Officials of inspection services (market, gambling, food safety, etc.) will be able, with prior permission from the misdemeanor court, to enter private property (houses, apartments, business premises, etc.) if they suspect that undeclared trade, production, or other unregistered services are being carried out there. This is stated in the draft amendments to the Law on Inspection Procedure, which the Ministry of Public Administration has put up for public discussion. The aim of this norm is to reduce the shadow economy and protect legal businessmen from illegal competition.
The Employers' Union has listed the suppression of the shadow economy as one of its priorities in the "Business Agenda 2025", which according to their estimates is worth 30 percent of GDP, which would be over two billion euros. The expansion of inspectors' jurisdiction to include private facilities has been announced since 2017.
This amendment to the law includes the amendment of only one article and was put on public debate for 15 days, while most other ministries make amendments to more than half of the articles of the law without public debate. The latest example is the proposal for amendments to the Law on the Prevention of Money Laundering, where 52 articles of the law were amended and added without public debate.
The proposed amendment to the Law on Inspection Procedure refers to the fact that after the paragraph “in carrying out inspection supervision, the inspector has the authority to: inspect buildings and premises, land, equipment and devices, means of work and other objects, products placed on the market, goods in circulation, the sale of goods and the provision of services, business books, records and registers, contracts, public documents and other business documentation”, the following was added: “the inspector also has the authority from paragraph 1 of this Article to carry out inspection supervision in an apartment and other premises upon a court order, in accordance with the law regulating misdemeanors”.
The inspection will prove reasonable suspicions
This also means that the inspection will have to prove to the court that there are justified suspicions that illegal activities are being carried out in that area, in order for the court to grant them entry and inspection supervision.
The explanatory memorandum to the draft amendment to the law states that the Constitution of Montenegro stipulates that an apartment is inviolable, and that no one may enter an apartment or other premises against the will of its owner and search them without a court decision.
"This constitutional postulate greatly reduces the efficiency of determining the occurrence of illegal work. Bearing this in mind, when conducting inspections, inspectors are unable to carry out inspections in apartments and other premises, because the apartment owners prevent them from doing so, i.e. they will not open the door, using this constitutional principle as a cover," the explanation states.
As explained in this proposal, it is being aligned with the Law on Misdemeanors.
"The aim of this law is to reduce the shadow economy in Montenegro, i.e. to suppress illegal business by ensuring that inspectors can, with a court order, enter and conduct surveillance in private apartments and premises where there is a reasonable suspicion that unregistered activity is being carried out, which has the characteristics of a misdemeanor in accordance with the Law on Misdemeanors. The draft law prescribes the possibility for inspection bodies to request the court to issue an order to enter an apartment and other premises in the exercise of their powers and in order to carry out unhindered supervision. Meeting the objectives can only be achieved by adopting the aforementioned regulation. If this regulation is not adopted, inspectors will not be able to enter apartments and other premises where illegal business is being carried out," states the Impact Assessment Analysis (RIA) of this regulation.
Registration controls are not sufficient
It is emphasized that in addition to controlling registered companies, it is necessary to prevent the operation of illegal ones, in order to stop unfair competition and prevent damage to the state treasury, protect human health, the environment, consumer rights and other values of public interest...
Therefore, as stated, conditions must be provided for unhindered surveillance in apartments and premises where illegal activities are carried out, i.e. apartments, houses, garages, auxiliary and other private buildings, when it comes to business that has the characteristics of a misdemeanor. It is added that the need for this regulation also stems from the Reform Agenda of Montenegro for the period from 2024 to 2027.
The reform agenda commits the Government to adopt by December next year a full set of laws relating to inspection supervision, prevention of the informal economy (grey market), as well as amendments to the Law on Misdemeanors and the Criminal Code, in order to reduce the grey economy. This refers to amendments to the Law on Misdemeanors, the Law on Inspection Supervision, the Law on Prevention of Illegal Business, as well as the Criminal Code of Montenegro. The aim of all this is to ensure the preconditions for a systematic fight against the informal economy.
New measures will affect the growth of budget revenues and consumer safety
"The implementation of this regulation will generate revenue for the budget of Montenegro, through the imposition of higher fines and incentives for the registration of new business entities. There are no negative impacts of this regulation, and the positive impacts are reflected in the suppression of the gray economy," it is written in the Analysis of the Impact Assessment of this regulation.
In addition, it is emphasized that this will support the formation of new companies and market competition, as well as protect consumers.
The reform agenda from September last year, which envisaged amending this law, was confirmed by the European Commission in October, so the fight of state inspections against the shadow economy will also be under the scrutiny of the EC, which means that the implementation of these inspection powers must yield results.
The document states that the Tax Administration is "aware of the fact that unregistered business entities operate illegally, hidden from the law and control, avoiding the payment of all taxes and other duties - which makes their products cheaper, but also of lower quality and safety", and that most unregistered activities, trade, services... are carried out in private apartments and houses that it cannot control.
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