Montenegro’s government may soon approve the introduction of a single VAT rate of 15% for the hospitality, hotel and accommodation sectors, as suggested in the Fiscal Strategy. Alternatively, it might decide to delay this measure, according to Slobodan Mikavica, President of the Union of Employers, following a recent discussion with Prime Minister Milojko Spajić.
Mikavica noted that Montenegro is on the brink of receiving a reform program aimed at improving employee conditions and addressing employers’ concerns. He mentioned that following an analysis of wage calculations under the “Europe Now 2” program, discussions will occur with social partners about increasing the calculation value of coefficients that influence meal allowances, holiday bonuses, per diem and jubilee awards.
The government has incorporated employers’ feedback into the Fiscal Strategy, adjusting the minimum wage to 600 euros for high school graduates and 800 euros for university graduates. This adjustment, Mikavica explained, protects small and micro enterprises, particularly in the northern part of the country.
“It is encouraging that the government has addressed this feedback, creating a more realistic situation. The central and southern regions of Montenegro have long paid wages above the minimum of 450 euros, so this adjustment mainly formalizes the existing wage structure,” Mikavica said.
Discussions with the Prime Minister also covered the potential implementation of a unified VAT rate of 15% for the hospitality, hotel, and accommodation sectors. Employers have suggested re-evaluating this solution before the Fiscal Strategy is finalized.
“Our proposal is to maintain a unified VAT rate, but at a lower rate or to delay its introduction until early 2026, as many in this sector are still recovering from the impact of COVID-19. A gradual increase or adjustment of this tax rate could also be considered,” Mikavica proposed.
When asked about an acceptable tax rate for the service sector, Mikavica referenced VAT rates in the Mediterranean, which typically hover around 10%. He expressed hope that the proposed rate of 15% could be reduced.
Mikavica also emphasized the need to update the calculation value of coefficients, which has been set at 90 euros gross since 2010 and is used for meal allowances, holiday bonuses, per diem, and official travel allowances. This issue will be addressed after analyzing the new wage calculation method under the “Europe Now 2” program.
“There needs to be a new alignment of the calculation value of the coefficient through social dialogue and agreement,” Mikavica concluded.
The President of the Union of Employers stated that the Fiscal Strategy and the “Europe Now 2” program are reform initiatives that benefit employees while considering the interests of businesses. He expects further responses to various initiatives submitted to the government, including simplifying employment procedures for foreigners and potentially introducing electronic visas starting in September. The Union also supports the transformation of the Investment and Development Fund (IRF) into a Development Bank, which should offer better financing conditions with state guarantees. They also anticipate improvements from the digitalization of the Employment Agency and public administration, as well as continued active measures to prevent abuse of sick leave.
