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news 16 Jun 16

Montenegro Piles Pressure on Tax Dodging Firms

Montenegrin institutions are under pressure to recover around 230 million euros in unpaid taxes from companies seen as close to the ruling elites.

Dusica Tomovic
Photo: Pixabay.

Montenegro's Finance Ministry is moving to finally collect unpaid taxes of about 230 million euros owed by companies that are considered close to Prime Minister Milo Djukanovic's government, after an opposition minister, Rasko Konjevic, took the post three weeks ago.

Despite a huge budget deficit that has lasted for years, the Tax Administration has not used all its legal possibilities to collect the taxes from several trade and construction companies still engaged in important projects in the country.

On June 18, parliament's Committee for Economy and Budget will hold a hearing with Finance Minister Konjevic and the Tax Administration management about the debts and to check how some companies that owed millions in unpaid taxes still got loans from national funds, after the new minister said that, "obviously, the law is not the same for all."

Konjevic has ordered checks into the tax administration's operations in the last two years and wants some "scalps".

He has ordered the management of the tax institution to open disciplinary proceedings into civil servants who failed to collect the debts when they had legal authority to do so.

"How is it possible that the debt of Bjelasica company rose up to 2.5 million euros? How did they tolerate debts of a coal mine of 14 million, the [debts of] national air carrier Montenegro airlines of 12 million?... If the state collected those debts, we would be able to secure the budget's needs," he said.

"We can provide the money for the budget shortfall only in two ways - by borrowing more, though I would remind you that the national debt is already over 60 per cent of GDP - or by collecting the tax debt," Konjevic said on Thuesday.

The Tax Administration in January published a blacklist of 200 companies and individuals who have failed to pay all they owe in VAT, capital gains taxes and taxes on the profits of real estate sales and concessions.

The list of the 100 largest debtors in terms of unpaid salary taxes and pension contributions was also published, showing more them 100 million in debts. 

The biggest debtor is the bankrupt Podgorica-based tabacoo company, which owes around 34 million euros, followed by the trading company, Pantomarket, and the construction company,
Zavala Invest, which owe 11 and eight million euros.

One of the biggest debtor is the Bemaks construction company, engaged in all major national capital projects - from construction of the highway to luxury resorts on the coast.

Independent media have claimed that the company is linked to Djukanovic and his friends, citing the number of government tenders that the company won in the last few years as evidence. The company management has rejected the allegations.

After the Finance Minister's warning, Bemaks on Monday repaid half a million euro in debt from 2013, but still owes 1.1 million euros in corporate income tax for 2015.

On the list of the largest debtors is a wood and trade group Vektra, which is also considered close to the ruling elites. The opposition has accused the government of putting the company in privileged position.

Although it owes about 8 million euros, last December Vektra got a 3 million euro development agriculture loan from the Abu Dhabi Fund, which is guaranteed by the government.

The company's owner, Dragan Brkovic, on Wednesday said he was ready to repay the tax debt in installments over the next five years.

In tandem with this, the State Audit Institution, DRI, on Wednesday began an audit of operations of the Ministry of Finance, Tax Administration and Property Administration, to determine "the efficiency" of those government bodies in collecting the tax debt by confiscating debtors' assets.

A member of the DRI senate, Branislav Radulovic, told the Dnevne Novine newspaper that the audit would cover the period from 2013 to the present.

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