The Tax Administration’s intensified VAT compliance controls have introduced a new layer of pressure on Montenegro’s services sector, particularly for small and mid-sized operators. Enhanced audits and enforcement measures aim to improve fiscal discipline, but they also expose long-standing weaknesses in cash-flow management.
For many service providers, VAT obligations represent a significant liquidity burden. Invoices may be issued months before payment is received, forcing firms to pre-finance tax liabilities. As enforcement tightens, tolerance for delayed or partial compliance diminishes, pushing marginal firms into acute stress.
From a public finance perspective, stronger VAT collection is essential. It underpins budget stability and reduces reliance on borrowing. However, timing matters. Enforcement during periods of elevated costs and slowing demand risks accelerating business closures rather than formalisation.
The challenge lies in balancing fiscal discipline with economic resilience. Without parallel measures such as faster VAT refunds, payment-term reform, or targeted restructuring tools, stricter controls may deepen illiquidity rather than resolve it.
