Montenegro, Business community is against the Draft Law on Solidarity Contribution, News
Representatives of the business community sent an official letter to the Minister of Finance, Aleksandar Damjanović, in which they once again appeal to the Government of Montenegro to seriously consider and consider their arguments, and withdraw the Draft Law on Joint Contribution from the procedure.
The joint letter to the minister was sent by the Chamber of Commerce of Montenegro, the American Chamber of Commerce (AmCham), the Montenegrin Association of Employers, the Council of Foreign Investors and the Association of Banks of Montenegro.
– We believe that economic policies in every segment should support the economy, its further development, diversification and be a driving force for the progress of the entire society. We believe that the achievement of this goal is only possible if there is understanding and meaningful communication between decision makers and members of the business community in the widest possible context. However, we are witnesses that the absence of such practices in the previous period directly threatened the business models that numerous companies in Montenegro were devotedly developing – the letter states.
As they point out, the situation is aggravated by the fact that the economy of Montenegro is still in the recovery phase from the consequences of the crisis caused by the Covid 19 pandemic (2020 – 2021), which was additionally deepened by the economic crisis imposed by the war in Ukraine (2022 – 2023).
– Taking all the above into account, the Montenegrin business community believes that, when conducting economic policies, the focus must be on solutions that fundamentally strengthen the economy, create a positive investment climate, help diversify the economy and contribute to achieving a predictable and fair business environment. Any compromise with the stated goals would put the entire Montenegrin business community in front of a serious challenge that would very quickly call into question the general sustainability of business and the development of the Montenegrin economy – the document states.
Representatives of the business community remind that from January 2022, measures in the domain of the tax system of Montenegro are in force that reduce the competitiveness of our economy, such as the introduction of progressive taxation of profit tax instead of the previous proportional rate, and recently also the introduction of unannounced levies for the economy, in the form of new and increases in existing excise taxes.
– We see the draft law on joint contribution as an additional form of punishment for companies that are successfully operating after a long period of extremely unstable circumstances. We believe that it is another confirmation of the additional burden and collapse of the positive business environment in Montenegro – they say.
As the aforementioned draft law is under public discussion, they add, the Montenegrin business community once again wants to use the opportunity to point out the facts that were excluded during the creation of the text of the law and its explanation, and which are directly to the detriment of companies in Montenegro:
All economies that develop in accordance with the best practices create their policies in order to attract and retain renowned, socially responsible companies, and as a priority they have support for the entire economy to overcome very challenging opportunities caused by global economic trends;
Frequent changes in legal solutions create additional unpredictability of the business environment, in conditions when all the efforts of the state should be directed precisely at reducing the unpredictability caused by global political and economic events;
Retroactive application of the law is being introduced, which consequently creates uncertainty in the business environment and mistrust towards decision-makers, and prevents companies from planning their business;
Further growth and development of companies is discouraged, especially the attraction of investments that would enable a greater number of new jobs and additional income for the state;
A message Is being sent to foreign and domestic investors that we are a country that, instead of building a system that encourages the most successful companies and the best business practices, expects such companies to bear the burden of the shortcomings of the entire economic system, and practically “punishes” them for achieved successful business results;
The country’s Investment rating is negatively affected, because Montenegro becomes less attractive to foreign, successful companies, which will rather choose to establish a company in the countries of the region that do not have high and diverse levies, and which are also more attractive in terms of the size of their market compared to Montenegro;
The essence of Council Regulation (EU) 2022/1854 of October 6, 2022, to which the decision-makers refer, is overcoming the energy crisis, i.e. the introduction of certain measures that would suppress the increase in electricity prices and their impact on households and industry, which was created as a result of the war in Ukraine. On the contrary, the income from the joint contribution in Montenegro would go to the Health Insurance Fund of Montenegro, and the purpose and intention for the adoption of the Regulation and the disputed law are different. In order to overcome the problem caused by the abolition of the obligation to pay health insurance contributions, it is necessary to find a long-term and sustainable solution, through measures that would have far-reaching effects, and not just ad-hoc measures for 2023 and 2024, as provided for in the disputed Draft Law.
– Also, we want to draw attention to another bad practice that damages the reputation of the Montenegrin business community. We believe that it is necessary to take care of the way in which decision-makers explain the reasons for adopting this legal solution in public. Unfounded and dangerous terms such as “unearned profit”, “profiteering” etc. are often used during these presentations. This excessive and populist rhetoric harms the reputation of Montenegrin companies, which in a significant majority are reliable and responsible partners of society, as well as desirable employers who take care of the well-being and progress of their many employees – say representatives of the business community.
As they point out, the business community understands the challenges facing the Government of Montenegro, especially when it comes to the lack of funds to finance public spending.
– In addition to the unquestionable need to rationalize it, we point out that there are concrete and alternative measures that the state can and must undertake in order to increase budget revenues and improve the business environment. Here, above all, we mean the systematic and significantly stronger fight to suppress the gray economy, which in Montenegro is estimated at approximately 40% of GDP. In this field, business associations have already offered a number of concrete systemic solutions, such as the adoption of necessary legislation and strengthening the capacity of inspection services for decisive control of unregistered business entities and other illegal behaviors – the letter states.
They state that the Montenegrin business community is ready to get involved and strengthen the capacities of decision-makers in the processes of solving complex economic situations and challenges facing Montenegro.
– However, this doesn’t mean the adoption of unilateral solutions that threaten and limit the operations of companies that can rightly be called the drivers of the Montenegrin economy. Finally, we would like to once again appeal to the Government of Montenegro to seriously consider and consider the arguments presented, and to withdraw the Draft Law on Solidarity Contribution from the procedure – concluded the representatives of the Montenegrin business community.
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