Clarified taxation of shipments: The limit for customs remains at 150 euros

According to the amendments to the VAT Act, the limit for taxation of commercial shipments of EUR 75 applies only to value added tax (VAT), and the limit for customs duties remains at EUR 150, explained the Ministry of Finance.

"In accordance with the provisions of Article 9 of the Regulation on the conditions and procedure for the exercise of the right to exemption from paying customs duties for goods of insignificant value, which are exempted from paying customs duties, are considered goods whose value per shipment does not exceed 150 euros. This amount represents the customs limit", the Ministry of Finance told "Vijesti", thus explaining the doubts that remained even after the adoption of amendments to the VAT Law on Wednesday in the Parliament.

To the question of how VAT will be charged on shipments ordered from abroad via the Internet from the department headed by the Minister of Finance Darko Radunović, they answered that "the obligation to calculate VAT when importing products arises from the date of the obligation to calculate customs and other import duties (Article 19 of the Law on value added tax)".

At the session of the Assembly where the changes to the VAT Law were adopted, Liberal Party MP Andrija Popović said that it is acceptable for LP that amounts of 75 euros are not subject to additional levies, that citizens pay VAT for amounts between 75 and 150 euros, and that customs duty is only over 150 euros, but no one from the Ministry of Finance responded and announced that it would be so.

They did not even react to media announcements and public comments when the original proposal was discussed, that the maximum value of goods that are not subject to customs duties and taxes should be 22 euros. The proposal caused a violent reaction from the public, an online petition was also launched, so the proposal was corrected, i.e. the limit for taxation was moved to 75 euros.

"Vijesti" previously published an example from Croatia, where citizens have no additional costs for online purchases of products worth up to 22 euros, that they pay VAT for goods worth 22 to 150 euros, and that for goods over 150 they also pay customs, but the authorities did not announce that such a model is foreseen in Montenegro as well.

Financial analyst Ana Nives Radović told "Vijesti" that the amendments to the VAT Act in the part related to online purchases confirm two things that even those who have doubted this so far can now confirm. beliefs.

"The first is the complete absence of a rational approach by the Government in creating a fiscal strategy, which results in the impossibility of filling the state budget without the need for additional borrowing or tax increases. The second is the lack of strategic planning and consideration of the consequences that a certain measure can cause. Since we have recently witnessed the announcement of changes several times, and then the need to revise what was announced, the need for manipulation can also be pointed out here. The government first proposes a measure, waits for the reaction of the public, and then corrects it, so that everything looks like something that meets the citizens. Lowering the limit for taxation from 150 euros to 22 euros, and then moving it to 75 euros clearly shows that there was no planned approach, but the government tried something, and seeing that it did not succeed, decided to find an allegedly less harmful solution," she said. is Radovic.

He adds that whenever he moves to defend certain government measures, many use references to EU practice, regardless of the huge inconsistencies.

"In the EU, online shopping is taxed with an upper limit that, depending on the country, is from 10 to 22 euros, but only when shipments come from countries that are not EU members. In the EU, this measure serves to protect the common European market and for member countries to encourage mutual exchange, and if we take into account the volume of industrial production in the EU, we will also understand how much is available to its citizens. Therefore, it is completely absurd to apply this measure to Montenegro and still refer to the practice of the EU, because in its members this measure is not aimed at filling budget holes, but at protecting producers on the single market, which is by no means the case in our country", explained Radović.

He believes that after the introduction of this measure, the price of each shipment above 75 euros will be increased by the amount of VAT, which will make products delivered online less attractive.

According to Radović, to advocate the position that online shopping can threaten the Montenegrin economy and the fact that it is represented by those who enable the huge import of bottled water from the region while domestic factories operate at a loss is not only absurd, but also an insult to the citizens' intelligence.

