Prime Minister Milojko Spajić has declared that there will be no cuts to indirect taxes in Montenegro, including VAT, while efforts will focus on reducing direct taxes that impose a fixed burden on the economy.

Spajić reiterated that this approach reflects the continued agenda of the 44th Government, aiming to lessen the state’s financial load on the economy and streamline procedures. Thus, indirect taxes will continue to be the cornerstone of Montenegro’s revenue generation.

This statement was made during the American Chamber of Commerce in Montenegro (AmCham) conference, where the business environment report for 2023 and 2024 was launched. The event was themed “Openly with the Prime Minister”.

AmCham rated Montenegro’s business environment at 5.91 out of 10. All members expressed discontent regarding the state of the shadow economy in the tourism sector, with half indicating that the business climate has remained stagnant over the past two years.

Montenegro also received predominantly negative feedback on issues related to waste management, the length of court proceedings, and bureaucratic procedures in construction.

“The courts operate independently, limiting our influence”

When asked about challenges surrounding the functioning of domestic courts, Spajić responded that the judiciary operates autonomously, restricting the government’s ability to intervene.

“Our capabilities are quite limited. It’s concerning that in 2018, the courts were rated more favorably than they are today,” he remarked, expressing his dissatisfaction with several judicial outcomes but promising to exert every effort to address these issues.

He also disclosed that, in collaboration with Britain and France, they are working on establishing a new Arbitration Court, or on utilizing the existing one at the Chamber of Commerce of Montenegro. He assured that this initiative aims to resolve judicial problems and expects it to be realized during the term of the 44th Government.

AmCham’s Executive Director, Marko Miročević, raised concerns about the gray economy in tourism and mentioned their satisfaction with advancements in inspection reform and consumer protection.

Spajić acknowledged that prior inspections were ineffective due to the separation of the Inspection Directorate from ministries, but changes are underway to address this. He stated his agreement with the assessment of this sector’s situation and committed to improving it, including in coordination with platforms like Booking and Airbnb.

Miročević also inquired about public administration and the measures being taken to attract larger investors.

“Montenegro faces severe bureaucratic hurdles; there are times I’m unsure how to pay certain taxes,” Spajić remarked, admitting that the systems need modernization.

He mentioned plans to have “boot camps” set up by the end of April, designed for citizens to enroll in three-month programming training. This initiative aims to equip willing participants with basic skills to secure employment, ultimately benefiting Montenegro’s workforce.

“Currently, we have only 20 to 30 individuals graduating in programming from the Faculty of Electrical Engineering, which is far from sufficient. Additionally, we are confronting issues of financial and digital literacy,” Spajić noted, clarifying that these camps will be free for Montenegrin citizens and that they are collaborating with Bahrain on the project.

He also announced ongoing efforts in sectors reliant on seasonal employment through the Law on Permanent Seasonal Workers, alongside healthcare modernization.

Miročević observed a growing dissatisfaction among companies regarding waste management, to which Spajić replied that they are negotiating Chapter 27 – the most complex chapter in this respect.

“The situation is dire, and we will strive to enhance it. By establishing an Agency at the national level, we aim to assist municipalities in obtaining the expertise needed to resolve these issues,” he emphasized, noting that Montenegro must align its regulations with EU standards, with a deadline set for the first quarter of 2027. He acknowledged the challenges of integrating the business community into these decisions.

Spajić pointed out that there has been a reduction in the tax burden on labor and improvements in the tax administration’s efficiency concerning VAT refunds.

Additionally, he expressed regret over the “anti-American rhetoric from the opposition” and mentioned that Montenegro has ready or nearly ready conceptual solutions for 18 highway sections, with plans to issue tenders for contractors this year, next year, and possibly into 2027.

He also asserted that the Montenegrin Electric Transmission System is working to enhance its export capacity to Italy.

The U.S. Ambassador to Montenegro, Judy Rising Reinke, remarked that this is a biennial report aimed at fostering prosperity through business and economic collaboration. She mentioned that the new American administration is attentively reviewing these reports.

“This is a challenging report, compiled from thousands of interviews and surveys, and it can serve as a guide for the government. American investors have shown unprecedented interest in Montenegro during your tenure as prime minister,” she stated, emphasizing the importance for local companies regarding government consistency, court efficiency, and workforce availability.

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