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Montenegro: Tax developments in response to COVID-19

General Information

This page offers an overview of tax developments being reported globally by KPMG member firms in response to the Novel Coronavirus (COVID-19).

The content will be updated regularly. However, due to the fast-moving pace of change, it may not always reflect the most current developments in a given jurisdiction. Please refer to the date of accuracy and refer to the relevant links, under additional information, for original source information.

Date accurate as of: 14 October 2020

Initial tax relief provided in Montenegro in response to the coronavirus (COVID-19) pandemic include measures for the deferral of payments of individual (personal) income tax and social security contributions.

On July 23, the Government has announced multiple initiatives as a part of third set of measures for support of the economy. 

In line with announced measures, VAT Law is amended so that VAT rate is reduced from general rate of 21% to 7% for accommodation in tourist apartments, preparation and serving of food, bottled drinking water and non-alcoholic non-carbonated beverages in restaurants and facilities where catering services are provided (applies as of 1 September 2020), and 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 (applies up to 31 August 2021).

Additionally, VAT Law amendments extend VAT exemption to supply and import of products and services on the basis of a concluded donation contract with state bodies, local self-government units and other public legal bodies, or donations of medical devices and protective equipment to state bodies and organizations and local self-government units and other public legal bodies.

Also, amendments prescribe that taxpayer may issue an invoice in electronic form with the prior consent of the recipient of the invoice, in accordance with the law governing electronic documents, and introduces submission of VAT returns solely in electronic form (instead of possibility to choose between paper and electronic submission) as of 4 November 2020. 

The Government has also announced several additional measures which will span across 4 years period and amount to 1.2 billion EUR, including salary incentives for affected industries (100% of gross minimum salary reimbursement for COVID prohibited services, 70% for hospitality services), low interest rate loans, incentives for financing loan interest, etc. 

Tax relief provided in Montenegro in response to the coronavirus (COVID-19) pandemic include measures for the deferral of payments of individual (personal) income tax and social security contributions. 

In addition, the tax authorities have extended the deadline for filling financial statements and corporate income tax returns from March 31, 2020 to April 15, 2020. However, this relief does not extend the deadline for the payment of corporate income tax.

A decree (published in the official gazette) is effective 31 March 2020, and includes a 90-day postponement for businesses economically affected by the COVID-19 pandemic to pay their tax liabilities—that is, taxes that otherwise would need to be paid during March, April, and May 2020.

  • The decree does not apply with regard to governmental entities or municipalities.
  • The tax liabilities for which relief is provided include: (1) individual income tax; (2) social security contributions; and (3) amounts owed under a payment plan for taxes due for prior tax periods.
  • Taxpayers seeking to take advantage of the relief must file a request with the tax authority.

In line with the Decree amendments, postponed duties are to be paid in 24 installments after the postponed period ends. 

Separately, the tax authorities announced an extension of the deadline for filing of the annual individual income tax return (GPPFL Form) for 2019. The deadline (originally 30 April 2020) was extended by 15 days, to 15 May 2020.