Analysis of corruption and business barriers between the public and private sectors in Montenegro
However, there are some unnecessary fiscal burdens for small and medium enterprises. For example, according to the Law on Amendments to the Law on Tax on Turnover in Immovable Property ("Official Gazette of Montenegro" No. 069/03-34 and Official Gazette of Montenegro, No. 17/07, Article 9), which has been in force since January 2008, the rate of sales tax has been increased from 2% to 3%. A large burden of the private sector is under an obligation to pay contributions to tourism organizations. Contributions for membership must be paid by all legal and natural persons engaged in activities related to tourism. These activities are divided into groups depending on the level of association with tourism revenue generated. Thus the first group includes activities whose generated income is most directly dependent on tourism and the last group includes those activities whose income depends least on tourism. Annual membership fees range between €50 and €10,000. b) However, local taxes and levies are much bigger problems. According to the Law on Self-local Government Financing (Official Gazette of Montenegro, No. 042/0315; 044/03-5 and Official Gazette of Montenegro, No. 005/08-26; 051/08-1) municipalities can generate revenues through: •
Local taxes (tax on property, consumption tax, games on chance tax, tax on firm or name etc);
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Local fees (residence fees, administrative and communal fees) and
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Contributions (contribution for construction land usage, contribution for usage of municipal roads etc).
Due to a lack of regular inflow (caused by the economic crisis and the removal of contributions for the usage of construction land by the municipal contribution system) during the course of 2009, most municipalities decided to raise utility taxes and other fees that were collected from the private sector in an attempt to service its own needs. In this situation, the private sector was faced with additional financial obligations at a local level. For example: -
In the municipalities of Berane and Andrijevica, annual tax was calculated and charged on machinery and equipment in the wood industry;
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In the municipality of Rozaje, wood industry companies had to pay a new tax for roads (2 EUR/ m³ of wood mass). This was an additional burden because the Law on Forests already prescribes that 30% of concession fees will be allocated to local governments;
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In the municipality of Niksic, fees for using billboards and other forms of advertising has increased from 250 to 800 EUR.
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