The Ministry of Finance will not consider changing the general value added tax (VAT) rate of 21 percent during the amendments to this law, which are planned for the end of this year.
This was officially confirmed by "News" from the department headed by the minister Novica Vuković.
Amendments to this important law have been announced for the fourth quarter of this year (October-December) and a working group will soon be formed to prepare new legal solutions.
"Amendments to the VAT Law will improve the existing legal solution in the part that refers to the place of service provision, VAT corrections in case of impossibility of collection, i.e. further alignment with EU Directive 2006/112 will be continued. The legal amendments in question will not consider a change in the general VAT rate of 21 percent", explained this Government Department.
According to the law, VAT is calculated and paid at a general rate of 21 percent on all turnover of products, services and import of products, except for turnover of products, services and import of products for which it is stipulated that VAT is paid at a reduced rate, as well as on turnover of products , services and import of products for which a zero VAT rate is prescribed.
The general rate of VAT from 17 to 21 percent was introduced in January 2018, which is why citizens and the economy were met with more expensive bills for electricity, water, telephone, prices in stores, numerous other services...
The Ministry of Finance clarified that in the coming period, the formation of a special group is planned for the adoption of amendments to the VAT Law.
"Members of this working group will identify the parts of the law in question where it is necessary to harmonize with Directive 2006/112 on the common value added tax system, as well as legal provisions where there is a problem in implementation. The working group for amending the aforementioned legal solution will be formed after the completion of the procedures prescribed by the Decree on the election of representatives of non-governmental organizations in the working bodies of state administration bodies and the implementation of a public hearing in the preparation of laws and strategies. On January 24, 2024, the Ministry issued a public invitation to propose a representative of a non-governmental organization in the working body for drafting the Draft Law on Amendments to the VAT Law. The members of the subject working group will be representatives of the Ministry of Finance and the Tax Administration, with the adequate participation of all other interested parties, through the implementation of the public discussion procedure," said the Ministry of Finance.
As of New Year, the lower rate of 7 percent for the preparation and serving of food, beverages and beverages, except for alcoholic beverages, carbonated beverages with added sugar and coffee in hotels and other catering facilities, which was a relief during the outbreak of the coronavirus pandemic, has ceased to apply. There is a reduced rate of seven percent on the services of preparing and serving food, non-alcoholic non-carbonated drinks in restaurants and facilities without service (catering). In addition, the reduced rate of seven percent continued to be applied to accommodation services in hotels, motels, tourist settlements, boarding houses, camps, tourist apartments and villas.
The recent Minister of Finance Aleksandar Damjanović canceled in mid-2022 the advantage for owners of luxury yachts to pour cheaper fuel when they enter Montenegro, from which, according to the ministry's account, the state budget has lost around 2018 million euros since 59 due to unpaid VAT and excise taxes.
A lower VAT rate of seven percent from the turnover of products, services and product imports is calculated by law, among other things, on the basis of products for human consumption (bread, flour, milk and milk products, baby food, fat, oil, meat , eggs and sugar) part of medicines, textbooks, copyrights in the field of education and science, funeral services...
The zero rate of VAT applies, among other things, to medicines and medical devices, determined by the list of drugs, i.e. medical devices that are prescribed and issued at the expense of the Health Insurance Fund, products and services intended for the official needs of diplomatic and consular missions, international organizations if it is stipulated by international agreements.
It is planned to return the VAT rate of 21 percent for the preparation and serving of food and beverages in restaurants and facilities where catering services are provided. It is now seven percent, and it was reduced as a relief due to the covid crisis.
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