"If, based on the experiences of people in the immediate vicinity, we look at what is mostly bought online, we will see that it is about technological devices, wardrobes, toys and household items, that is, everything that is not produced in Montenegro. Protecting the domestic economy means protecting domestic producers, not monopolistic importers whose prices are too high and the offer is insufficiently diverse, the fact that the citizens of Montenegro are ready to wait for a delivery for a month or two, rather than buy something in local shopping centers, speaks volumes," she said. is Radovic.

He believes that it is worrying that exactly 20 years since Montenegro got the Internet, more and more problems are constantly encountered related to the IT market, telecommunications and the use of digital services.

"Starting with the January increase in the VAT rate on computer equipment, through the fact that PayPal works one-way to the fact that we are among the worst placed countries in Europe in terms of price and quality of internet connection, the question arises as to what kind of future we can hope for when the technological revolution bypasses us, considering that many services are still unavailable to a large number of citizens", concluded Radović.

Only the Post Office delivered 2016 e-commerce shipments in 319.828, and 182.368 of these shipments during the first six months of this year.

In the banking sector, they believe that the introduction of VAT will reduce online trade and the value of card transactions on the Internet.

Dragan Crvenica, Director of Erste Bank's Communications Department, tells "Vijesti" that it is logical to expect a decline in online shopping, because trade worth 75 to 150 euros will very quickly become less profitable due to the additional cost of VAT of 19 percent, and from January 2018. by 21 percent.

"Now we don't have information about whether, apart from VAT, there will be some additional costs for the amounts of 75 to 150 euros, we should wait for official information," said Crvenica.

He believes that this decision will affect the decline in the number and value of card transactions on the Internet.

"This can further lead to a decrease in citizens' interest in new payment cards that would serve them exclusively for online shopping," said Crvenica.

Director of the Marketing, Development, Direct Banking and Coordination Sector of NLB Bank, Jelena Vujović, said that of the total number of NLB Bank cards in the first half of the year, 10% of clients used the card for payment and shopping on the Internet, and only 5% of them paid with the card for purchases. clothes, shoes, toys and sports equipment in the average amount of 100 euros per purchase and it is assumed that the latest changes in the VAT Law will affect the purchasing habits of these card users.

"Certainly there will be a certain decrease in the number of electronic card users. But since it is not a very large percentage of transactions (5%) that will be affected by these changes, we are sure that this will not have a major impact on the card business, which has been growing for years and cards are becoming an indispensable means of payment for a significant majority of NLB Bank's clients ", Vujović said.

At Atlas Bank, they believe that the new legal solutions will affect the trading of Montenegrin citizens on foreign internet sales points.

"The eCommerce service is provided in both segments of card business - as an opportunity for payment card users to trade online and as an additional service for companies that sell their goods and services online. The new legislation can be reflected more on the first segment, the trading of Montenegrin citizens, users of payment cards of domestic banks, on foreign internet sales points, but it certainly cannot significantly affect the development of eCommerce services in our country. We do not think that there will be a decrease in the number of users of issued cards or an increased number of card cancellations due to changes in this regulation," said Davorka Miranović from Atlas Bank.

The petition was signed by 4.000 citizens in three days, the Government's website for citizens' voices is not working

In just three days, more than 4.000 citizens signed a petition to delete Article 3 of the Proposal for Amendments to the VAT Law, which levies a tax on postal items worth more than 22 euros, authored by Filip Ivanović. Ivanović started the petition on the change.org service, but only after several unsuccessful attempts to do so on epeticije.me, the official website of the Government for the voice of citizens. The launch of that portal was initiated by former Prime Minister Igor Lukšić, and the project officially started working in October 2012, in cooperation with the UN Program for the Development of Offices in Podgorica.

The project was implemented within the Open Government Partnership (OGP), where Montenegro recently, due to non-fulfillment of obligations, lost its place and received the status of an "inactive" country. POV Operational Team Coordinator Srđan Kusovac, otherwise the head of the Government Bureau for Public Relations, did not answer the question of "Vijesti" about why the epetitia website is not functioning and when it will be available again.

Citizens also sought answers to the same questions from the Government on official accounts on social networks, but they did not receive an answer.