Behind the modest growth figures, the government is wrestling with a classic fiscal balancing act. The 2026 budget is set at about €3.79 billion, with slightly higher revenues and a modest increase in borrowing, all aimed at financing growth without undoing the hard‑won fiscal discipline. Public spending is still tilted toward wages, pensions, and social transfers, which together form the bulk of the expenditure envelope.
Corporate income tax remains anchored at a competitive 9–15% rate band, one of the lowest in Europe, a deliberate choice designed to keep the headline regime business‑friendly. The real shift in 2026 is less about headline rates and more about enforcement. Authorities have stepped up scrutiny of small businesses, self‑employment, and home‑based economic activity, pushing to raise the effective tax take without raising statutory rates, and aligning the system more closely with EU standards on transparency and base‑protection.
Another element of the fiscal picture is the planned tightening of excise duties on tobacco, where Montenegro’s current rate is already at the lower end of what the European Commission tolerates. The authorities argue that even a modest increase can help meet revenue targets without devastating domestic producers, but it feeds into a broader debate about how much the state can lean on indirect taxes before households feel the pinch.
At the same time, Montenegro is implementing parts of the OECD‑backed “two‑pillar” tax reforms, including a domestic minimum top‑up tax (DMTT) from 1 January 2026 that subjects large groups to a 15% effective minimum rate. The measure is designed to ensure that large multinational and big domestic firms, wherever they locate profits, cannot benefit from a substantially lower effective rate. For investors, this reads as a signal that Montenegro is serious about aligning with global tax‑transparency norms, even as it clings to its low‑rate positioning.
