In an effort to bring the existing legislation in Montenegro in line with the current laws and regulations of the European Union, predominantly the Pillar Two framework, the Assembly of Montenegro has recently adopted the Law on the Global Minimum Corporate Income Tax.
The prescribed minimum effective tax rate is 15%.
It should be noted that the newly introduced tax obligation will not be imposed on small and medium enterprises operating exclusively within the territory of Montenegro, but only on large multinational groups carrying out their activities in Montenegro, as well as large domestic business groups, the consolidated revenues of which amount to at least 750 million euros in at least two of the preceding four fiscal years.
The law provides exemptions from the payment of the additional tax for constituent entities located in Montenegro for a given fiscal year if, for that fiscal year:
- the average revenue of all constituent entities located in Montenegro is less than €10,000,000; and
- the average profit or loss of all constituent entities in Montenegro is a loss or amounts to less than €1,000,000.
Lastly, significant fines for failing to comply with the new law have been introduced, ranging from 3.000 to 40.000 euros for legal entities, as well as from 500 to 4.000 euros for responsible persons within the infringing entity.
Prepared by,
Daniel Vujacic, LL.M. (UW)