INVESTMENT ENVIRONMENT IN MONTENEGRO 2017
MILOŠ JOVANOVIĆ, MSC
HEAD OF THE MONTENEGRIN
INVESTMENT PROMOTION AGENCY
(MIPA)
Easy business start up
Hub for regional business Strategic geographical
position
National treatment of foreigners
Dynamic economyc growth and development Favourable tax climate (CT 9%, VAT 19%)
The positive experience from existing investors Political stability and multi-ethnic harmony
Qualified human resources
Montenegro – a place to invest in
Montenegrin economy
• Montenegro is constantly devoted to the improvement of the business environment.
• This has been recognised by the World Bank Doing Business Report 2017 and Montenegro has been ranked as the 51st in the world, especially improving in the field of dealing with construction permits.
• Montenegro has been improving on the Doing Business rankings since 2009 when it was ranked the 90th.
INDICATOR 2013 2014 2015 2016
GDP at current prices (€ million) 3,335 3,458 3,618 2,282 (IIIQ)
Real GDP growth (%) 3.5 1.8 3.4 2.4 (IIIQ)
Inflation (%) 1.8 -0.3 1.4 -0.2
Unemployment rate (%) 15.02 18.0 17.6 17.2
Public debt (% of GDP) 51.1 59.6 65.69 70.6 Net foreign direct investment,
current prices (€ million) 323.9 498 619.27 347,4 Net foreign direct investment (%
of GDP) 9.7 14.4 26,6 12,2
Montenegro memberships:
CEFTA
Montenegro – EU and NATO integration
•
Accession negotiations with the EU opened in 2012, and now, with more than two thirds of the accession chapters opened, the Montenegro enjoys a widespread support among EU members' officials
•
In its 2016 assessment of the accession progress, the European Commission has identified Montenegro as having the highest level of preparation for membership among the negotiating states
•
A formal invitation was issued by the alliance on 2 December 2015, beginning the final accession talks, and 23 countries ratified the Protocol of Accession so far.
•
Government of Montenegro is strongly committed to Montenegro’s integration to the EU
and NATO
• Free trade agreements
Montenegro joined the Central European Free Trade Agreement – CEFTA. Montenegro also signed the FTAs with EFTA (the common market that includes Switzerland, Norway, Iceland and Liechtenstein), Russia, Turkey and Ukraine.
• Agreements on mutual promotion and protection of investments
Since re-gaining its independence, Montenegro has signed 26 agreements on the mutual promotion and protection of investments. Agreements are in place with: Austria, the Slovak Republic, the Republic of Serbia, the Czech Republic, the Republic of Finland, the Kingdom of Denmark, the State of Qatar, the Belgium-Luxemburg Economic Union, the Republic of Macedonia, Malta, France, the Hellenic Republic, the Netherlands, Israel, Cyprus, Romania, Ukraine, Hungary, Germany, Poland, Spain, the Republic of Turkey, the Swiss Confederation, the Republic of Azerbaijan, Moldova, and the United Arab Emirates.
• Double taxation agreements
Montenegro has so far signed 42 double taxation treaties on income and property with: the Republic of Albania, Belarus, Bulgaria, Cyprus, Egypt, Germany, the Republic of Italy, Latvia, Malta, the Kingdom of Norway, the Russian Federation , the Republic of Slovenia, Switzerland, Ukraine, Austria, Belgium, the People’s Republic of China, Czech Republic, the Republic of Finland, Hungary, South Korea, the Republic of Macedonia, Moldavia, Poland, the Republic of Serbia, Sri Lanka, the Republic of Turkey, the United Kingdom, the Republic of Azerbaijan, Bosnia and Herzegovina, the Republic of Croatia, the Kingdom of Denmark, France, Ireland, Kuwait, Malaysia, the Netherlands, Romania, the Slovak Republic, Sweden, the United Arab Emirates.
FDI in Montenegro
• Total inflow of FDI in 2016 – EUR 640m
• EUR 6.6 billion invested in Montenegro from 2006-2016
2006. 2007. 2008. 2009. 2010. 2011. 2012. 2013. 2014. 2015. 2016.
0 200 400 600 800 1000 1200
469.68
1,057.23
847.32
1,124.00
652.84
494.74
633.69
479.19 498.08
757.44
640.75
FDI inflows by countries (2007 – 2015)
16% 9%
8%
6% 7%
6%
5% 5%
• Foreign investors in Montenegro are coming from 107 countries.
