Support for investors

INCENTIVE MEASURES

Incentive measures at the national level include the tax incentives for investing, such as:

Exemption from corporate income tax

The newly established companies, operating in economically underdeveloped municipalities, are exempt from corporate tax in the first eight years, whereby the total amount of tax exemption for this period may not exceed EUR 200,000.

Exemption from personal income tax

Newly established companies operating in economically underdeveloped municipalities are exempt from personal income tax for employees during the first eight years, provided that the total amount of tax exemption for this period may not exceed EUR 200,000.

Reinvestment of Profits in Agriculture

According to the Law on Corporate Income Tax, the companies which reinvest their profits into the development of their own agricultural production are exempt from tax. This incentive applies to investments in the sectors of primary agriculture, forestry, and fishery. The reinvested amount is excluded from the tax base in the year the investment is made, provided that the relevant documentation is submitted.

Support for innovation development

The adoption of the Law on Innovation Activities and the Law on Incentive Measures for Research and Innovation Development resulted in introducing a range of benefits to promote more dynamic employment and attract investments in companies and startups engaged in innovative projects. These incentive measures refer to reductions, exemptions or facilitations related to:

• Personal income tax and surtax;
• Mandatory social insurance contributions;
• Corporate income tax;
• Fees for municipal infrastructure development;
• Utilization of state-owned real estate and/or land;
• Property tax

Free Zone

The Law on Free Zones regulates the establishment of free zones and free warehouses, their management, conditions for conducting economic activities within them, as well as conditions for the termination of the operation of zones and warehouses. For processing of goods within these zones, as well as their active refinement, customs, customs duties and value added tax are not paid and they can remain in the zone for an indefinite period of time

Business zones

A business zone represents a unique entity in the territory of a local self-government, partly or fully equipped with infrastructure, which provides potential investors with additional state-level and local administrative and tax facilitations, in addition to common space and infrastructure.

Boosting the investments of the manufacturing companies on a land equipped with infrastructure, increasing the employment in the less developed municipalities, as well as the activation of domestic and foreign investors’ capital are some of the basic goals of establishing business zones.

The Decree on the business zones differentiates business zones of strategic importance, established and managed by the Government and the business zones of local importance, established and administered by a local self-government.

The local governments provide the following benefits:

• Favourable costs of lease/purchase of an area intended for business zone;
• Facilitations in terms of payment of utility and other charges;
• Infrastructure equipment in the areas where it does not exists;
• Reduction of or exemption from surtax on personal income tax;
• Reduction of the property tax rate;
• The possibility to define a favourable model of public-private partnership.

For persons employed in the business zone, the beneficiary of the business zone is exempt from paying:

• Contributions for compulsory social insurance on salaries (contribution for pension and disability insurance, contribution for health insurance, contribution for unemployment insurance) and contributions to the Labour Fund;
• Personal income tax.

The amount of these benefits may not exceed the maximum allowable aid intensity of 70% for small enterprises, 60% for medium-sized enterprises and 50% for large companies, in accordance with the regulations governing the state aid, and they can be used for a maximum of five years from the date of employment in the business zone.

In addition to the incentives provided by the Regulation on Business Zones, beneficiaries are also entitled to other incentives in accordance with special regulations governing the state aid, provided that the total cumulative amount of state aid, including investments in infrastructure development, does not exceed the maximum allowed amount of the incentive.

So far, ten municipalities have designated locations for the establishment of business zones. These are: the Capital City Podgorica, the Old Royal Capital Cetinje, and the municipalities of Nikšić, Kolašin, Mojkovac, Berane, Šavnik, Rožaje, Bijelo Polje, and Ulcinj.