M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Working Group for Chapter 16 – Taxation Bilateral screening: Chapter 16 PRESENTATION OF MONTENEGRO Brussels, April 2013

Working Group for Chapter 16 – Taxation Bilateral screening: Chapter 16 Presentation of Montenegro Brussels, April 2013 TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Direct and indirect taxation, prevention and avoidance of tax evasion, and administrative assistance Nikaš Petrušić Tax Auditor I TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Legislative Framework  Treaties on avoidance of double taxation;  Bilateral agreements;  Law on Tax Administration;  Law on Personal Income Tax;  Law on Corporate Income Tax;  Law on Value-added Tax;  Rulebook on content and manner of issuing the certificate on residence for tax purposes. TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Competence upon enforcement of tax policy  Ministry of Finance – Department for tax and customs system Division for tax system, tax policy and indirect taxation established within this Department  Tax Administration TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Organizational structure of the Tax Administration  Headquarters  Five departments within the Headquarters - Department for taxpayer services and registration; - Department for processing of tax returns and tax payments; - Department for information technologies; - Department for tax policy analysis; - Department for monitoring of tax regulations and tax audit. TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Tax Administration Organizational Structure Eight regional offices /there are branch offices within regional offices/ -Branch office for administrative, technical and assisting affairs; -Branch office for taxpayer services and registration; -Branch office for processing of tax returns and tax payments; - Branch office for tax audit. TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Legislative framework for competence of the Tax Administration (procedures related to control of tax assesment and payment)  Law on Tax Administration  Bylaws for enforcement of the Law on Tax Administration -Rulebook on Form and Content of the Report on Witholding Tax; -Rulebook on Criteria for Determination of Large Taxpayers; -Rulebook on Height of Costs for Enforced Collection; -Rulebook on the Manner of Sale of Property of Taxpayers in Enforced Collection Procedure; - Rulebook on Tax Book - keeping. TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Legislative framework for Tax Administration competence (procedures related to control of tax assesment and payment) Subsidiary implementation of the following laws: - Law on General Administrative Procedure (Official Gazette of the Republic of Montenegro 60/03); - Law on Tax Audit (Official Gazette of the Republic of Montenegro 39/03); - Law on Executive Procedure (Official Gazette of the Republic of Montenegro 23/04); -Law on Mortgage (Official Gazette of the Republic of Montenegro 52/04); -Law on Secured Transactions (Official Gazette of the Republic of Montenegro 38/02). TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Cooperation and administrative assistance  Cooperation and administrative assistance according to Article 100 of the Stabilization and Association Agreement of Montenegro and EU covering: -Priority tax areas and fight against harmful tax competition, based on the Code of Conduct for corporate taxation; -Increase of transparency and fight against corruption; - Exchange of information with states in the region and EU Member states, with the aim of prevention of tax frauds, evasion and avoidance. TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Cooperation and administrative assistance  Montenegro has accepted 36 Treaties on Avoidance of Double Taxation concluded by SFRY, FRY and Serbia and Montenegro, referring to Montenegro.  Treaties are in force and are fully applicable in Montenegro.  As an independent state, Montenegro has concluded treaties with Ireland, Serbia, United Arab Emirates, as well as a treaty with Azerbaijan, while treaties with Qatar and Austria have been initiated.  Tax Administration of Montenegro concluded the agreement on mutual cooperation with tax administrations of the region (Slovenia, Serbia, Croatia, Bosnia and Herzegovina). B6 Group is established in order to exchange information and assistance related to detection of VAT fraud and avoidance, prevention of money laundering etc. TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Cooperation and administrative assistance  Agreement on inter-institutional state cooperation (6 state institutions) in the field of prevention of crime, with the view to exchanging operational information with elements of foreign exchange. Governance by the Unit for International Police Cooperation within the Police Administration (ILEKU-s Unit).  EU CAFAO Montenegro supported the Tax Administration of Montenegro in the period through technical assistance, with the view to strengthening capacities of human resources for tax collection and tax audit for prevention of tax fraud and corruption (trainings focused on tax control and tax audit), as well as strengthening capacities for implementation of regulations in line with the acquis. TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Cooperation and administrative assistance  Tax Administration of Montenegro uses the instrument TAIEX - workshops, study visits to tax administrations of EU Member States (so far, study visits to Estonia, Netherlands and Slovak Republic have been organized regarding avoidance of double taxation by corporate income tax, personal income tax and VAT), as well as visits of tax experts from Denmark, Belgium, Italy and Louxembourg.  Tax Administration of Montenegro has been a member of IOTA (Intra-European Organisation of Tax Administrations) since 2003, having 46 members. -Possibility of participation in 24 workshops per year; -Technical enquiries related to tax legislation, exchange of experience related to legal solutions in tax fields existing in EU countries.  Mutual agreement on signing Memorandum of Understanding between Tax Administration of Netherlands and Montenegro TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Taxation of revenues of non-residents – review of the national legislation  Law on Personal Income Tax (Articles 37, 44, 45 and 50);  Law on Corporate Income Tax (Articles 29, 29a, 34);  Law on Value-added Tax (Aricle 17, paragraph 3);  Law on Excise Tax (Articles 31 and 32). TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

Direct and indirect taxation, prevention and avoidance of tax evasion and administrative assistance Nikaš Petrušić Tax Auditor I TAXATION Chapter 16: M O N T E N E G R O Negotiating Team for Accession of Montenegro to the European Union Chapter 16: Taxation

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