The Ministry of Finance put up for public discussion the Draft Law on Solidarity Contribution, according to which the state plans to introduce an additional tax as a temporary crisis measure for all companies whose revenues in the last year and this year exceed EUR 5 million.
All companies that are taxpayers in accordance with the Law on Corporate Profit Tax and whose revenues in the last year and this year exceed EUR 5 million will have to pay a joint contribution to the state – a tax on extra profit, which the Ministry plans to introduce as a temporary crisis measure in two years, Vijesti wrote. The public discussion lasts until March 20.
The Ministry decided to propose that law so that companies that gained additional profit during the economic crisis, thanks to the Government’s measures in the form of numerous incentives, would now show solidarity and that the burden of the crisis would be evenly distributed and enable the Government to create new aid packages for citizens. In the explanation of the proposed law, the Ministry stated that despite the negative business conditions, some business entities are making increased profits and this increase in profits is noticeable in various activities.
– The basis of the joint contribution for this and the next year is the taxpayer’s taxable profit for the previous year and this year, determined in the tax balance in accordance with the provisions of the Law on Corporate Income Tax, reduced by the amount of the average taxable profit of the taxpayer determined in the tax balances for 2018, 2019 , 2020 and 2021, increased by 20%. The tax period for which the tax on the joint contribution is calculated and paid is this and the following calendar period. The rate of joint contribution is proportional and amounts to 33% – it is specified in the explanation of that draft law.
In the explanation of the proposed law, it is stated that it is being introduced due to extraordinary events on a global level to which the country is exposed, and that the same tax measure has been applied in other countries.
– Montenegro is in a time of great global economic turbulence that has had a negative impact on citizens and the economy. The main cause is the war in Ukraine, which caused a major disruption in the supply of energy and food at the world level, which led to an imbalance in the market caused by high demand and insufficient supply – the explanation reads.
Additionally, for the past three years, the world economy has been experiencing disruptions caused by the coronavirus pandemic. In these conditions, the population is faced with a constant increase in the prices of key products.
– The aforementioned energy and health crises have a negative impact on all countries in Europe, although to varying degrees. In order to alleviate the consequences of these disturbances, last year the Government adopted a whole series of measures for the protection of citizens and the economy, aimed at preserving the standards of citizens and ensuring high economic growth. The fairness of that package of measures is reflected in the fact that it is aimed precisely at those who are most affected by the rise in prices and who need help the most – it is written in the explanation.
On the one hand, that package of measures, as it is stated, brought an easing of the rise in the prices of oil derivatives, because on May 5 last year the Parliament passed a law on amendments to the Law on Excise Taxes, which gave the Government the opportunity to, in the event of a significant increase in prices of mineral oils on the world market, can make a decision to reduce the amount of excise duty by up to 50% for unleaded gasoline and gas oils, for a period of up to three months.
– Pursuant to that legal authority, the Government for the first time, on May 9 last year, passed a decision on reducing the amount of excise duty for the sale of unleaded gasoline and gas oils, which prescribed reduced amounts of excise duty for the sale of unleaded gasoline and gas oils used as motor fuel – the proposal states.
The valid decision that is in force prescribes a reduction of 15 percent for unleaded gasoline and gas oils for the period from January 4 to February 27 of this year. On the other hand, there are restrictions on the prices of basic foodstuffs.
– There was a reduction in the VAT rate on the sale of basic foodstuffs when it comes to imports, i.e. internal trade, from the general VAT rate of 21% to a reduced rate of seven percent or at a rate of zero percent, namely – milk and dairy products, baby food, fat, oil, meat, eggs, sugar, salt, bread, flour and sunflower oil. Similarly, in the event of a pandemic, the Government adopted a series of measures that brought numerous incentives to the economy in the form of various subsidies and benefits for companies – the bill states.
All the mentioned measures were made with the aim of easing the burden of negative circumstances on the economy and citizens, however, as explained, in order to preserve the balance between incentives and benefits in relation to the entire society, the introduction of a solidarity contribution was proposed.
– By combining the measures implemented so far, the Government through strategic measures encourages the development of the economy, but also takes care of the most sensitive groups in order to ensure a decent standard of living for all citizens. The introduction of the solidarity contribution increases the state’s ability to create new packages of measures to help citizens in need, thus achieving fairness in sharing the burden of negative circumstances and the energy crisis. In addition to the fact that certain persons need strong and quick help from the state in order to overcome the burden of negative circumstances, it was also observed that despite the negative business conditions, some business entities are making increased profits. This increase in profit is noticeable in various activities – it is stated in the explanation.
As it is added, precisely with the aim of greater fairness of the overall system exposed to global extraordinary events, states in response to them introduce extraordinary taxes that have a limited duration and affect those taxpayers who profited from the mentioned economic, political and social circumstances.
– Therefore, there are two key justifications for the introduction of an extraordinary, temporary, crisis fiscal form in our fiscal system. First, due to unfavorable circumstances, the budget needs additional funds for the incentives of citizens and the economy, which are also necessary; some taxpayers, due to such circumstances, managed to make additional profit that is justified to be taxed – the bill says.
In the explanation, it was stated that the problems faced by Montenegro are acute and present in all countries on the European continent, which enables the use of the best comparative experiences, that is, the measures that must be implemented in Montenegro.