Montenegro, Progressive taxation can be a double-edged sword

The Committee for Economy, Finance and Budget accepted the amendment of Democratic Front MP Dejan Đurović to the amendments to the Real Estate Sales Tax Act, which stipulates that progressive taxation of EUR 22,000 and an additional six percent will be introduced for all real estate whose value exceeds half a million euros. The amendment was also supported by the Minister of Finance, Aleksandar Damjanović, who attended the Committee.

– Whoever has the opportunity to buy a property for 500,000, has to pay this tax. Until now, we have been hostages of naïve politics in Montenegro, so we put in the same basket someone who buys a studio apartment and someone who buys a million-dollar real estate. We also had a naïve policy when we exempted condo hotels from taxes. The effect is absolutely zero – said Đurović.

He pointed out that most of the condo hotels were converted into residential buildings, which benefited the former regime.

– Should someone who invests hundreds of millions of euros and thereby harm the state be exempted from tax? I suggested that all hotels should be re-examined and if they are converted into residential buildings, they should pay for the complete infrastructure and tax on it, so that we can see how much we benefited from them – he said.

Democrat Danilo Saranović said that he supports Đurović’s proposal.

– I am in favor of checking all condo hotels and if it is determined that they have been converted into residential units, to find a way to charge them for it – he said.

Member of Parliament Zdenka Popović said that she has nothing against taxing rich citizens, but she is afraid that with sudden taxation we may not discourage investors with healthy capital.

– Progressive taxation can be a double-edged sword. They can bring us income, but also drive away investors to other countries – she said, adding that it should be done gradually. Đurović replied that he believed that this proposal would reduce money laundering.

Minister Aeksandar Damjanović said that he does not think that the tax of 50,000 more will affect investors who invest several millions.

– We are inclined to accept Mr. Đurović’s proposal with caution to monitor the income and to see by the end of the year if we have found the right measure. I think we are – he said.

Deputies will also consider this bill at today’s plenum.

Sign up for business news updates & special reports.

LATEST NEWS

• February 1, 2024 Invitation to Enhance Visibility and Stakeholder Engagement in EU Horizon Projects
• January 17, 2024 Montenegro forests, emissions trading and carbon offset credits, opportunities for investments
• May 11, 2023 Luxury Public Relations for pearl of Mediterranean, Elevate PR for Montenegro
• May 11, 2023 Elevate your business in Montenegro with Elevate PR
• May 9, 2023 Montenegro economy briefing: Wage growth in the public sector and other labour market issues
• April 8, 2023 Montenegro economy briefing: Increased indebtedness of Montenegro
• December 10, 2024 Montenegro recognizes France as key partner in EU integration path
• December 10, 2024 Strengthening tourism cooperation between Montenegro and Republika Srpska: Joint efforts for expanding markets and improving connectivity
• December 10, 2024 Kolašin readies for winter season with high tourist interest and exciting events