The current situation regarding Bemax’s owner highlights a sense of helplessness in the face of a compelling argument and an emerging incorruptible state. This is evidenced by the lack of substantial facts in his favor, leading him to resort to superficial political tactics. Furthermore, the negative narratives surrounding him are crafted by individuals who are well-compensated by Bemax, stated Momo Koprivica, the Deputy Prime Minister for the Political System, Judiciary and Anti-Corruption, in his remarks today.

Koprivica’s comments were a response to statements made yesterday by Veselin Kovačević, the President of the Board of Directors of Bemax, who accused him of spreading falsehoods and insinuations primarily aimed at self-promotion ahead of the local elections in Nikšić.

Prior to this, Koprivica’s office had announced that irregularities within Bemax had been identified by the Tax Administration based on his reporting.

In a response issued by his cabinet today, Koprivica remarked, “The irony of historical fate suggests that those who once adeptly manipulated regulations are now distorting their own statements.”

Koprivica further questioned, “How can one justify the claim that I initiated this investigation in anticipation of the Nikšić elections, when I filed a report with the Tax Administration and a criminal complaint as far back as June 17, 2024?”

He emphasized that “the discussion regarding retroactivity should be approached with caution.”

“Firstly, the Constitution of Montenegro permits retroactivity for specific legal provisions if deemed necessary for the public interest, as outlined in Article 147, paragraph 2. This determination was made through the appropriate parliamentary processes. Secondly, this legislative measure did not introduce any new taxes, duties, or regulatory burdens; rather it empowered the tax authority to investigate contracts from the previous 5 years (within the limits of legal tax statutes) to ascertain whether reported sales figures were manipulated to evade or diminish tax liabilities. The tax authority is already permitted to do this for real estate, vehicles, and aircraft, thereby ensuring fairness among different asset owners. Thirdly, the European Court of Human Rights, comprising top legal authorities, has established that retroactive tax legislation does not inherently violate Article 1 of Protocol No. 1 regarding property rights,” Koprivica elaborated.

Koprivica warned citizens that if they encounter claims of properties being sold at absurdly low prices, such as an apartment in Block 9 in Podgorica for just 15 euros per square meter, they are likely witnessing a tax scam designed to minimize tax obligations.

“While individuals may set their own sale prices, they cannot exploit the state financially. The state will not dictate the sale price, but when determining the real estate transfer tax, it will rely on the actual market value rather than the contract price. This measure is not intended to compel property owners to set better prices but to prevent tax deception. This principle currently applies to share sales in companies as well, and it reflects a worrying trend in the ownership structure of the company in question,” Koprivica pointed out.

He also mentioned that individuals are free to gift their properties, yet the state will appraise the market value for tax purposes, just as it would for a sale.

“The distinction between property transfer and tax obligations is critical, and regarding taxes, individuals lack the freedom of choice. Compliance with laws is required, regardless of personal beliefs. The owner of Bemax may theoretically gift a company worth 139 million euros in undistributed profits, but the tax computation will still rely on the actual market value to prevent any tax evasion. The state’s focus is not on how much the beneficiary gains or does not gain, but on ensuring proper contributions to its budget,” asserted Koprivica.

Koprivica denounced attempts to mask tax fraud as a threat to property rights.

“Legally, any positive difference between the sales and purchase prices of company shares constitutes capital gains to which tax rates apply. In the case of sharing Bemax, after subtracting a so-called purchase price of 750,000 euros from the sales price of 749,800 euros, Kovačević appears to have earned a mere 200 euros through this transaction, which qualifies as capital gain subject to taxation under the Personal Income Tax Law. Last year, the company had fixed assets valued at 120 million euros and total capital estimated at 142 million euros, alongside a prior undistributed profit of 141 million euros. For context, Bemax reported net profits of 14 million euros in 2021 and 27.5 million euros in 2020. These numbers indicate that Kovačević sold his company for less than 1% of its actual worth, which reflects only 5% of last year’s net profit,” explained Koprivica.

This, he stated, underscores that the stated contract price is likely a fabricated figure, intentionally lowered to minimize tax payments to the state.

“While the owner’s personal motives are not of concern to the state, he must confront the legally relevant inquiry that impacts the public interest, which he cannot sidestep through cheap tricks: did he adhere to the existing Personal Income Tax Law regarding capital gains from share sales? Before the public, rather than fall back on despairing political theatrics, he should answer whether he submitted his GPPFL (annual personal income tax return required by April 30 for the previous year) for 2022, the year in which this sale occurred, with the deceptive sale price potentially obligating him to pay just 30 euros. Did he remit this amount to the state, or was even that sum too burdensome for his ‘patriotic ethos’?” questioned Koprivica.

He concluded by emphasizing that amid a wave of manipulative rhetoric, one undeniable truth remains: “the state of Montenegro has previously sold companies for less than their book value.”

“Indeed, those associated with Bemax have engaged in such transactions, as evidenced by declarations from the Deputy Prime Minister of Saint Lucia. Such disastrous sales have opened avenues for other companies to thrive in civil engineering sectors, necessitating adjustments to regulatory frameworks. An era of bribed governance, manipulation, and privileged entities is over; responsibilities must be addressed, despite their unpleasant nature. This is essential for a nation striving for sovereignty and EU integration. The illicit activities surrounding this company will continue to be scrutinized, and the outcome will be clear: the rule of law cannot be circumvented, not by them or anyone else,” Koprivica concluded.

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