The Montenegrin government has outlined a budget of approximately €3.79 billion for 2026, reflecting a careful approach to fiscal management amid modest economic growth. The budget aims to balance increased revenues and a slight rise in borrowing while maintaining fiscal discipline. The primary focus of public spending continues to be on wages, pensions, and social transfers, which constitute the majority of government expenditures.
Corporate income tax in Montenegro remains competitive, with rates ranging from 9% to 15%, positioning the country as one of the more business-friendly environments in Europe. However, the emphasis for 2026 is shifting towards enhanced enforcement rather than altering tax rates. The government is intensifying scrutiny on small businesses, self-employed individuals, and home-based economic activities to increase the effective tax revenue without changing statutory rates, aligning more closely with European Union standards on transparency and base protection.
Additionally, Montenegro plans to tighten excise duties on tobacco, which currently sits at the lower end of acceptable levels as per European Commission guidelines. Authorities believe that even a small increase can help achieve revenue goals without significantly impacting domestic producers. This move is part of a broader discussion regarding the reliance on indirect taxes and its potential effects on households.
Montenegro is also progressing with parts of the OECD-supported “two-pillar” tax reforms, introducing a domestic minimum top-up tax (DMTT) starting January 1, 2026. This new measure will impose a 15% effective minimum rate on large multinational corporations and significant domestic firms, ensuring that they do not benefit from significantly lower effective tax rates regardless of where they report their profits. This initiative signals Montenegro’s commitment to global tax transparency standards while maintaining its low-rate tax environment.
