Montenegro Cuts Taxes on Chinese Highway Builders

29 Apr 15

Montenegro Cuts Taxes on Chinese Highway Builders

The Chinese companies chosen to construct the priority section of the Bar-Boljare highway will not have to pay any taxes in Montenegro or customs duties for the import of materials.

Dusica Tomovic


Montenegro is exempting Chinese contractors and subcontractors working on a new highway from paying VAT, customs duties, taxes and fees for engaging foreign workers and corporate income tax.

The Tax Administration on Tuesday said new laws prescribed the tax exemption for the procurement of products and services for the planned new highway.

Last October, Montenegro signed a loan arrangement with China’s Exim Bank for 700 million euro, which will cover most of the total of 809 million euro required for the construction of the 40-kilometre-long priority section.

Chinese contractors will have to purchase stamps to prove that their purchases are related to the construction of the highway, the Tax Administration added.

The Chinese will also pay three times less excise taxes on fuel imports and, in case of disputes over construction and financing contracts, the competent courts will be in Beijing.

Montenegro has selected the Communications Construction Company and its subsidiary, China Road and Bridge Corporation, to construct the priority section of the highway.

The government says the most important development project in years will improve Montenegro’s economy and reinforce connections between different parts of the country.

Opposition parties and some civil sector groups oppose the project, however, saying it is too expensive and could jeopardise macro-economic stability.

The European Commission and the International Monetary Fund have also expressed concern that the cost of the highway will be a burden on the budget.

In last November, the IMF said Montenegro’s national debt could spiral upwards because it took out such a big loan.

Source: Balkan Insight (Montenegro)