On 4th November 2008, Deputy Prime Minister and Minister of Foreign
Affairs, Dr. Tonio Borg signed the Agreement between Malta and
Montenegro for the Avoidance of Double Taxation with respect to
Taxes on Income, with his Montenegro counterpart, Milan Roćen. This
adds to Malta’s already extensive treaty network with over 50
countries around the world.
Internationally, Montenegro borders Croatia, Bosnia and Herzegovina,
Serbia, Kosovo, and Albania. Montenegro declared independence in
2006. Montenegro has the lowest corporate tax rate of the region –
9%. Since independence a number of companies have been privatised
encouraging efficiency in all sectors. The banking sector,
telecommunications, and oil import and distribution in Montenegro
are 100% privately owned.
Double Taxation Agreements help to strengthen and increase trade,
investment and business opportunities for Malta and in this regard
the conclusion of this agreement with Montenegro is seen as a step
forward to explore new avenues of economic benefits. The agreement
will help to contribute towards the expansion of commercial
activities between Malta and Montenegro. The agreement provides an
excellent basis for establishing tax efficient structures and
relieving double taxation on cross border transactions. Once
Montenegro joins the European Union, access to EU directives will
further assist trade between both countries.
Montenegro is not yet a member of the European Union. However it intends
to present its application to join the European Union before the end
of the year. Although not yet part of the European Union, Montenegro
still implements a VAT system with the applicable rate on goods and
services of 17%, reduced to 7% for tourism activities. The lower VAT
rate for tourism is to encourage growth in this strategic industry.
Tourism has become a very important part of the local economy.
Montenegro also decreased the personal income tax, and a 15% flat
rate was implemented in January 2007; a 12% rate will be implemented
in January 2009.