Montenegro’s new economic plan, together with tax and insurance-related reforms, aligns with the country’s aspiration to become an attractive destination for foreign investors and digital nomads, according to Milena Roncevic Pejovic, Attorney at Law in cooperation with Karanovic & Partners.
"Focusing on attracting investors, the government of Montenegro is in the process of implementing a number of reforms," begins Roncevic Pejovic. "In general, one of the major recent developments was the introduction of a new economic plan, referred to as the 'Europe Now!' project," she says. "The plan focuses on tax reform. According to the plan, the corporate income tax will remain at 9% for companies whose profit does not exceed EUR 100,000. It will be beneficial for both new and existing investors to enter and operate on the local market." Roncevic Pejovic points out that Montenegro has the lowest corporate income tax in the region, and the new law should contribute to the country having a unique position in the regional market.
Another major update, according to Roncevic Pejovic, is the adoption of the new Law on Innovation. "This law will enable innovative companies to be exempted from paying profit tax for the last five years," she notes. "This is an additional way for the government to attract investments in the field of innovation. It also sends a good signal for young people to enter our market. Additionally, the minimum employee salary is increased to EUR 450, which might not be a significant number for many countries, but is a big step locally."
"Recently, health insurance payments became the responsibility of the state," Roncevic Pejovic adds. "Previously, it was the employers’ responsibility to provide such insurance." According to her, this news will have a positive impact on the business sector, as their obligations will be relaxed on a monthly basis.
Overall, Montenegro is a touristic destination, and ensuring reforms in this area remains the priority of the government, Roncevic Pejovic says. "Investments in renewable energy, in particular wind and solar energy, are becoming increasingly popular," she adds, noting that "the government also aims to promote Montenegro as a destination for digital nomads. That would be a great novelty, contributing to our country’s economy."
"While the business environment is becoming more attractive, there is a great need for further reforms to promote the rule of law and to fight against corruption and the grey economy," Roncevic Pejovic explains. "Definitely, those factors, in addition to the COVID-19 pandemic, the war in Ukraine, and the local government crisis, have a major influence on the development of the market and attracting new investors."