the Open Data Management Council was adopted. It was emphasised that open data represent the basis for improving the work of public administration, further modernisation and transparency of work, as well as increasing the efficiency and quality of services provided by the administration. Publishing data in a reusable format is extremely important for the transparency of public sector work. The decision, among other things, defines the tasks of the Council, which are reflected in identifying challenges in the field of open data and proposing solutions to these challenges, considering and launching initiatives, activities and projects to improve open data management, improve cooperation with state and local authorities in order to open as much data as possible, to manage and promote the open data portal (www.data.gov.me), as well as improving the transparency of public administration and promoting the principles of open public policies.

The Cabinet adopted the Information on sending humanitarian aid to Afghanistan. The Information states that after the takeover of power by the Taliban, Afghanistan is facing a humanitarian crisis. The COVID-19 pandemic has put the health system under serious pressure, and the economy has been hit hard, which is why many Afghans need urgent humanitarian aid. The Cabinet has decided to send $ 100,000.00 in humanitarian aid to the UN to overcome the humanitarian situation in Afghanistan, thus confirming that Montenegro is a responsible member of the UN which, within its capability, contributes to peace and security in the world.

The Information on the activities undertaken on the establishment of the Credit Guarantee Fund of Montenegro was adopted. The establishment of the Credit Guarantee Fund is a significant component of recovery, following the measures adopted on 29 April 2021 to support the economy in combating the effects of the COVID-19 pandemic, and especially financial support for the development and strengthening of micro, small and medium enterprises in Montenegro. This aims to establish a long-term financial instrument, which will stimulate the recovery of MSMEs and which will be used as an instrument of adequate mitigation for all potential problems in the future caused by economic shocks. EBRD support enables faster launch of the Guarantee Fund in Montenegro, which will provide a long-term platform for cooperation with other international financial institutions and potentially provide more resources for economic recovery and development. On that occasion, the Ministry of Economic Development was tasked to start activities on drafting the Law on the establishment of the Credit Guarantee Fund of Montenegro.