FDI inflow in 2016
Norway Italy Russian Federation Azerbaijan Hungary Switzerland Serbia United Arab Emirates Germany Slovenia South Africa Sweden Great Britain Turkey Bosnia i Herzegovina Austria Malta Singapore Ukraine
- 20,000.00 40,000.00 60,000.00 80,000.00 100,000.00 120,000.00 140,000.00 160,000.00 180,000.00 200,000.00 189,035.11 48,970.00
47,937.48 47,108.54 34,116.31
29,748.53 21,519.51 17,875.15 16,248.27 15,278.11 15,012.34 14,131.44 12,153.48 11,494.15 10,036.99 9,903.99 8,098.15 6,913.00
5,832.04
• The largest investor in Montenegrin economy in 2016 was
Norway, whose investments represent 30% of total FDI inflow last year.
• Second place was taken by Italy, 28 million was invested in domestic companies and banks, 20 million was invested in inter-companiy debt and 346k in real estates
• Third place was taken by Russian Federation, 38 out of total 47 million euros Russian companies invested in real estate sector in 2016
• Equity investments amounted to 281.8 million euros,
accounting for 44 percent of the total inflow in 2016: total
FDI in real estate were 117.4 million, and the investments in
companies and banks were 159.6 million euros.
Foreign investors in Montenegro
Opportunities in Montenegro
AGRICULTURE - Big potentials in organic production, forestry, fishery, water
production etc
TOURISM - Projects in process or in initial phase up to 3 billion euro: Porto
Montenegro, Porto Novi, Lustica Bay, Aman Sveti Stefan, Qatari Diar,
Hilton,Sheraton...
RENEWABLE ENERGY .
- Enormous potentials in hydropower, wind, biomass and solar energy.
.
Things that foreign investor should know when starting a business
According to Montenegrin law, it is possible to establish six types of companies:
Entrepreneur, Limited Liability Company, Joint Stock Company, General partnership , Limited partnership and Part of a foreign company.
New business entities can register a company, apply for general tax registration and obtain a VAT, excise and customs code all in one place. This means that it is not necessary to go to several different institutions, since everything can be done with the Central Register of the Commercial Court, which saves time and money.
Personal Income Tax – 9% (11% for gross personal income above €720) Corporate Income Tax – 9%
Value Added Tax – 19% (reduced to 7% for tourism and 0% for some basic products)
Property tax - between 0.08% and 0.80% of the real estate property’s market value
Withholding Tax – 9% on dividends/profit distribution, capital gain, royalties, intellectual property rights, rental income, consulting, marketing.
Investment incentives and reliefs
1. VAT refund
If the tax liability (output tax) for the taxable period is lower than the input VAT, deductible for the same period, the difference is either
recorded as tax credit for the coming period or refunded, following the taxpayer’s request, within 60 days from the date of submission of the VAT return.
To taxpayers who are predominantly involved in export and those who have shown excess input VAT in three consecutive VAT assessments this difference is refunded within 30 days from the date of submission of VAT return.
2. VAT O% - for the delivering products and services for the construction and equipment of four or five stars hotels.
2. The subsidies for employment of certain categories of unemployed persons
For the certain categories of the unemployed, the employer does not pay: Contribution for mandatory social insurance on wages and tax on personal income for the period of 12 years
Cluster Development Programme in Montenegro .
• The Programme aims to provide financial support to the entrepreneurs and 100% privately owned MSMEs within clusters through investment in tangible or intangible assets or operational costs• The Ministry of Economy will cover up to 65% of the eligible costs of the purchase value of equipment, excluding VAT, for the clusters operating in the less developed municipalities, or up to 50% of the eligible costs for the clusters from other regions;
• The strategic priority activities eligible for co-financing include the following:
- Agricultural production and processing, - Wood processing,
- Other manufacturing activities (except those not included in the Programme).
Investment incentives and reliefs
1. Programme for Enhancing Regional and Local Competitiveness through Harmonization with International Standards of Business for the period 2017-2020
The Programme aims to support entrepreneurs and SMEs, in particular the ones from the less developed municipalities and the northern region, to enhance their competitiveness through harmonization with the international standards related to products, management systems, staff, testing, control and certification and support for conformity assessment accreditation.
The program contains two components of support:
1. Support for SMEs in terms of reimbursement of the costs of accreditation of conformity assessment bodies;
2. Support SMEs in terms of reimbursement of the costs of the implementation of standards. Assistance granted by the Ministry of Economy is up to 70% of eligible costs for small companies, or up to 60% of eligible costs for medium-sized companies, in the amount up to EUR 5,000 (excluding VAT) per applicant.
2. Programme to support industry modernization
The Programme aims to strengthen competitiveness of companies and upgrade business operation, productivity and profitability by investing in equipment.
The Programme includes co-financing of the eligible costs of purchase of equipment – up to 20% for small and 10% for medium-sized enterprises, excl. VAT, in line with state aid rules. The remaining funds are provided through the IDF lending scheme. The funds allocated to the Programme are intended to co-finance the costs of purchase of new/used production equipment/machines or new parts and specialized tools, to enable activation of unused machines.
