On 30 October 2026, the Association of Municipalities of Montenegro (Zajednica opština Crne Gore) issued a formal position paper insisting that any legislative framework for the “Euro model” must constitutionally guarantee local budget autonomy and equitable tax revenue sharing. The association argues that centralization of VAT and excise revenues since 2020 has eroded municipal fiscal capacity, leaving 18 of 25 municipalities unable to fund basic services. The paper calls for a statutory revenue-sharing formula indexed to GDP growth, earmarked grants for infrastructure, and a local tax on vacant commercial property to broaden the municipal tax base.
Key Takeaways
- Revenue Sharing Reform: Municipalities demand a fixed percentage of national VAT collections (proposed 15%) to be transferred directly to local budgets, replacing discretionary central grants that have declined 12% in real terms since 2022.
- Local Tax Empowerment: The proposal includes legislative amendments to enable municipalities to levy a progressive tax on undeveloped urban land and vacant commercial premises, estimated to yield €18 million annually across major cities.
- Fiscal Equalization Mechanism: A new horizontal equalization fund, financed by a 0.5% surcharge on corporate income tax, would redistribute resources from wealthier coastal municipalities to underdeveloped northern regions, reducing inter-municipal fiscal disparities by 30% within five years.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement