The Ministry of Finance is preparing a set of laws and measures with the aim of increasing budget revenues, which will relate to higher taxation of luxury and highly profitable activities, suppression of the gray economy in the field of games of chance and real estate issuance, prevention of fraud in the obligation to pay capital gains tax and extracting money from companies through loans to owner and related persons...
This was announced at yesterday's working breakfast of the Minister of Finance Aleksandar Damjanović and his associates with journalists.
The focus of all measures is on increasing income and creating savings, in order to compensate part of the losses of the state budget due to the abolition of health insurance contributions and part of the wage tax through the "Europe Now" program and reduce the budget deficit.
Already in December, amendments to the law on income tax were adopted, which give the Revenue Administration greater powers in checking calculations and collecting tax on capital gains, as well as amendments to the law on profits of legal entities, which introduces a tax on loans that natural persons receive from companies. The preparation of by-laws on these two laws is being completed. Amendments to the law on games of chance and the prevention of illegal business are being prepared, while solutions are being worked on with partners from the EU on additional taxation of luxury products and highly profitable activities in accordance with EU recommendations.
Introduction of e-visitors
State Secretary in the Ministry of Finance Ilija Vukcevic he said that they are preparing the introduction of the e-visitor system, following the example of Croatia and EU countries, which connects hotels and other accommodation providers with the border police system. So the tax authorities will have insight into where that guest is staying, whether the provider of the accommodation has paid the residence tax and VAT on the accommodation for him, how many guests he had and whether and how much he paid in profit tax at the end.
Damjanović said that the goal is to provide enough money for the functioning of the health system and all other public needs, reduce the gray economy and enable normal business operations of the economy. He expects citizens to be the best controllers, to take bills, not to use the gray economy and to report all irregularities, because this is the only way to improve the quality of life in Montenegro.
Will control the sale of "Bemaks"
The minister said that the Revenue and Customs Administration will check the sale of "Bemaks" and determine the amount of tax on capital gains that should be paid in accordance with the new legal solutions.
"Vijesti" announced in October last year that the previous official owner of "Bemax" Veselin Kovačević sold a hundred percent share in that company Ivan Ubović for 750 euros, although in the company's official balance sheets the value of the capital is estimated at 000 million euros and retained earnings at 142 million euros.
In December, the government proposed an amendment to the law on personal income tax, which foresees the possibility for the Revenue and Customs Administration to determine the actual sales value of shares in a legal entity if the sales value in the sales contract is lower than the market value. The Assembly adopted that proposal as well as the amendment of the SNP deputies' club on establishing the public interest that this article applies retroactively from January 1, 2018.
Damjanović said that in accordance with the legal obligation of the tax authorities, they will check all disputed sales of companies and shares in them in this period and will do so in the future, so that those who have the most pay minimum tax obligations or avoid them.
Vukčević, explaining this new law, said that the focus in the coming months will be on increasing income, and that this is one of the legal solutions to that end.
"The value of shares in companies that have been sold will be reassessed, and where there is a difference, the new amount of tax liability for the seller will be determined," said Vukčević.
He stated that the law has retroactive effect in the previous period of five years.
How tax will be paid on loans from companies
It is also new that this year a tax of 15 percent will be paid on loans that companies give to individuals.
"This avoids situations that currently exist where the company owner borrows the company's money to himself, constantly extends the repayment terms, never pays taxes, and leaves the company in debt. The purpose of the company's existence is not to give loans to natural persons," said Vukčević.
At the end of last year, a group of SNP deputies proposed this amendment to the law on profits of legal entities, where this amount of tax is charged on all loans to natural persons, and the ministry is obliged to pass by-laws within 90 days. The Ministry of Finance then gave a positive opinion for this amendment to the law.
"The person liable for income tax is obliged to calculate, suspend and pay the withholding tax on payments made on the basis of a loan, i.e. a loan with or without interest to natural persons, as well as in the case of an extension of the loan repayment period," the law states.
