June 15, 2020 - State guarantees of up to at least 70% of the amount of the loan for legal entities which were forbidden to work in accordance with temporary measures for the suppression of coronavirus or which had their volume of activities significantly reduced, extension of moratorium, delay of the repayment of the due tax duties- are just some of the measures proposed by the Montenegrin Employers’ Union, as part of the third Government’s package of measures.
In order to help Montenegrin recovery to recover, Employers’ Union of Montenegro has prepared Innovated (third) proposal for measures to support economy.
What measures have been proposed?
ECB, IMF and EIB have officially announced increase in the funds aimed at helping WB countries, creating conditions for more favorable credit funds.
“In accordance with that, it is necessary to provide state guarantees of up to at least 70% of the amount of loan for legal entities which were forbidden to work in accordance with temporary measures for the suppression of coronavirus or which had their volume of activities significantly reduced, which would create conditions for the IMF and commercial banks to provide more favorable credit lines”, Union said.
They think that Government and Central Bank guarantees should be earmarked proportionally to the market share of every individual bank in Montenegro, provided that guarantees do not amount to more than 40% of the overall placement of the bank.
Montenegrin employers hold that it is necessary to carry out analysis of the situation and possible scenarios with the aim of earmarking support funds proportionally.
In addition, Investment and Development Fund and commercial banks should enable extension of moratorium on the repayment of loans for legal entities until their business operations are back to normality.
Tax
Montenegrin employers state that it is necessary to extend deadlines for the repayment of due tax liabilities on the grounds of all types of taxes with the possibility of repayment in 24 installments.
“Legal entities should be exempt from paying local public utility taxes, fees for use of the road as access to commercial facilities for 2020, paying real estate tax…”, employers say.
They add it is necessary to revise prices of public utility services depending on whether they worked during the epidemic or not.
They point out it is necessary to exempt legal entities from tourism and hospitality sector from paying fees for the use of temporary facilities in the coastal zone and national parks.
Montenegrin employers stress it is necessary to enable deferred payment of customs and VAT for 90 days and in cycles until economic and money flaws become smooth again.
Labor market and sustainability of jobs
Employers say that it is necessary to adopt special law to regulate work and legal relations in emergency circumstances, or introduce urgent amendments to the Law on Labor and harmonize its provisions with the emergency needs.
It is necessary to reconsider labor costs and reduce specific items related to the salary costs.
“Entrepreneurs and companies that were forbidden to perform their activities should be entitled to a subsidy in the amount of 100% of minimum net salary during six months and 50% of the minimum net salary for vulnerable sectors, as well as deferred payment of taxes and contributions for all those subjects”, Union says.
Long-term measures
Montenegrin employers request introduction of lower VAT rate – 7% on the accommodation services and accommodation services with services of food and non-carbonated and non-alcoholic beverage in hotels and facilities with similar purpose; increase of the generated turnover as prerequisite for mandatory VAT registration from €18.000 to €30.000.
“Entrepreneurs and micro companies would feel most benefit from this increase. The day they enter VAT system, their goods and services are by 21% more expensive, they enter a very demanding and uncertain race with major legal companies and most of them soon become illiquid”, employers say.
Grey economy
Employers call on all competent authorities to commit fully to taking measures and activities to combat grey economy.
“The scale of this negative trend is at alarmingly high level, and according to the official data, this phenomenon is on an upward trajectory”, they warn.
