Despite many years of pleas to reduce taxes and contributions on the salaries of journalists and other media workers and to introduce a zero rate of VAT for daily and periodical press, the authorities in Montenegro did not change the tax policy even during the coronavirus epidemic, nor, as it was unofficially announced, " News", that issue is also on the agenda of the new Government.
The only support in this part was the reprogramming of the tax debt for companies that were regular in paying their tax obligations, and the contributions for newly employed workers from the records of the Employment Service were also reduced.
Taxes and contributions on wages remained unchanged, and on the total amount of salary they amount to 41,5 percent and include contributions for pension and health insurance, and contributions paid on the basis of unemployment. If payments for the trade union and the Chamber of Commerce are added to that, then it can be calculated that the total taxes and contributions are about 65 percent of the net amount.
In addition, the tax on raw materials, which amounts to 21 percent, has not changed, and the same taxes and fees are still paid by the electronic media.
"Even though the previous Government promised to fix the situation on the destroyed media market by passing new media laws, that did not happen. The political will to regulate the market was lacking because, as they knew very well, fair play removes propaganda from the game, and allows professional media sustainable development", says the executive director of "Vijesti", Marijana Kadić Bojanić.
The media, she adds, is one of the most vulnerable industries and says that the new administration should react quickly.
"Additionally, the print media suffer the greatest damage during the epidemic and the question is whether the new government is ready to maintain media pluralism with immediate interventions, but also with long-term legal solutions that should be the basis for creating a climate in which the media depends on trust, viewership and readership and innovation, not from political leanings," she said.
At the end of July, the Parliament of Montenegro passed the Law on Media, which introduces the Fund for Encouraging Media Pluralism as one of the support measures. The fund is financed in the amount of at least 0,09 percent of the budget, of which 60 percent is intended for commercial and non-profit media and the rest for print media and internet publications.
Speaking about the assistance from the Fund, the vice-president of the Union of Media of Montenegro (SMCG), Radomir Kračković, told "Vijesti" that the Government should "start fulfilling the obligations of the Law in a timely manner".
"If we take last year's budget achievement as a parameter, which in the end amounted to just over two billion euros, the private media should receive about 1,7 million euros from this Fund this year, television and radio stations about a million, and newspapers and portals around EUR 700.000. However, the adoption of the budget for this year has been postponed until the end of March, and therefore the distribution of this money will also be postponed," he said.
Kračković points out that it is not known whether all the criteria for the distribution of this money have been determined, and that the Union will insist that every media outlet that receives money from this Fund adequately rewards its employees.
"What will certainly be needed is the help of the state in postponing or rescheduling the tax obligations of these media that have accumulated in recent years, which is why some are threatened with bankruptcy," he warned.
In September, the Media Association of Southeast Europe published the "Analysis of conditions for media business and business barriers for the media industry in Montenegro". The author, among other things, recommended to the Government an increase in the annual percentage allocation for the Fund to 0,9 percent of the current budget - that is, ten times more than the existing solution.
In the analysis, which was authored by the executive director of "Fidelity consulting" Miloš Vuković and the media expert Ana Nenezić, it is stated that the media in the region, as well as all business entities, face high taxes and contributions to the salaries of employees.
It was pointed out that Montenegro has the lowest tax rate for profit (9%), but with 21% the VAT rate is the highest after Croatia (25%). In the form of a reduced rate, VAT is calculated and paid at a rate of seven percent for print media in Montenegro.
In the document, the authors also simulated a 50 percent reduction in taxes and contributions to personal income for the largest companies - TV Vijesti, Antena M, Nova M, Daily Press, CdM, JU Media Mont, Nova Pobjeda and Portal Press.
The analysis showed that, if taxes and contributions on wages were reduced by 50 percent, it would mean that those companies would have over 1,1 million euros less in expenses on this basis.
"What they could channel into much-needed investments, improving the working conditions of journalists and their education, as well as other necessary activities. For example, if this entire sum were taken for the employment of additional journalists and other media workers, who would receive an average gross salary in Montenegro in the amount of 10.000 euros gross per year, this would mean that the total profession would have over 110 new employees. In this way, the quality and volume of reporting would be drastically improved, and at the same time it would generate additional revenues for the budget, through tax payments and contribution for a larger number of people, which would also have positive implications for the Montenegrin economy," says the financial analysis made by Vuković.
The author's recommendation is to reduce the tax burden for the work of the media - a 50 percent reduction in taxes and contributions on the personal income of journalists and other media workers, a reduction of VAT to a zero rate for the press, a reduction of VAT to a reduced rate of seven percent for advertising services in the media and for the procurement of equipment needed for media work.
In the analysis, he also performed a simple simulation of reducing VAT by 50 percent through the example of the obligation to pay VAT of one million euros.
"After lowering the VAT rate by 50 percent, the media would have 500.000 euros left for financing other business expenses and new investments," he states in the analysis. The executive director of "Vijesti" highlighted several examples that Montenegro could apply.
"In Finland, in addition to the preferential VAT rate per newspaper copy sold, the preferential rate is also applied to subscriptions to printed newspaper editions, as well as to the purchase of newsprint and circulation costs. Newspaper publications also enjoy a preferential VAT rate on costs distribution. For example, Belgium, Denmark, Great Britain and Luxembourg have a zero VAT rate for the distribution and sale of newspapers. Norway, known as a country with an extremely high VAT, applies a zero rate for printed newspapers," said Kadić Bojanić. .
The media union asked for the abolition of the value-added tax on the press and books back in 2014 with a request they sent to the then presidents of the state, Filip Vujanović, the Prime Minister, Milo Đukanović, and the Parliament, Ranko Krivokapić.
"Such measures have already been taken by numerous European countries such as Belgium, Denmark, Great Britain. In other European countries, such as France, that tax is symbolic and amounts to only one or two percent," they stated at the time.
The tax policy in relation to the media has not changed in North Macedonia either, where the preferential rate for print media is two percent lower than in Montenegro and amounts to five percent. According to the portal "Sloboden pećat", for the same newspaper, if you want an electronic subscription, you have to pay a tax of 18 percent. If e-subscription for printed editions were to be introduced in Montenegro, the tax payable in that case amounts to 21 percent.
This means that for the printed edition of "Vijesti", which costs 0,7 euros, the publisher pays 0,05 euros in tax, while for the same edition in the electronic version, he should pay 0,12 euros.
There is no help in the competition for the weekly newspaper
Journalist and director of "Monitor" Milena Perović Korać said that, although the authorities have taken some measures since the beginning of the epidemic in order to mitigate the consequences and to help in business, none of them had a concrete impact on that weekly.
"Also, 'Monitor' was discriminated against during the allocation of subsidies to print media, because it was excluded from the competition. There were also no tax incentives. The new authorities should have more understanding and sensibility for the business of print media, given their public importance, and special position on the market," said Perović Korać.
She warns that a new problem is yet to be expected and that therefore new ways of mitigating the consequences of the epidemic must be urgently devised, whether through tax policy or some other means.
The Investment and Development Fund of Montenegro (IRF) approved loans worth 1,2 million euros and this money was used for the acquisition of working capital and the payment of part of the salary, the assistance for the payment of fees to the Radio Broadcasting Center (RDF) was not quite 390.000 euros , exemption from fees for the Agency for Electronic Media (AEM) is about 178.000 euros, the Ministry of Culture helped the media with about 302.000 euros.
This story was created in cooperation with the daily newspapers Vijesti from Montenegro and Sloboden pecat from North Macedonia
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