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Business Environment WELCOME to the forty-forth edition of Montenegro Business Outlook. MBO is quarterly publication of pertinent economic indicators presenting a comprehensive view of Montenegro’s business environment. This publication is intended to serve international business people seeking investment opportunity in Montenegro. We welcome your comments.

Business Environment in Montenegro: Business environment in Montenegro is still under the pressure of economic crisis. Government is taking different initiatives in order to improve macroeconomic stability in the country. These measures involve new laws that would influence decrease in the level of grey economy as well as announcement of the introduction of the new level of VAT rate. Economic freedom: Montenegro has been ranked well in different reports that are measuring the level of economic freedom. Priority actions for fighting the economic crisis have to be considered, since they can negatively influence the level of economic freedom. The Government needs to consider negative effects of those measures on economic freedom. Macroeconomic Outlook: The third quarter of 2012, at a macroeconomic level, was characterized by a slight reduction in economic activity: industrial production recorded declines of 0.8% during January-February 2013 when compared with same period last year. Less tourists were recorded in January (4,5% below last year`s level. In the labor market, slightly negative trends were recorded. Salaries without taxes and contributions in January 2013 recorded a fall of 3% when compared to last year`s period, and totaled €490, while the unemployment rate was 14.2%. In February monthly CPI index rose 1.6% Banking sector: From the end of October to the end of December 2012, the banking sector recorded a slight decrease of total assets and liabilities, while household deposits recorded an increase. In this period, the weighted average lending effective interest rate was decreased by 0.32%. The situation in the banking system, in terms of solvency and liquidity is satisfactory. Privatization and Investments: The Council for Privatization and Capital Investments reviewed the proposal of measures made based on the analysis of privatization agreements concluded with investors in the tourism area, which have not been implemented yet. Certain agreements, due to the investor’s failure to fulfill defined obligations, will be terminated, while some others will be revised and re-defined. The Government of Montenegro continues to pursue the Privatization Plan for 2013: tender for New Tobacco Company has been launched; tender for exploration of oil and gas is to be announced soon; etc.

CENTRE FOR ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT Kralja Nikole 27a/4, BC “Čelebić“, Podgorica, Montenegro Tel/Fax: +382 (0) 20 633-855 +382 (0) 20 620-611 E-mail: web site:

Business Environment in Montenegro by Darko Konjević

During the first 4 months of 2013 the Government of Montenegro made a significant effort in order to improve the situation regarding tax income to the state budget. These activities resulted in the creation of the Committee for fighting the grey economy that adopted the Action Plan for fighting the grey economy. This action plan resulted in a proposed Law on preventing illegal business operations that was adopted by the Government of Montenegro. Also discussions about the VAT rise in Montenegro have been intensified both by domestic and foreign stakeholders. The Government of Montenegro adopted the Agricultural budget of Montenegro for 2013 as one of the measures of supporting the agriculture sector in Montenegro. The Government defined a new minimal wage.

EU Corner: Montenegrin steps towards EU

The Working group for suppression of the grey economy adopted an Action plan for 2013 as one of the preconditions for activities that need to be undertaken in order to decrease the level of the grey economy. The action plan is mainly focused on areas that are having a large impact on the state budget such as: excise products, issuing of fiscal invoices, the grey economy at the labor market, tax debt of the companies etc. All of these areas can significantly influence the level of tax income and there is common action planned by all stakeholders (different inspections, state authorities, judicial system) in order to improve the situation in collection of income. Special attention is given to the forthcoming tourist season since it was proved that lot of tax evasion and non-registered activities were undertaken during the summer season in Montenegro.

Interview: Mr. Saygin Narin, CEO of Global Ports Holdings

Also the Working group prepared the Law on preventing illegal

Capital Markets: During the first 4 months of 2013, the Montenegrin capital market was characterized by a decrease in the volume of trade, but the number of transactions was characterized by an increase when compared with the same period of 2012. We can conclude that better days are ahead of us, but the crisis is not yet over. In the first 4 months of 2013, the greatest turnover was recorded in the area of company shares (85,2%), followed by bonds and investment funds. In the focus: Decentralization in Montenegro: involving local governments in the financing of education We introduce: Doing business in a changing climate – building a case for adaptation (2)

business operation and sends it to the Government for adoption. The law among other things proposes the following actions in order to improve the rule of law and to decrease the level of the grey economy: • Defines the obligation of legal subjects to open an account within a bank and to make all of the transfers via the bank as well as to pay salaries through bank accounts. • Defines the level of cash maximum within a company, • Defines the prohibition of opening a new company and doing new work for the owner of the company or entrepreneur which is under bankruptcy or in the liquidation process, or it has tax debts and blocked accounts, • Defines the obligation for providing certain documents of proof when publishing ads in newspapers, • Defines the obligation for organizers of cultural, sports and other events to report income of non residents and pay the appropriate tax; • Defines the obligation for companies that are collecting products, semi products and other from non registered persons to report each payment to such a person larger then 100€. Further discussion on VAT rise continues in Montenegro. There are obvious signs that in the next couple of months the VAT rate will rise from the current 17% to a proposed 19%. The VAT for basic products will remain at the level of 7%. The VAT rise has been requested by international

organizations in order to provide Montenegro with additional funding needed to stabilize the budget. Even though current analysis shows that there will not be any negative effects it is hard not to expect an increase of prices and inflation in the next period. It is also announced that this measure will be a temporary one but if it is imposed before the tourist season it could do some damage to Montenegrin attractiveness. It is always better to try to collect money from all those that are not registered and not to tax those that are already regularly paying all the taxes. The Government of Montenegro has adopted the Agricultural budget for 2013. The level of the budget is to the amount of €14,1 million. For agricultural development, rural development and fishery €12,6 million will be provided, €1,3 million will be provided for health care of animals and about €200,000 for conducting phytosanitary measures. The new minimum wage was defined by the Government at the level of €193. This level is defined for the first six months of 2013. The level of the current minimum wage is about €50 higher than before which represents a serious increase. ■ Number of registered companies in Montenegro as of 1st May 2013 Source: Commercial Court

Joint stock company Limited liability company

341 27,802

Part of a foreign company


General partnership




Limited partnership










Tax rates Value added tax

17%, 7% and 0%

Corporate profit tax


Personal income tax

9% (15% over 479€)


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