The Montenegrin government is preparing a €3.79 billion budget for 2026, reflecting a careful approach to fiscal management amid modest economic growth. The budget aims to increase revenues slightly while allowing for a modest rise in borrowing, all with the goal of fostering growth without compromising the fiscal discipline that has been established in recent years. Public expenditure continues to focus heavily on wages, pensions, and social transfers, which constitute the majority of government spending.
Corporate income tax rates will remain within a competitive band of 9-15%, one of the lowest in Europe, as the government seeks to maintain a business-friendly environment. However, the key change in 2026 lies not in altering these rates but in enhancing enforcement measures. Authorities are intensifying scrutiny of small businesses and self-employed individuals to improve tax collection efficiency without increasing statutory tax rates, aiming for greater alignment with EU standards regarding transparency and base protection.
Additionally, the government plans to tighten excise duties on tobacco products, which are currently at the lower end of European Commission thresholds. Officials believe that even a slight increase in these duties can help achieve revenue targets while minimizing adverse effects on domestic producers. This move is part of a broader discussion about the reliance on indirect taxes and their potential impact on household finances.
Montenegro is also advancing its commitment to OECD-backed tax reforms by introducing a domestic minimum top-up tax (DMTT) effective January 1, 2026. This reform will impose a 15% effective minimum tax rate on large multinational corporations and significant domestic firms, regardless of where they report their profits. This initiative signals Montenegro’s dedication to aligning with global tax transparency standards while still maintaining its appeal as a low-tax jurisdiction for investors.
