Montenegro is moving to tighten implementation of the 15% global minimum corporate tax, aiming to ensure that additional tax due on low-taxed profits generated in the country is collected in Montenegro rather than transferred to foreign tax authorities.
A proposed legislative amendment submitted to parliament would clarify the country’s domestic top-up tax under the OECD and EU Pillar Two framework.
The rules apply primarily to multinational and large domestic groups with consolidated annual revenue of at least €750 million in at least two of the previous four fiscal years.
Where the effective tax rate on qualifying Montenegro operations falls below 15%, the domestic top-up mechanism is intended to collect the difference locally.
The fiscal logic is straightforward.
Under global minimum-tax rules, if Montenegro does not collect the additional tax itself, another jurisdiction within the corporate group’s structure may be entitled to do so.
The amendment is therefore designed less as a new tax burden than as a mechanism to determine which country receives revenue that may already be due under the international system.
For Montenegro, that is particularly important because its corporate tax regime has historically been one of the more competitive in Europe.
The country uses a progressive corporate income tax structure with rates below 15% for some taxable profit bands.
Pillar Two changes the economics of those lower rates for very large multinational groups.
A qualifying company may still calculate its domestic corporate tax under Montenegro’s ordinary system, but global rules can require the effective rate to be brought up to 15%.
If Montenegro collects that difference through a qualified domestic minimum top-up tax, the revenue remains in Montenegro.
If it does not, part of the tax can effectively migrate to the jurisdiction of the parent company or another group entity.
That makes the amendment a revenue-protection measure.
The effect will be concentrated rather than economy-wide.
Most Montenegrin companies are far below the €750 million consolidated revenue threshold and will not fall within the global minimum-tax regime.
SMEs, local family businesses and the majority of domestic taxpayers therefore should not be directly affected.
The main exposure is among large multinational groups operating in sectors such as banking, telecommunications, energy, retail, tourism and other capital-intensive industries.
For those companies, Montenegro’s tax rate can no longer be viewed in isolation.
Effective taxation increasingly depends on the wider group structure and how profits and covered taxes are allocated between jurisdictions.
That raises the importance of accounting systems and tax reporting.
Pillar Two calculations are considerably more complex than ordinary corporate income tax.
Groups need detailed information on income, deferred tax, covered taxes, ownership structures and jurisdiction-specific effective rates.
For subsidiaries in Montenegro, that may require closer coordination with foreign headquarters and tax advisers.
The compliance burden may therefore be more significant than the cash tax impact for some businesses.
Many large groups already pay effective rates at or above 15%, meaning no additional top-up would arise.
Others may benefit from transitional rules or adjustments under the international framework.
The amendment should therefore not be interpreted as an automatic increase to 15% for every large company operating in Montenegro.
The calculation is group- and jurisdiction-specific.
The policy also has implications for Montenegro’s investment model.
Low corporate tax rates have historically been part of the country’s effort to attract foreign investment.
Pillar Two reduces the value of that tool for the largest multinationals because profits taxed below the global minimum may simply face additional tax elsewhere.
For those investors, incentives increasingly need to come from other factors: infrastructure, energy costs, workforce quality, market access, regulation and investment support that complies with EU state-aid rules.
That does not make Montenegro’s tax regime irrelevant.
Companies below the Pillar Two threshold still benefit from the domestic system.
Even large groups can be influenced by other tax features and investment conditions.
But the international reform narrows the extent to which a country can compete for the largest corporate groups solely through low effective tax rates.
For public finances, the amendment could preserve revenue that would otherwise accrue abroad.
The amount is difficult to estimate without company-level data because it depends on how many qualifying groups operate in Montenegro and their effective tax positions.
The initial fiscal benefit may therefore be modest.
The strategic importance is greater.
Montenegro is aligning its tax system with EU and OECD rules before accession while ensuring that the alignment does not unnecessarily transfer taxing rights to other countries.
The measure also signals a broader shift in international tax policy.
Competition is moving away from headline rates toward substance, infrastructure and the quality of the business environment.
For Montenegro, that means maintaining investment competitiveness while accepting that very large corporate groups increasingly operate under a common minimum effective tax floor.
The proposed amendment is intended to ensure that when the 15% minimum applies to profits generated in Montenegro, Montenegro — rather than another jurisdiction — collects the difference.
