Despite repeated warnings from the economic editorial team of the Strategy for a European and Civil Montenegro (STEGA) that introducing excise duties on so-called still wines would be harmful to Montenegrin winemakers, particularly Plantaže, and calling on the government to abandon this plan, it is now certain that, starting January 1, Plantaže will be required to pay 25 cents per liter, while small winemakers will pay half of that amount, 12.5 cents.
In response to Pobjeda’s question about their stance on STEGA’s initiative to amend the law and abandon the excise introduction, the Ministry of Finance (MF) did not provide a specific answer, but instead stated that the Fiscal Strategy ensures a reduction in the tax burden on labor, thus ensuring the consistency of the proposed measures, which include excises on wine.
“In the context of the overall tax reform proposed by the Fiscal Strategy, the measure primarily aims to increase budget revenues from excises, considering that the EU Council Directive 92/83/EEC on harmonizing the structure of excise duties on alcohol and alcoholic beverages and Directive 92/84/EEC on harmonizing excise duty rates on alcohol and alcoholic beverages also include wines as an excise product,” the Ministry stated.
Producer structure
The Ministry added that in Montenegro, the majority of producers have vineyards of up to two hectares, representing 83% of all grape producers, while just over 6% have vineyards of up to five hectares.
“The structure of wine producers in Montenegro is similar to that of grape producers, with wineries having very small capacities for wine production. Therefore, the law amendments, in line with the provisions of Directive 2020/1151, include small producers of still wines, who produce up to 1,000 hectoliters of still wine annually for commercial purposes, and who would pay an excise of 50% of the rate prescribed by Article 43, paragraph 2, point 2 of the Law (12.5 euros per hectoliter),” the Ministry explained.
In addition to abandoning the excises, STEGA also called for support from 27 MPs to initiate a parliamentary inquiry into the government’s agricultural sector actions and to replace political management with professional management in state-owned strategic companies. They also urged the government to commit not to sell its shares in Plantaže or those held by state funds, to prevent the conversion of land for construction purposes. However, there was no official government response to these requests.
Consequences
STEGA previously warned that with VAT included, this increase could reach 30.25 cents per liter, which would also lead to higher trading margins for wines. They reminded that the Ministry of Agriculture, Forestry, and Water Management had cautioned that introducing excises would not support the development of Montenegrin wineries and could create problems for the further development of the wine sector, potentially increasing the black market and making local brands less competitive domestically.
The government expects to generate 4 million euros annually from the excises, but STEGA argues that the government has overlooked the negative effects of this measure, including higher prices, margins, additional costs, and administrative burdens on small producers.
“Producers would pay the excise in advance during bottling, purchase an excise stamp, and then pass the cost onto retailers or hospitality businesses, who would then transfer it to the final consumer,” STEGA explained.
Such an excise is not implemented in any country with a developed wine sector, with France being one of the few to have an excise on still wines, but it is set at just three cents per liter.
“In neighboring countries, which, like Montenegro, are fighting to position their wines on the international market, North Macedonia, Slovenia, and Serbia, the excise on wine is zero,” STEGA noted.
Plantaže previously stated that the new tax would cost them about one million euros annually, which they say would jeopardize their business and market competitiveness. They noted that they had already faced similar challenges when an excise on traditional brandies was introduced, causing sales to drop by 85%. They predicted that the excise would increase wine prices by 14 to 20%, depending on the packaging.
