The state budget has received two million euros from excise taxes on wine since the beginning of January this year, half as much as expected in the 2024 fiscal strategy, "Vijesti" learned from the Customs Administration.
Monstat data shows that this year there has been a decrease in domestic wine production, and that for the period January - October, wine exports amounted to 6,2 million euros, 1.5 million less than in the same period last year. Wine imports continued to grow and in these ten months were twice as high as exports, amounting to 12,2 million euros.
During the public debate on amendments to the excise tax law, in October and November of this year, winemakers' representatives, through the Chamber of Commerce, requested that the excise tax on wine be abolished, arguing that it did not serve its purpose, that it increased the prices of domestic wines, that it introduced small winemakers into the ranks of producers of excise products, which complicates and increases the cost of administration for them, all of which, along with poor and insufficient state support, created a negative environment for this industry.
Negative effects of introduction
The excise tax on still wines (all types of wine except sparkling wines) is 25 cents per liter, while for small wineries it is 12,5 cents. The excise tax is included in the VAT calculation base, which further increases the price and cost. Winemakers have a lot of hidden costs because they pay the excise tax in advance, while they can receive the money from sales much later, and also, as producers of excise goods, they have increased administration and different accounting, which also increases costs. All of this is included in the price of the basic product, on which traders later calculate their margins as a percentage.
"The introduction of excise duty on still wines is causing negative effects on the domestic market of wine producers, which has resulted in a decline in sales of still wines on the territory of Montenegro, especially in the domestic production segment, with an increase in business costs and a decrease in the liquidity of producers. At the same time, the state has not achieved the expected budget revenues based on this measure, which confirms that the excise duty on still wines has not fulfilled its fiscal purpose, but has produced a counter-effect - a decrease in turnover and a reduction in the tax base," stated the winemakers' request requesting the abolition of this excise duty.
Sales fell 25 percent
In 2024, as they state, an increase in prices was recorded on the domestic market caused by a general increase in costs and adjustment to market position.
"In the same period, a significant drop in sales of liter wines of 27 percent was recorded, which is a direct consequence of the price increase, since this is the most sensitive and affordable segment of the market. Data from the largest and most important customers confirm this trend. In retail stores, a quantitative drop in sales of liter wines of about 25% was recorded," the winemakers stated at the time.
The Chamber of Commerce's comment stated that the consequence of the introduction of excise taxes was a 10 percent increase in wine prices, and that "Plantaže" suffered the most damage because sales of their cheaper types of wine per liter were reduced.
"In addition, the wine industry in Montenegro is today facing the strongest competition in its history, both on the domestic market and in the markets of the region. The liberalization of imports and the increasing presence of foreign brands are putting pressure on prices and the market share of domestic producers. In such conditions, any additional fiscal burden reduces the possibility of investing in quality, marketing and exports, and directly threatens the sustainability of the Montenegrin wine sector," the explanation of the request requesting the abolition of this excise duty is stated.
The Ministry of Finance responded that the existing excise tax rates remain in force "because they represent a balance between the fiscal goals of the state and the needs of the wine sector, while respecting European standards and regulations."
The EU does not have a directive that requires excise taxes on wines; the only member state that does have them is France, which is five cents per liter, while in Montenegro it is five times higher.
According to data from "Vijesti", of the two million euros in excise duties collected on wines this year, slightly more than half goes to "Plantaže", around one hundred thousand to small wineries, and the rest to wine importers outside the agreed quotas. No excise duties are charged on wine imports from CEFTA and EU quotas.
Excise tax is neither logical nor well-intentioned.
Agronomist, viticulturist and winemaker from Crmnica Misko Lekovic He told "Vijesti" that excise taxes have proven to be pointless, and that for small winemakers, the administration of excise taxes represents a greater cost than the excise taxes are a benefit to the budget.
"If excise taxes paid by small winemakers will save the economy of Montenegro, then so be it. What is obvious is that this decision to pay excise taxes on still wines was made because of large producers, such as Plantaže, so the logic and goodwill of such a decision is questioned, knowing the situation of this company. Last year, small winemakers were faced with additional expenses, not only due to paying this duty but also the administrative costs that accompany it. When it comes to the amounts we pay monthly on the basis of excise taxes, they vary depending on the production capacity of the winery and monthly turnover," said Leković.
The state is not doing enough
He says that at the same time, the relevant Ministry is not doing enough to help small winemakers achieve the support provided by the agricultural budget, which is mostly donated by the EU.
"The procedures for IPARD are increasingly complicated, decisions are not implemented in a timely manner because payments from the agro-budget are late, and the calls themselves are full of illogicality and require serious initial funds to even enter the procedure. All of this together calls into question the sustainability of small-scale wine production, and someone who would like to start such production from scratch is completely discouraged and unmotivated," said Leković.
There are 85 winemakers registered with the Ministry of Agriculture, who produce between 300 and 400 thousand liters of wine annually.
Vintner Predrag Raznatović says that the introduction of excise taxes has harmed winemakers.
"While we don't see what benefit the state has had. In addition to the direct cost of excise taxes, we have additional work and administrative costs related to these excise taxes. This activity can be a good story, but with this attitude of the state, it is discouraging," said Ražnatović.
Leković: We cannot be competitive in our own market
"As far as I know, especially in countries recognized as wine-producing countries, there is no excise duty on domestic wines, and what makes it even more difficult for us is that, as a signatory to CEFTA, Montenegro allows unhindered imports of foreign wines that have flooded the domestic market. That is why we cannot be competitive on our own market and are forced to undertake additional business ventures such as tourism within our estates in order to make our production sustainable," said Leković.
He states that no matter how attractive and romantic the idea of ethnotourism sounds, it must still be emphasized that for winemakers, in addition to work in the vineyard, which is becoming increasingly intensive due to climate change, it implies an additional investment of time, energy, and money in adaptation.
"I am pretty sure that most Montenegrin winemakers cannot afford to live off this business alone, but rather it is either a combination with other businesses or a connection with the provision of additional services. All this leads to the conclusion that viticulture and winemaking have no prospects in Montenegro, but let's be optimistic that something can change in our favor in the coming years," said Leković.
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