Through cooperation between the Union of Municipalities and the Ministry of Finance aimed at resolving issues related to the rescheduling of municipalities’ tax debts, a Draft Law on the Rescheduling of Tax Claims has been prepared. The proposed legislation would enable municipalities, public institutions, and enterprises founded by local governments to settle their outstanding tax liabilities under more favourable conditions.
The draft law provides for the repayment of debts in up to 120 monthly installments, with accrued interest and procedural costs being written off. This would give municipalities the opportunity to gradually settle their tax liabilities without the need for additional borrowing and without placing further pressure on their day-to-day operations.
This measure is not selective and does not constitute state aid; rather, it represents support for all municipalities and public entities performing activities of public interest. Its objective is to help local communities stabilize their finances, meet their current obligations on a regular basis, and continue providing services that are important to citizens.
The implementation of the law is expected to improve the collection of municipalities’ tax debts, strengthen tax discipline, and contribute to more stable local budgets. This would create the conditions necessary for the uninterrupted functioning of public services, the implementation of planned projects, and enhanced cooperation between local governments and state authorities.
Estimates indicate that the implementation of the law could generate approximately EUR 7 million in additional annual revenue for the state, or around EUR 70 million over the next ten years, confirming its positive impact on public finances.
The Union of Municipalities of Montenegro believes that the adoption of this law would represent an important step toward the long-term financial stability of municipalities and the more efficient delivery of services to citizens.
The proposed amendments to the law also address the existing discrimination against municipalities, which are excluded under the current regulations from the right to reschedule their tax liabilities. Specifically, the current law does not recognize municipalities as tax debtors, preventing them from benefiting from debt rescheduling arrangements or from obtaining interest write-offs, even when they regularly meet their payment obligations.
In practice, this means that municipalities repay their debts under special agreements with the Ministry of Finance, with interest being charged, while at the same time they are excluded from other legal mechanisms that allow for the write-off of interest or the deferral of the collection of tax claims.
The adoption of this law would ensure equal treatment of all tax debtors, enhance the stability of local public finances, and further strengthen the fiscal sustainability of the state.
