Deputies of the Albanian national parties sent the Parliament a proposal to amend the Law on Real Estate Tax, which stipulates that municipalities can, but do not have to, reduce tax rates on real estate used in agriculture by up to 90 percent of the tax liability, while the current law states that they must reduce tax liability by 70 percent.
Also by the same proposal of the deputy Nikola Camaja, Artan Chobi i Ilir Capuni it is stipulated that this new article also applies to taxpayers "who have not been determined to be liable for real estate tax, as well as in proceedings that have not been legally concluded".
This would mean that the taxpayer, instead of a certain reduction of 70, could have a reduction of 20, 10 or zero percent.
"Plantaž" told "Vijesta" that they believe that this change in the law is directly directed against them, in order to enable the Municipality of Tuza to collect extremely high amounts of taxes from this company again, as well as to render meaningless the previous court decisions in favor of this state-owned company. companies that would have the right to collect from Tuzi over two million euros of illegally collected tax increased by interest amounts of 0,3 percent per day and other costs.
The amendment to the Law, which establishes that the tax rate must be reduced by 70 percent on land and other property used for agriculture, was adopted in December 2022.
In the past three years, the municipality of Tuzi has blocked the "Plantaž" account four times for disputed tax rulings in the amount of around two and a half million euros. Those blockages caused major problems in the company, affecting liquidity and delays in salary payments to employees. Annual tax rulings amounted to around 700 thousand euros.
Legal representative of "Plantaža" Filip Kazic he told "Vijesti" that before the Administrative Court they managed to prove the illegality of the decision on real estate tax made by the Municipality of Tuzi, which refers to the years 2019, 2020 and 2021, while the proceedings regarding 2022 and 2023. years have not yet ended.
"Although the decisions on real estate tax have been annulled, the Municipality of Tuzi has not returned the money it collected under the already annulled decisions. Therefore, "Plantaze" initiated a legal proceeding before the Basic Court in Podgorica for the return of money that was acquired on grounds that were later annulled, and it is an amount of over 2.150.000 euros, on which amount "Plantaze" is also entitled to legal interest. of 0,3% per day, from the day they made the payment," Kažić said.
He states that after these judgments, the Municipality of Tuzi, in accordance with Article 113 of the Law on Tax Administration, was obliged to apply a reduction of the tax rate by 70 percent in all ongoing procedures, but that it reduced them by only 20 percent.
"The stated action of the Municipality of Tuzi is contrary to the principles of administrative procedure, as well as the norms of the Law on Tax Administration and is obviously calculated to threaten the liquidity of 'Plantaž', while the obvious goal of the Municipality of Tuzi is the introduction of bankruptcy over this state-owned company. By attempting to introduce unconstitutional changes to the Law on Real Estate Tax, it is now clearly trying to implement the intentions of the Municipality of Tuzi", stated Kažić.
In the explanation, the proponents state that the basic reason for proposing changes is the need to provide additional funds for financing local self-government, that is, to collect more money from farmers and companies engaged in agriculture.
When asked by "Vijesti" whether changes were proposed so that the Municipality of Tuzi could collect higher amounts of taxes from "Plantaža" again, deputy Nikola Camaj said that the goal is not to return to the previous solution, but to request a normal valuation in order to determine the tax rate.
"With the existing solution, the Municipality of Tuzi has been directly damaged by hundreds of thousands of euros, on the one hand, and on the other hand, there is no room left for municipalities to determine the tax rate for agricultural land, which damages agricultural producers, not giving municipalities the opportunity to determine the tax rate, in order to stimulate agricultural production, which ultimately affects even greater centralization of power. As we normally stand for decentralization, this proposal also goes in that direction. Certainly, with the proposed solution, we do not return to the previous solution, in terms of the tax that will be paid by 'Plantaže', but normal valorization is required in order to determine the tax rate", said Camaj.
In the explanation, three MPs state that the current norm is discriminatory because it introduces an imperative norm that the tax rate must be reduced, as well as that it had a significant impact on the reduction of income for rural municipalities.
Kažić states that the proposed change opens up the possibility of discrimination against agricultural producers who come from different municipalities.
"The proposed legal solution leaves the municipalities to choose whether and how much they will reduce the real estate tax rate in relation to agricultural producers. The aforementioned legal solution puts agricultural producers from different parts of Montenegro in a potentially unequal and unequal position, since in one municipality an agricultural producer can have a reduced tax rate by 90%, while an agricultural producer from another municipality can be burdened with the entire amount of real estate tax without any reductions, and that's only because the local self-government unit on whose territory his real estate is located decided not to reduce the tax rate," Kažić said.
He cites an example from 2019, when a similar decision was in effect that municipalities can and do not have to reduce taxes for farmers, where Podgorica reduced the tax burden by 20 percent, Pljevlja by 90 percent, while there were also municipalities like Bijelo Polje that did not foresee any impairment.
"Fundamentally, agricultural producers from one municipality could indicate that they were discriminated against producers from another municipality. In this regard, the proposed changes are contrary to the Constitution of Montenegro, but to the provisions of the Law on the Protection of Competition, since they open up the possibility that agricultural producers from different municipalities are treated differently by municipal decisions, which results in the distortion of competition on the territory of Montenegro. Kazic said.
He states that the proposed changes are contrary to the Constitution of Montenegro and for the reason that the issue of taxes, and thus the issue of reliefs, i.e. reductions, cannot be transferred to the jurisdiction of municipalities, nor can municipalities be left free to choose for themselves whether the reduction will take place at all. introduce and how much it will amount to.
"Precisely the existing legal solution, which foresees a mandatory reduction of the tax rate by 70% for all agricultural producers, avoided discrimination and solved the mentioned issue in a unique way for the territory of the whole of Montenegro," Kažić believes.
No retroactive effect is possible
Kažić also states that the proposed changes are in contradiction with the Law on Tax Administration.
"The regulations that were valid at the time the tax liability was incurred are applied to issues related to taxes. Exceptionally, according to the provisions of Art. 113 of the Law on Tax Administration, if the procedure for exercising the taxpayer's rights is ongoing, it will be completed according to the provisions of the current law, if it is more favorable for the taxpayer. Therefore, the proposed provision could be applied to procedures related to earlier years and which have not yet been completed, only if it would be more favorable for the taxpayer", stated the legal representative of "Plantaža".
He believes that it is particularly unclear how the proponents intended to give retroactive effect to the stated norm, when it is not applied directly in the way they proposed.
"The proposed provision, even if it had retroactive effect (which is otherwise prohibited by the provision of Article 147 of the Constitution of Montenegro), would only be a basis for making municipal decisions on real estate tax. However, the proponents apparently overlooked that municipal decisions cannot in any case have a retroactive effect, since such an effect is exclusively reserved for certain provisions of the law, and only in the case when the public interest requires it. Therefore, even if the proposed changes are adopted, the municipal decisions on real estate tax that would have been made on the basis of the aforementioned provision could not be applied retroactively," Kažić said.
In the amendments to these articles, the proponents include transitional provisions for determining the value of immovable property for proceedings that have not been legally concluded.
Kažić says that determining the value of immovable property is regulated by provisions 6a to 6g of the Law on Immovable Property Tax, and that it is unclear what the proponents wanted to achieve with said provision "since the value of immovable property is a completely different category from the tax rate and its reduction".
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