Ministry of Agriculture against excise tax on wines

The Ministry of Agriculture believes that the introduction of an excise tax for wine of 25 euros per hundred liters, which is proposed by the Draft Fiscal Strategy, will not contribute to the development of Montenegrin wineries, and that the adoption of this proposal would be problematic for the further development of the wine sector, with a certain strengthening of the gray market and non-competitive domestic brands on the internal market.

The Ministry told "Vijesta" that a compromise solution should be found in order to implement the Government's fiscal measures and at the same time protect domestic producers.

The draft fiscal strategy, which is up for public discussion until August 7, foresees the introduction of an excise tax on "still wines", i.e. on all wines except sparkling wines, which was previously introduced, of 25 cents per liter regardless of the quality and price of the wine. As the excise duty is included in the basis of VAT calculation, the increase with the tax on this amount would amount to 30,25 cents per liter, and this growth would be accompanied by an increase in the trade margins for that product.

By introducing these excise taxes, which, if adopted, should come into force at the beginning of next year, the government plans to generate four million euros in revenue per year.

The producer would pay the excise tax in advance when bottling (buying an excise stamp), and then transfer that cost to retailers or restaurateurs, and they would pass it on to the final customer.

In the explanation of this proposal in the draft of the strategy, it is stated that it would be unjustified that the excise tax on "still wines", which represent an alcoholic drink and whose use has a negative externality, i.e. harm to the health of the population, should be zero euros, when excise taxes have already been introduced or increased on sugar products, cocoa and ice cream as well as carbonated and non-carbonated water with added sugar or other means for sweetening and flavoring and non-alcoholic beer.

"The Ministry of Agriculture also understands the situation in which all Montenegrin winemakers find themselves, who market their entire wine production on the domestic market (only a few wineries market part of their production in the region). Plantations also sell more than 60% of their production on the domestic market. It should be borne in mind that no country with a developed wine sector, incomparably greater production and export of wine with a world reputation, such as: Italy, Spain, Portugal, Greece, Austria, Germany, Hungary, Croatia, applies such financial burdens, i.e. . excise duty on wine is zero euros. In neighboring countries, which, like Montenegro, are struggling to position their wines on the international market, Macedonia, Slovenia, and Serbia, excise taxes on wine are zero euros. We believe that in order to develop viticulture and wine production in Montenegro, a compromise solution should be found, given that this document is still in the stage of public discussion. In this way, the measures of the Government of Montenegro would be implemented, and at the same time producers who represent their country in the best way with their products would be protected", the Ministry of Agriculture, which is headed by the Minister, told "Vijesta" Vladimir Jokovic.

The number of wineries increased from 4 to 117

They say that they are trying to introduce additional mechanisms to control the traffic of still wines during production and during their import.

"Over the last two decades, a great deal of effort has been invested in the revitalization of existing and the establishment of new vineyards, as well as in the reconstruction, construction and equipping of facilities for wine production and tasting. The number of registered wine producers has increased from 4 in 2007 to 117 in 2024. Respecting tradition and the age-old emotional relationship to wine in our area, gladly highlighting famous examples from the past, awards won for wine quality at international competitions from 100 years ago and more, then regulations that read the importance of and encourage wine production (even in 20 chapters of the medieval Statute of Budva dealt with the then-current legal issues related to vineyards and wine), new enthusiasm in the wine sector was stimulated by the passing of the Law on Wine (2007, and then in 2016) and the realization of the project Rezoning of the viticultural geographical production areas of Montenegro ", the Ministry stated.

They say that the current Montenegrin regulations, which regulate activities in the wine sector, are fully harmonized with current European regulations, while the agricultural budget is aimed at improving the competitiveness of the wine sector.

Winemakers sent appeals

The "Plantaže" company, as well as the association of domestic small wineries, submitted analyzes and initiatives to the Government in which they request that this duty be waived.

In these analyses, it is stated that the consequences will be the shutdown of a large number of small producers or their transfer to the black market, as well as that "Plantaže" would suffer a loss in the period when the company's recovery began.

At a public hearing last week, a representative of small wineries Ljubiša Krgović appealed not to introduce this excise tax.

"Unreasonably, thoughtlessly, the decision was made in the cabinet budget to introduce an excise tax on still wines due to four million missing revenues, it would be disastrous for everyone, especially small wine producers. Such a decision devalues ​​all the efforts made so far to revitalize the wine sector and calls into question the sustainability of this production," Krgović stressed.

According to the CEFT agreement, up to the level of the agreed quota, imported wines are exempt from excise duty, so this decision would expose domestic wines to unfair competition.

Assistant to the Minister of Finance for the tax and customs system Biljana Peranović, she said at the public debate that with this measure they wanted to "expand the tax coverage" and that "countries from the surrounding area that do not have this excise tax, have a higher tax burden on work".

One of the few countries, big wine producers, that has an excise tax on this product is France, and its excise tax on still wines is three cents per liter.

Private wine producers also wrote to the Governor of the Central Bank (CBCG) Irena Radović. The CBCG should give an opinion on this document before sending the Draft Fiscal Strategy to the parliament.