Over the past year, the municipality of Gusinje collected a total of 25,452 euros in value-added tax (VAT), while Petnjica garnered 27,988 euros. These amounts represent their contributions to the state budget through one of the most significant taxes. In return, Gusinje will receive 828,000 euros, and Petnjica 992,000 euros from the state’s Equalization Fund this year.

This data suggests that economic and commercial activities in these municipalities may have nearly vanished or are predominantly occurring in the informal sector. The VAT amounts of around 25,000 and 28,000 euros indicate a turnover that should approximate between 130,000 and 150,000 euros annually.

According to census data, Gusinje has a population of approximately 4,600, while Petnjica has about 1,600. In comparison, the municipality of Šavnik, with a population of 186,000, appears to be an economic powerhouse relative to these two. Last year, Šavnik’s VAT collection was just 2,200 euros. Meanwhile, Plužine, which has 126,000 inhabitants, contributed 953,000 euros in VAT. Šavnik will receive a total of ____ thousand euros from the Equalization Fund, while Plužine does not benefit from this type of support.

Andrijevica, with nearly 1,000 fewer residents than Gusinje, reported VAT revenues that were 43 times greater.

Data from the Tax Administration on VAT collection across municipalities was released in response to a parliamentary inquiry by Albanian Alliance MP Ilir Čapuni. He sought information regarding the amounts of VAT collected by municipalities over the past five years, fees for the Coastal Zone, allocations from the state budget for capital projects, and investments by the public company Morsko Dobro in various municipalities.

The Tax Administration’s response included a breakdown of VAT revenues by municipality, clarifying that these figures pertain only to domestic transactions, as VAT data collected from imported goods cannot be assigned to municipalities.

56 Percent of VAT Collected in Podgorica

Last year, the total VAT collection from domestic sales reached 479.5 million euros, with the majority—271 million euros, or 56 percent—originating from Podgorica. This statistic illustrates that more than half of all economic and commercial activity in Montenegro is concentrated in the capital, which is home to approximately 28 percent of the nation’s population (180,000 out of 633,000).

In Budva, Montenegro’s tourism center, the city achieved 35 percent of the total overnight tourist stays in 2024 and collected 41.5 million euros in VAT last year, representing 8.6 percent of the overall VAT collected.

Nikšić ranks third in terms of economic strength, generating VAT revenues of 30.8 million euros, or 6.4 percent of the total collection.

Herceg Novi follows, with 25.6 million euros collected, making up 5.3 percent of the total VAT in domestic sales. Next is Tivat, with a collection of 24.8 million euros (5.2 percent), Kotor with 19 million euros (4 percent), and Bar with 16.2 million euros (3.4 percent).

In eighth place is Pljevlja, the first city in northern Montenegro, with 12.2 million euros collected, representing 2.5 percent of the total. Following are Ulcinj with 8 million euros (1.7 percent), Bijelo Polje with 6.6 million euros (1.4 percent), and Danilovgrad with 5.8 million euros (1.2 percent of total VAT revenues).

Cetinje, the royal capital, ranks 12th with a collection of 3.4 million euros (0.7 percent), followed by Tuzi with 3.3 million euros (0.68 percent) and Zeta with 2.3 million euros (0.48 percent). Berane and Rožaje each brought in 1.9 million euros last year, signifying 0.4 percent of the total VAT collection.

Kolašin sits at 17th with 1.4 million euros in VAT collected, with Andrijevica following at 1 million euros.

The seven smallest municipalities—Mojkovac, Žabljak, Plav, Šavnik, Plužine, Petnjica, and Gusinje—combined to collect only 1.9 million euros, accounting for 0.4 percent of the total.

Across all 13 municipalities in the northern region, the total VAT collected amounted to 27.2 million euros, representing 5.6 percent of the overall VAT collected.

VAT represents the most significant state revenue, fully allocated to the state treasury. Municipalities falling below the average development level may access funds from the Equalization Fund, which redistributes portions of revenue that originally went to the state level.

Upon their establishment as independent municipalities—Petnjica from Berane, Gusinje from Plav, and Tuzi and Zeta from Podgorica—they were required to present studies ensuring financial sustainability. Yet, 25 to 33 percent of their total income now derives from the Equalization Fund.

Each of the four new municipalities is classified as underdeveloped. Petnjica received 992,000 euros from this fund this year; Gusinje received 828,000 euros; Tuzi 2.24 million euros; and Zeta 1.86 million euros.

Similarly, Nikšić benefits from the Equalization Fund, receiving 5.9 million euros, Bijelo Polje 4.8 million euros, Bar 3.8 million euros, Ulcinj 2.82 million euros, Pljevlja 2.73 million euros, Tuzi 2.24 million euros, Zeta 1.86 million euros, and Danilovgrad 2.56 million euros. In these municipalities, the state has earned more in VAT than it distributed through this fund.

This year, Rožaje received 4.1 million euros from the Equalization Fund, Berane 3.41 million euros, Plav 1.93 million euros, Kolašin 1.55 million euros, Mojkovac 1.2 million euros, Andrijevica 1.11 million euros, and Žabljak 1.03 million euros, all exceeding their respective VAT collections from the state.

Ulcinj Charges the Most for Seaside Property, Yet Investments in Beaches Remain Unanswered

In a response provided to MP Čapuni by the Ministry of Finance, it was disclosed that Morsko dobro collected 9.2 million euros in user fees last year, with the highest amounts from Ulcinj at 2.97 million euros, followed by Budva at 2.82 million euros. Tivat collected 1.1 million euros, Bar 868,000 euros, Herceg Novi 834,000 euros, and Kotor 617,000 euros.

However, there was no response regarding the extent of Morsko dobro’s investments in coastal areas per municipality.

Ulcinj received 1.49 million euros from the state budget for capital investments last year, primarily earmarked for the initial phases of various projects, including a bridge over the Bojana River, renovations on Mother Teresa Boulevard, cobblestone restorations in the old town, rehabilitation of the Kruče bridge, and the construction of a kindergarten. The cumulative value of these projects is set at 21 million euros, with funding continuing in the upcoming years. An additional 1.46 million euros is slated for capital investments this year.

Overall, the state collected 8 million euros in VAT from Ulcinj, alongside another 3 million from user fees through Morsko dobro.

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