Small wine producers, who produce up to one thousand hectoliters (100.000 liters) annually, will have a 50 percent discount on the future excise tax of 25 cents per liter of wine, and the VAT rate on daily and periodicals will remain at seven percent instead of the planned 15 percent.
These are the only changes in the laws adopted by the Government and sent to the Parliament, which differ from what the Cabinet of the Prime Minister Milojko Spajić announced in the draft fiscal strategy from mid-July.
Duties on books, tickets, wines, hotel services are increased,... a tax on winnings from games of chance is introduced, the full amount of the value of postal items from abroad is taxed,...
Last night, the government adopted proposals for changes to the budget and eight laws related to the "Europe Now 2" program and which were announced through the fiscal strategy, even though the public debate on the fiscal strategy ended only on August 7 and the public report has not yet been published. discussions, in which it would be seen how much and what comments the Government received on this document.
The aim of the amendments to all these laws, as stated in the explanatory notes, is to reach an average net salary of one thousand euros, to reduce the burden on salaries and to preserve the stability of the budget through the increased collection of other duties. By reducing the contribution for pension insurance from 20,5 to 10 percent, the state budget is left without about 280 million per year, while through the increase of a number of other taxes and duties, that amount of money is charged again from the same citizens and businesses, so the "balance is zero".
Change of contributions beyond the Social Council
The proposal to amend the law on contributions for mandatory social insurance, which reduces contributions to PIO, was adopted by the Government the night before last, although that law did not pass through the Social Council. The trap from this law is that for a significant number of workers, the future coefficient important for calculating the pension amount is reduced. "Vijesti" yesterday asked the Minister of Labor and Social Dialogue, Naida Nišić, why this bill was not discussed at the Social Council, despite the legal obligation, but they did not receive an answer. She stated just three days earlier that the social dialogue in Montenegro has never been stronger.
With the amendments of this law, pension insurance contributions are reduced from the current 15 to 10 percent of the gross salary, while they are completely abolished for employers, and now amount to 5,5 percent of the employee's gross salary.
For employees who are not affected by the minimum wage increase, this reduction in contributions will mean an increase in net wages by around six percent. This applies to those who now have a net salary of over 800 euros, as well as those employed with a secondary or lower vocational education, who have a net salary of over 600 euros.
Employers will raise prices
By reducing the contribution, employers will save 5,5 percent of their gross salary or an average of 50 euros for these two categories of employees. However, due to the increase in minimum wages for high school students from 450 to 600 euros and for those with higher education from 450 to 800 euros, employers will have a higher cost. Only the Ministry of Finance, in the explanation of these laws, calculated that the increase of the minimum wage from 450 to 600 euros, taking into account the positive impact of the reduction in contributions, will increase the total cost by 109,5 euros per employee, and with the increase of the minimum wage from 450 to 800 euros, the total the employer's gross cost will be 359,3 euros higher than before.
An employer who participated in the past negotiations with the Government told "Vijesti" that a significant number of companies where the majority of workers are with lower qualifications will have higher costs due to the increase in minimum wages than they will receive from the state through a reduction in contributions.
"However, we all have labor shortage problems and we are aware that we have to increase their wages in order to keep them. So we accepted this proposal of the Government because at least one part of the salary increase will be borne by the state. Those employers who will have an increase in costs due to the increase in earnings can only compensate for this by increasing the prices of their products and services", said the interlocutor of "Vijesti".
The cost for the minimum is greater than the savings
In the explanation of the changes to the labor law, which increase the minimum wages from 450 to 600 and 800 euros, the Ministry of Finance also published a tabular overview of how this increase, along with the abolition of part of the contribution, will affect future net and gross wages. Thus, the one who now has a net salary of 800 euros, due to the reduction in contributions, will receive an increase of 48,8 euros, the one who now receives a thousand euros will receive another 63,1 euros, and the employee who now has a salary of one thousand and a half euros will receive an increase of 99,1 euros.
On a net salary of 800 euros, the employer will receive a reduction in taxes by 53,7 euros, on a thousand euros of earnings he will save 69,4 euros, and on a thousand and a half employers will have 109 euros left. However, as employers lose 450 euros for an increase in minimum wages from 600 to 109,5 euros, and for an increase from 450 to 800 euros, they will pay 359,3 euros more, i.e. they will be at a loss if they have more workers with whom they increase the minimum wage than those others. For example, what he saves by reducing contributions for seven employees, he will lose if there is only one employee for whom he has to increase the minimum wage from 450 to 800 euros.
