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Malta Tax News Section

Malta and Montenegro Sign Double Taxation Agreement (4/11/2008)

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.


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