Montenegro

Taxable profit is calculated by adjusting the accounting profit (determined in accordance with International Financial Reporting Standards [IFRS] and accounting legislation) in accordance with the provisions of the CIT Law.

Inventory valuation

Inventory is valued by applying the average weighted cost method or the first in first out (FIFO) method. If another method is used for book purposes, an adjustment for tax purposes should be made.

Capital gains

Capital gains resulting from the sale or transfer of real estate, property rights, shares or other securities are subject to the standard CIT rates.  

Capital gains can be offset against capital losses incurred in the same tax period, but cannot be offset against operating tax losses. Additionally, capital losses can be carried forward for up to five years.

Dividend income

Dividend income of the recipient is exempt from CIT in Montenegro if the distributor is a Montenegrin corporate taxpayer. In all other cases dividend income is included in taxable profit and subject to the standard CIT rates.

Interest income

Interest income is included in taxable profit and subject to the standard CIT rates.

Royalty income

Royalty income is included in taxable profit and subject to the standard CIT rates.

Foreign income

A Montenegrin resident receiving foreign income is eligible for a tax credit in the amount of the tax paid abroad. However, the tax credit is capped at the amount of tax that would have been assessed on that income under Montenegrin corporate income tax rules.

There are no provisions allowing for deferral of taxation of income earned abroad.