In the case when the loan agreement was signed before the entry into force of this law, which was adopted and entered into force at the end of December, the debtor is obliged to calculate and pay tax after the end of the period for which the agreement was concluded, or if they conclude a new agreement extends that period.
Vukčević said that the goal of this measure is not only to collect the amount of tax on these disputed loans, but to stop this practice and to introduce taxpayers to regular flows, that is, to declare this money as profit, pay tax on it and then raised for themselves.
He expects that this novelty will affect the regularity of the operations of legal entities and the better collection of profit tax.
Damjanović said that this was one of the ways in which those who have the most avoided paying their obligations and had poor companies with tax debts.
"Jackpot" to pay two million if he wants to work
The minister said that two days ago he signed a decision rejecting the second extension of the concession to the company "Jackpot" for the casino in the hotel "Falkeinsteiner" in Bečići without paying the concession fee of two million euros.
He stated that the law is very clear for casinos - you pay a fee of two million euros, you get a ten-year concession that can be extended once to five years, and after that you have to pay another two million for a new concession.
As he explained, a new competition for a casino concession will now be published, to which an existing or a new organizer can apply, but they will have to pay a starting fee of two million euros.
Damjanović answered this to the question of "Vijesti" whether he will act on the adopted amendment of the Democrats, which stipulates that the Revenue and Customs Administration, within 90 days from the date of entry into force of this law, will verify all facts relevant to the payment of a one-time fee of two million euros .
He stated that it was not possible to react earlier due to the decision of the Commercial Court from February last year on the introduction of a temporary measure, which was abolished by the Council's judgment only in November. The owners of "Jack Pot" are businessmen Branislav Brano Mićunović i Sava Džigi Grbović.
Greater taxation of online gaming
Vukčević said that the new law on games of chance has been submitted to Brussels for evaluation.
"Considering that this procedure could last until the end of the year, and that there is a need for urgent reactions in this area, we are making changes to the existing law, which we will submit to the Assembly during the spring session. There is a need for greater tax coverage of online games of chance, expansion of state online supervision over organizers because two-thirds are not included, definition of the obligation to pay taxes on income from abroad, which some now pay, and some do not," said Vukčević.
He said that they are also planning the fiscalization of the entire area of games of chance, as well as making analyzes of changes in the concession policy and the amount of fees.
Damjanović stated that Montenegro now earns 15 to 16 million per year from fees for organizing games of chance, but that according to the comparison of charges in Serbia, Croatia and the size of the market, that amount should amount to 30 to 40 million euros.
He also said that the existing law from 2004 has outdated norms on online games of chance.
Because of "Europe now", a loss in the budget of 133 million
"If there was no inflation, we would have had a collapse of public finances last year due to the experiment with the abolition of contributions through the program "Europe now", stated Damjanović.
He said that when the Constitutional Court is formed, his ministry will submit a proposal for an evaluation of the constitutionality of the amendments to the law that abolished the collection of contributions for health insurance, because mandatory social contributions are a constitutional category.
"Last year, we had a deficit of EUR 90 million in contribution collection and a EUR 43 million loss due to the direction of income tax to municipalities as a compensation for the losses they had due to the "Europe Now" program. "If there was no increase in VAT collection of 216 million euros, mostly due to inflation and fiscalization that I started while I was the director of the Revenue Administration, we would have had a collapse of public finances," said Damjanović.
He stated that, as a member of parliament and chairman of the parliamentary committee for economy, he advocated for the reduction of payroll taxes for years, but not in this way without any analysis, but with serious studies and gradually as proposed by the IMF.
When asked whether there will be an agreement with the World Bank and whether it will carry some restrictive measures, Damjanović said that there are no demands such as lowering salaries and pensions, but that it refers to the adoption of new acts, the formation of the fiscal council, the green agenda , defining the financing of the public health system and the like.
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