Confirmation of the lower coefficient for pensions
Also, the tables of the Ministry of Finance show that the employees, who are not affected by the increase in the minimum wage, will have the same gross salary, while the average gross salary will increase. The employee's personal coefficient for future pension calculation, according to the PIO Act, is obtained by dividing his gross salary with the average gross salary, so that they will have a lower coefficient for pension calculation in the future compared to the current one. The president of the country pointed out that two days ago Jakov Milatovic, which the Government and the Europe movement have now tried to deny.
Another significant increase in VAT
Through the proposal to amend the Value Added Tax (VAT) law, the Government plans to introduce an average VAT rate of 15 percent. This increases the tax rate from the current seven to 15 percent for hotel services, books and publications, for copyrights, for services in the field of education, literature and art, for tickets to cinemas, theaters, matches, concerts, for the use of sports facilities, for solar panels and services in marinas. In the fiscal strategy, the government states that it will collect an additional 60 million euros per year from this increase in VAT, i.e. the increase in the prices of these products and services.
She only gave up on increasing the VAT on daily and periodicals. Representatives of Montenegrin publishers, associations of writers and librarians, cultural institutions also asked for a reduction in VAT on books, but the government did not accept that.
Hoteliers have announced an increase in the prices of hotel accommodation, because they will have a higher cost due to the increase in taxes on this service, than they will have savings due to the reduction of the VAT rate on food and beverage services from 21 to 15 percent. They also pointed out that Montenegro will have one of the highest rates of VAT on hotel accommodation in Europe, significantly higher than in competing destinations Croatia, Albania, Greece, Turkey,...
The draft law abolishes the current zero rate of VAT for the construction and furnishing of hotel and catering facilities, for the construction of energy facilities and capacities for the production of food products. This zero tax rate was previously introduced to encourage the development of these activities.
In the case of online shopping and delivery of shipments from abroad, the current exemption from VAT of 75 euros will be abolished, so the tax will apply to the entire amount. For example, someone had two purchases per month for 75 euros, now he will pay tax on them in the amount of 31,5 euros, that is, he will lose most of his salary increase.
Higher excise taxes for four product groups
The amendments to the law on excise duties introduce an excise duty of 25 cents per liter of wine, increase the scope of excise duties for juices and beverages containing sugar and sweeteners, and increase the excise duty on fuels for industrial and commercial purposes from the current 25,9 cents per liter to 33 cents per liter. An excise tax on solid fuels (coal, wood, pellets) of 30 cents per gigajoule of gross thermal value is being introduced, until now only coal was on the excise list. Electricity is also included in the excise products, but the excise duty will be paid from the moment Montenegro enters the EU.
In relation to the original proposal from the fiscal strategy, independent small wine producers are now defined who for commercial purposes produce up to 1.000 hectoliters of wine per year (100.000 liters) and who would pay excise duty in the amount of 50% of the excise duty, i.e. 12,5 cents per liter. .
Due to this intention of the Government, the winemakers previously protested, stating that most countries and the region and in the EU have a zero rate on wine, while in France it is three cents per liter. Also, according to the CEFTA free trade agreement, wine that has been imported so far in accordance with the agreed quotas will continue to be exempt from paying this excise duty, so that it will mostly apply to domestic producers and increase the prices of domestic wines. Excise duty is included in the base for VAT calculation, so it will have a greater impact on price growth than the amount of excise duty itself.
Tax on profits and other income remains
The proposed amendments to the law on personal income tax propose the introduction of a tax on winnings in all games of chance, from internet and video games, but also significantly increase the scope of tax payers who are self-employed, who earn income from two or more employers, which generate income from capital...
The public debate on the draft amendments to this law lasted until August 8, and the report has not yet been published to see who and what kind of comments were made on its text, and the Government adopted the draft law the night before last. The application of these changes is planned from January 1 of the following year.
The group of organizers of games of chance at the Chamber of Commerce submitted remarks to the Ministry during the public hearing, in which they state that the taxation of winnings will affect players moving to the gray zone and to foreign websites, that the state will receive less income from the variable concession, as well as that such a calculation for certain games is not technically possible.
The Ministry of Finance is obliged to publish a report in which it responds to all remarks and suggestions within 15 days from the end of the public hearing. That deadline was supposed to be August 24, but without it, the Government adopted the identical text from the public discussion two days ago and sent it to the Assembly.
The state budget now receives 22 million euros from regular concessions for games of chance, and now it would receive another expected five million from the tax on winnings.
