The American Chamber of Commerce in Montenegro has sent an official letter to the Prime Minister of Montenegro, Mr. Zdravko Krivokapić, PhD and the Minister of Finance and Social Welfare, Mr. Milojko Spajić, MSc – regarding the announcement of the Draft of the budget for the current year, with the aim to once again emphasise the importance of predictable tax policy and initiate a meeting to rediscuss the key recommendations from the AmCham Business Climate Report for period 2019-2020, for which we appreciate that they are crucial for retaining existing and attracting new investors to Montenegro.

The American Chamber of Commerce in Montenegro (AmCham Montenegro) is making significant efforts to achieve timely and continuous communication between the Government of Montenegro and the private sector, regarding relevant issues to the business environment in Montenegro. This was recently pointed out during the event “Openly with the Prime Minister”, at which we presented the AmCham Business Climate Report for 2019-2020, and the main guest was the Prime Minister. On this occasion the Prime Minister supported the importance of timely involvement of the business community in the adoption of new and / or changes to existing regulations relevant to the business environment.

In order to keep the existing renowned investors, but also to attract new ones, a safe, transparent and predictable business environment is necessary. The transparency of the decision-making process in the tax area was rated as poor or very poor by 61% of our member companies, in the last Business Climate Report. Therefore, we pointed out the need for improvement in communication regarding tax policy, with the aim of achieving predictability as an important business factor. 

Frequent changes of the tax system create uncertainty, unpredictability and additional costs, and discourage current and potential investors from investing in Montenegro. Therefore, we believe that tax policy changes, which should be applied from the middle of the fiscal year, without proper announcement and consultation, have an extremely negative impact on the business environment, since all companies have already adopted business plans for this year. In particular, it should be pointed out that these changes occur in the year of the COVID-19 pandemic, in which companies have reported a significant revenue decline, and are forced to rationalize all expenses, which ultimately affects the reduction of total consumption. 

For this reason, any measure that leads to higher prices of products and services, and a decrease in the purchasing power of the population, such as an increase in excise duties, inevitably leads to a further decline in consumption and an increase of the grey economy, and thus a reduction in tax revenues. So, in that way, budget revenues do not increase, for which there are examples from the recent past from our country when similar measures were adopted, but also corrected after a certain period of time.

Finally, we emphasize that the way of adopting new tax policies, provided by the Draft Budget, it’s not in line with the basic principles of predictability and business planning advocated by AmCham Montenegro, and for which we received the support of the Prime Minister and Minister of Finance and Social Welfare. We believe that the ministry in charge of tax policy should not continue with the bad practice of policy-making process without the involvement of the business community that affects it, and indirectly all Montenegrin citizens.

Timely involvement and consultation of the business community, when changing tax policy, would result that envisaged measures are more applicable in practice, and consequently, positive effects on the budget of Montenegro would be more certain.