I GENERAL PROVISIONS
Article 1
Freedom of enterprise
On the territory of the Republic of Montenegro as a free economic and developing area is guaranteed to foreign legal and natural persons the freedom of establishing companies, the freedom of enterprise and freedom of contracting international business transactions subject to terms and methods prescribed by this Act.
Privileges
The Republic of Montenegro (hereinafter: Republic) ensures tax exemptions and relieves and other privileges for establishing and conducting business activity of companies or branches of foreign and domiciling, sojourning and working of foreign citizens.
Article 2
Activity of companies
Company is established in order to: perform international trade; export domestic goods and services; extend financial and non-financial services, management and consulting services; extend services and perform transfer and production of information technology and services for the transfer of real property; extend services for production and transfer of films and other audio-visual products and execute activities which are, according to accepted standards for conducting business, performed in international business centers
Business partners
In conducting their business activity companies may conclude contracts with one another or with other foreign personalities outside of Yugoslavia. In conducting their business activity company may use services of management, consulting services and other non-financial services of domestic legal and natural persons.
Article 3
Limitations of business
The company coordinates its business activity with requests pertaining to ecological environment, health of people and security of country, in conformity with law.
Article 4
Legal security
Rights, exemptions, relieves and other privileges prescribed by this Act may not be modified, diminished or otherwise made unfavorable by subsequent amendment of this Act or any other law for a period of fifteen years.
Article 5
Security of property
Property of company may not be subjected to nationalization or expropriation.
Article 6
Contractual labour relations
Labour relations between the employer and employees are regulated by contract.
Article 7
Meaning of legal expressions
Individual expressions in this Act have following meanings:
- "foreign legal person" signifies every foreign firm, company, corporation, partnership and legal person domiciled abroad;
- "foreign natural person" signifies every individual who has been residing abroad for the time period of at least five years;
- "company" signifies every firm, corporation and other legal person registered in the Republic for performing activities prescribed by this Act.
- "qualified individual" signifies foreign natural person employed at the company and foreign natural person domiciled in the Republic.
II ESTABLISHMENT OF COMPANIES
Article 8
Types of companies
Company is established as:
- Limited liability company ("LTD") and
- Joint stock company ("SC").
Number of establishers
Companies defined by Paragraph 1 of this Article may be established also as anonymous companies in conformity with the provisions of the Government of Montenegro (hereinafter: Government).
Limited liability company may be established by one or more establishers and a joint stock company may be established by least two establishers.
Article 9
Register of companies
Company will be registered in a special register kept by the Ministry of Finance (hereinafter : Ministry).
Article 10
Duties of establisher
In order to register the company the establisher files an application with the Ministry. Along with application establisher files :
- data concerning firm and domicile, activity and form of company which is being established ;
- decision to establish company or officially authenticated copy of decision to establish company;
- data concerning the person who represents the company ;
- certificate of payment of corresponding taxes, and
- certificate of deposit, or a security for founding capital.
Article 11
Duties of Ministry
The Ministry has a duty to perform the registration and to issue the extract from the Register of companies within ten days from filing of application. If the Ministry does not register or rejects or refuses to register within the time limit prescribed by Paragraph 1 of this Act the company is deemed registered.
Against administrative decision from Paragraphs 1 and 2 of this Article it is not allowed to lodge an appeal, but it is possible to commence procedure for judicial review of administrative proceedings.
Article 12
Minimal capital necessary for establishing company
Minimal amount of capital necessary for establishing a limited liability company is US$ 1.000 ,and US$ 10.000 for establishing a joint stock company.
Article 13
Tax
Foreign person pays a due tax prescribed by special regulation of Government
Article 14
Guarantee of confidentiality
The state guaranties that it will regulate by law and that it will take appropriate measures and actions to ensure that authorized officials in the Ministry, banks and other organs and organizations who perform duties of registering the company and other duties for the company will keep as officially confident the data concerning identity, documents, reports and all other data with which they become acquainted with in the course of performing activities for company or qualified in conformity with special regulation which the Government will enact.
III ACTIVITIES OF COMPANIES , TAX AND OTHER RELIEVES
Article 15
Autonomy and freedom of business activity
Company is autonomous and free to conduct business activity, to acquire and dispose with the realized income and to perform acts of disposition of its property.
Company or qualified individual may direct financial resources into investments within the territory of the Republic after having obtained the assent of the Government.
Article 16
Profit tax
The company pays the profit tax at the rate 2,5%.
Article 17
Tax base
Tax base is the profit.
Establishing profit
In order to establish profit proceed as follows: deduct from total income all expenditures, outlays and expenses originating from making total income (in conformity with international accounting standards). Tax base this established is further, reduced with the amount of financial resources from income which is directed into investments within the territory of the Republic.
Governments regulation
Government will in more detail prescribe the outlays and expenditures which the company renders for the making of total income.
Article 18
Exemption from turnover tax
Company does not pay excise tax and turnover tax an goods, equipment and services necessary for conducting its business activity.
Company does not pay turnover tax on property of land and business buildings necessary for conducting its business activity.
