The Ministry of Finance of Montenegro and the Tax Administration of Montenegro have created a new program in the current tax system by way of tax incentive for companies with tax debt. The newly introduced program will facilitate payment of debt related to corporate income tax, personal income tax, social contributions, VAT and tax on real estate
The relevant Law, concluded on December 31st 2016, provides the ability to pay tax debts in up to 60 installments, with the requirement that the first payment amounts to 10 percent of the total debt. A very important aspect of the act is the fact that the dynamics of settling of the tax debt (basically the number of monthly installments) in proposed by the taxpayer.
The interest due for the debt as well as the costs of the procedure will be written-off for all taxable persons who will repay their debts in this manner. Subsequently, the reported liabilities will be taken in account as ongoing debt.
The Ministry of Finance will announce a public invitation in relation to the program until the end of March 2017. The deadline for submitting applications will be the 45th day after the publishing of the public ad.
Applications need to include the taxpayer’s name, registration number, address and the proposal of on the payment method for the tax obligations. The tax administration will have a 60 day timeframe to respond to applications. Following the acceptance, the first payment will need to be performed within 90 days.
A minimum threshold of tax debt is set for companies therefore conditioning the eligibility for the installments payment program. Companies with up to 5 employees have a threshold of EUR 100 in debt while companies with number of employees ranging from 6 to 50 must have a tax debt exceeding EUR 500 in order to be considered. For larger companies with more than 50 employees this amount has been set at EUR 1,000.
The tax administration has invited all tax payers who have reported tax debt to respond to the public invitation and to use the possibility of debt repayment in installments with the write-off of interest and litigation costs in connection with the tax claim.