Economic overview
Montenegro has a moderately delicate economy which is changing to a market framework and depends on money related ventures, particularly in the vitality and the travel industry divisions.
The country’s economy developed by 3.6% in 2019 (from 5.1% one year prior), generally because of foundation venture for the initial segment of the motorway association between the port of Bar and Boljare, which was assessed to represent 6% of GDP. Private consumption was additionally among the key development drivers of the nation. As per the refreshed IMF conjecture from fourteenth April 2020, because of the episode of the COVID-19, GDP development is relied upon to tumble to – 9% in 2020 and get to 6.5% in 2021, subject to the post-pandemic worldwide financial recuperation.
In spite of solid growth, Montenegro’s financial circumstance stays vulnerable. The fiscal deficit has been decreased lately and should enroll an essential overflow of up to 1.5% in 2020. Open obligation, be that as it may, expanded to 81.1% in 2019 from 72.6% one year sooner, because of the advance taken out with China Eximbank to back the previously mentioned motorway venture. IMF gauges the administration obligation to diminish in the next years, 74.8% in 2020 and 67.8% in 2021. The vast majority of the open obligation is designated in USD and the nation has an outer exchange deficiency of very nearly one-fourth of its GDP.
Main sectors of economy
Agriculture, which as indicated by the most recent information by the World Bank speaks to 6.7% of the GDP (generally 60% domesticated animals reproducing and 40% development) and 7.8% of the workforce, remains hampered by its obsolete techniques. Agricultural land represents 19% of the complete land region (FAO). In the beach front area which profits by the Mediterranean atmosphere, citrus and olive societies are across the board, opportune vegetables and tobacco can be found in the focal parts, and the North advantages from the broad sheep rearing. The fundamental items sent out are wine and brew. As Montenegro propels in the exchanges to join the EU, the nation is dealing with the improvement of its rural segment as per the EU pre-increase prerequisites.
Industry speaks to 15.9% of the nation’s GDP and utilizes 17% of the workforce. Its commitment to the nation’s economy has been declining as of late. The steel and aluminum industry alone speaks to a decent piece of the nation’s fares and is relied upon to support monetary turn of events. The assembling division is as yet immature and represents just 4% of GDP.
The tertiary division contributes 54.5% to the GDP and utilizes seventy five percent of the workforce. The travel industry is the third biggest industry and devours 34% of absolute speculation. Only it gives one-fourth of the GDP (more than USD 1 billion of every 2018). It is a division in full development, particularly on the Adriatic Coast: each year Montenegro invites three fold the number of guests as its complete population. The country is trying to improve its travel industry foundation and build up its eco-the travel industry to surpass 30% of GDP by 2027.
Taxation in Montenegro
- Main business entities – These are the joint stock company, limited liability company, partnership, and branch of a foreign corporation.
- Corporate income tax rate 9%
- Branch tax rate 9%
- Capital gains tax rate 9%
- Capital gains – Capital gains are included in taxable income and are subject to the normal corporate tax rate of 9%. Capital gains are calculated in accordance with the tax rules and may be offset only against capital losses.
- The main rate of 9% applies to both domestic and foreign companies.
- Penalties – A penalty of 0.03% per day is imposed for late payment.
Investing in Montenegro
Foreign investors wanting to open a company in Montenegro, can profit by the strategy as indicated by which there is no distinction in the treatment of remote and local enterprises. This implies they can repatriate their benefits with no impediment or limitation.
Outside speculators can set up different sorts of organizations in Montenegro, as the Company Law accommodates similar rights and commitments of the abroad and nearby business visionaries keen on having their own organizations here.
The accompanying structures are accessible for outside financial specialists in Montenegro:
- the sole ownership which is a decent choice for beginning an independent venture so as to get to know the market;
- the partnership which is a favored alternative for the individuals who need to have a Montenegrin accomplice;
- the private limited liability organization which is a very mainstream business structure across Europe;
- the joint stock which is likewise basic in other European states and which is devoted to huge activities;
- branch offices and auxiliaries are accessible for remote organizations looking to set up tasks in Montenegro.