Within the territory of the Republic company does not pay property tax on buildings and land necessary for conducting its business activity.
Article 19
Exemption from turnover tax
Qualified individual does not pay tax on automobile, yacht, ship, equipment for household and other technical goods and furniture which serve for his use and use of his wife and children.
Qualified individual does not pay turnover tax for acquiring property of land and buildings which serve for his housing of his wife and children.
Within the territory of the Republic qualified individual does not pay property tax on land and buildings which serve for his housing and housing of his wife and children.
Qualified individual may not enter into legal transactions with domestic legal or natural persons which for their objects have goods and equipment defined by Paragraph 1 of this Article for a period of five years after said goods and equipment have been imported.
Article 20
Tax on earnings of employees
Tax on earnings of employees of company is paid at the rate of 5%.
Tax on earnings of employers who are of Yugoslav citizenship the company pays only the tax for old-age and disability insurance at the rate which the Government will prescribe.
Article 21
Exemption from tax on services
Qualified individual does not pay taxes on income originating from consultancy fees, remuneration and other income originating from rendering of services outside the territory of the Republic.
Article 22
Income tax of qualified individual
All income originating from investments and other income originating from sources outside of FR Yugoslavia which the qualified individual receiver in the Republic will be taxed at the rate 5%.
Income of qualified individual which originates from old-age pension will be taxed at the rate of 2%.
Untaxed income and resources
As an exception tax will be paid on resources which qualified individual invests within the territory of the Republic into real property and movable property (business and housing buildings, equipment for business activity and for housing, ships, yachts, automobiles and similar).
Article 23
Untaxed inheritance and capital yield
Qualified individual does not pay inheritance tax on capital yield realized within the territory of the Republic.
Article 24
Sale of real property
Qualified individual may alienate to domestic legal or natural person real property defined by Paragraphs 2 and 3 of Article 19 of this Act on condition that he pays turnover tax he was exempted from when acquiring said real property.
Article 25
Exemptions from taxes and local surtaxes
Company and qualified individual do not pay administrative and sojourning taxes and local surtaxes.
Article 26
Customs exemptions
Company does not pay customs and other import duties on equipment and resources intended for conducting business activity.
Qualified individual does not pay customs and other import duties on import of automobiles, yachts, equipment for household, technical goods and furniture which serve for his use of his wife and children.
Article 27
Foreign currency control
Concerning foreign currency control company and qualified individual enjoy the status of a foreign firm.
Article 28
Tax declarations
Company has a duty to file a tax declaration in due time or to hand over to the competent tax authority other data indispensable for establishing taxable profit.
Article 29
Accountancy of company
Company keeps business activity accountancy in conformity with international accounting standards and conducts business activity through its accounts which the company may open with the authorized bank within the territory of the Republic.
Review
Business activity of company is subject to review.
Exclusion of review
Company which makes total annual income of US$ 1.500.000, or taxable income less than US$ 100.000 is not subject to review.
Article 30
Foreign currency and domestic currency business activity
Company or qualified individual conducts its business activity through the account opened with the bank which has such a license and domestic currency (dinars) activity through the account opened with National Bank of Yugoslavia-Institute for Accounting and Payment.
Article 31
Cessation of company
Company ceases to exist:
1) by a decision of establisher;
2) by a binding decision of Ministry
- if company conducts business activity contrary to this Act, and
- if company does not conduct business activity continuously for a time period which exceeds five years.
Instrument of cancellation of company from register will realize Ministry within 15 days from the day when decision of establishers was made or within the same time period when binding decision was made.
IV REGISTER OF SHIPS , YACHTS AND AIRCRAFTS
Article 32
Registration of ship and aircraft
Foreign legal and natural persons may register ship, yacht or aircraft under Yugoslav flag in conformity with special legislation.
If the registered ship, yacht or aircraft is used for making profit, foreign legal or natural person has a duty to establish company in conformity with this Act.
If the registered ship, yacht, or aircraft is not used for a making profit, foreign legal or natural person has a duty to pay annual tax for each object separately in conformity with regulation prescribed by the Government.
Tax on ship and aircraft
At the time of registration of ships, yacht and aircrafts a tax is paid, the amount of which the Government will prescribe.
Register of ships and aircrafts
Register of ships, yachts and aircrafts, defined in Paragraph 1 of this article keeps Maritime and Transportation Ministry.
V TRANSITIONAL AND FINAL PROVISIONS
Article 33
Obligatory application of more favorable provisions
On relations regulated by this Act more favorable provisions will be applied if during time of its application new domestic legislation is enacted.
Article 34
Application of Act to other companies
Provisions of this Act which regulate labour relations, tax and other relieves will apply also to banks and insurance companies which are established and conduct business activity on special terms, as well as companies in free trade and industrial zones within the territory of the Republic, if special legislation does not prescribe otherwise.
Article 35
Subordinate legislation
Provisions for implementation of this Act will be enacted within 30 days of the coming into force of this Act.
Article 36
The coming into force
This Act comes into force on the eighth day after publication in the "Official Gazette of the Republic of Montenegro". | 