How much money will be obtained through the increase in the scope of taxation of income and payments to natural persons from other subjects was not specified, but it was stated:
"In order to have a fairer system of taxation depending on the source of income, it is proposed to supplement other incomes with categories that have been taxed as personal incomes, but also with categories that are not clearly prescribed in the current law. The aforementioned will have a positive effect on the collection of income based on the personal income tax, but also on taxpayers who in the past had to pay the tax liability once in accordance with the annual personal income tax declaration", the explanation stated.
By amending this law, it is possible for sports organizations to pay up to 600 euros for meals to amateur athletes without calculating income tax. Tax will not be paid for benefits for the birth of a child up to the amount of one thousand euros, as well as for benefits for women up to 100 euros on the occasion of International Women's Day.
Incentives for agriculture and sports
Through changes in the corporate income tax, businessmen are enabled to invest part of their profits in the development of agricultural activities, without tax being calculated on it. The total amount of these tax exemptions for a period of three years cannot exceed 300.000 euros.
The changes allow companies that sponsor Montenegrin national sports federations to donate up to five percent of their income as tax-free expenses. This percentage is now 3,5 percent.
Amendments to the Law on Vocational Training of persons with higher education increase their salary from 450 to 600 euros, although the new amount of minimum wage for those with higher education is 800 euros.
A different calculation of student scholarships and loans
Yesterday, the Student Parliament of the University of Montenegro reacted to the proposed changes to the Law on Higher Education because they define that "the amount of student loans and scholarships for the best students is determined by the Government, at the proposal of the Ministry, depending on the available budget funds".
The current law states that "the amount of the student loan is determined in an amount that cannot be lower than 25%, and the amount of the scholarship for the best students in an amount that cannot be lower than 50% of the minimum wage in Montenegro".
In this organization, they believe that by changing the law, the government is given the opportunity to reduce the amount of student loans and scholarships for the best students. They propose that in accordance with the change in the minimum wage, the scholarship for basic studies should be at the level of 25 percent of the lower minimum wage of 600 euros, and for postgraduate and specialist studies 25 percent of the higher minimum wage of 800 euros.
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As well as for the scholarship for undergraduate students to be 50 percent of the minimum salary of 600 euros, and for postgraduate and specialist studies 50 percent of the minimum salary of 800 euros.
The Ministry of Education, Science and Innovation replied that the aim of the changes in the law is not to reduce student scholarships and loans, but that they received the approval of the Ministry of Finance that scholarships and loans should be fixed amounts.
"Thus, the proposal of the Ministry of Education, Science and Innovation, which received a positive opinion from the Ministry of Finance, foresees that the amount of the student scholarship will be increased from 225 euros to 300 euros, while the amount of student loans, whose amount so far was in the range of 112 to 161 euros, to be from 150 to 214 euros, for which funds are provided by the budget rebalancing", stated in the statement of the Ministry.
Payment terms up to 30 days
According to the proposal of the new Law on the settlement of monetary obligations, it is stipulated that the deadline for the settlement of monetary obligations between business entities is 30 days from the creation of the debtor-creditor relationship, that in exceptional cases it can be 60 days, and where the obligee is a small company and a businessman, a maximum of 90 days .
The possibilities for business entities to state in their mutual contract that the deadline for settling obligations is longer than 60 days are also limited.
The current fixed fee - the fine that the creditor can collect from the debtor due to non-payment of obligations within the deadline, is reduced from 50 to 40 euros.
The government expects that these changes will encourage mutual payments within a reasonable period of time and thereby affect the reduction of illiquidity.
"Late payments can cause negative consequences, especially when access to financial resources is limited and expensive, and can seriously threaten the liquidity and solvency of creditors, and above all micro, small and medium-sized enterprises," the explanation states.
Whoever pays the entire tax debt does not pay interest
The Government adopted and sent to the Assembly a draft law on write-off of interest on overdue tax liabilities, which gives tax debtors who settle all tax liabilities within 60 days from the beginning of the law, the possibility of write-off of interest on that debt. The text states that the law will enter into force on the day it is published in the Official Gazette, and that it will be applied from January 1 of the following year, which means that tax debtors will have until the end of February 2025 to pay their debts without paying interest.
These legal possibilities will also apply to tax debtors to local self-governments. The Ministry of Finance will subsequently pass by-laws that will precisely describe all procedures.
A tax debtor whose tax debt has been rescheduled in accordance with the former Law on the rescheduling of tax claims will be able to exercise the right to write off the interest.
The government expects to collect a significant part of the tax debt in this way.
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