Montenegro

Corporate - Income determination

Last reviewed - 07 June 2022

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 CPT 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 realised by the sale or transfer of real estate or other property rights, as well as shares and other securities, are subject to the 15% CPT rate.

Capital gains may be offset against capital losses occurring in the same period. A capital loss may be carried forward for five years.

Dividend income

Dividend income of the recipient is exempt from CPT in Montenegro if the distributor is a Montenegrin corporate taxpayer.

Interest income

Interest income is included in taxable profit and subject to 15% CPT.

Royalty income

Royalty income is included in taxable profit and subject to 15% CPT.

Foreign income

A Montenegrin resident receiving foreign income is granted a tax credit in the amount of the tax paid abroad but limited to the amount that would be calculated using Montenegrin rates.

There are no provisions that provide for the possibility that taxation of income earned abroad may be deferred.