Zarko Djuranovic,

1
Reducing Red Tape in Montenegro
Zarko Djuranovic, Directorate for Development of
Small and Medium Sized Enterprises
2
The Government of Montenegro adopted the document
Eliminating Business Barriers in October 2007

• Document prepared by the Directorate for
  Development of SMEs
• Document studies the barriers for the development
  of entrepreneurship and contains proposals for
  their elimination
• Documents objective is to assists the Government
  in finding proper solutions
• Answers to 3 basic questions sought
• Transparency and predictability of regulatory and
  business environment for SMEs?
• Equality for all users?
• Costs for end users?

3
Business Registration - Licensing

• Findings
• Process is decentralized, complicated and could
  be arbitrary
• Large number of institutions issue numerous
  permits, approvals and decisions
• Costs of licensing are high
• Various regulations authorize numerous
  inspections which can influence the licensing
  process

• Recommendations
• 3 - 7 day deadline for municipal authorities
  (silence is consent)
• 30 day deadline for state authorities (silence is
  consent)
• Costs cannot exceed realistic values
• One-stop-shop at municipal level
• Central Registry of licenses at the Statistical
  Office of Montenegro

4
Labor market

• Findings
• Flexible employment introduced part-time
  employment, temporary employment, seasonal
  employment etc.
• Redundancy payments reduced
• Co-financing public works
• Co-financing creation of new jobs
• Widened measures for active employment policies
• Procedures in Employment Agency too complicated

5
Labor market (cont.)

• Recommendations
• Gradual distancing of State involvement from
  labor market
• Eliminate existing procedures for employment and
  termination of employment
• State to be excluded from negotiation of
  collective agreements
• Introduction of flexible working hours
• Introduction of flexible work organization
• Decrease of taxes and contributions on wages

6
Personal income taxes and contributions

• Findings
• Changes to the Law on Personal Income Tax from
  progressive to proportional taxing

7
Personal income taxes and contributions (cont.)

• Recommendations
• Further decrease of taxes and contributions

8
Grey Economy

• Findings
• 20-25 of GDP
• Illegal import and distribution of excise goods
• Releasing of transit and export goods in
  Montenegro
• Unrecorded sales of goods and services for cash
• Withdrawal and withholding cash outside official
  payment system channels

• Recommendations
• Reforms of business environment aimed at
  promotion and development of dynamic private
  sector
• Reforms of Taxation Department and Customs and
  linking their information systems

9
Further Activities

• Continuous monitoring of business barriers in all
  sectors and institutions involved
• Action plan for the implementation of
  recommendations (15th November)
• Government to adopt the Action plan (22nd
  November)
• Action plan will contain
• Above mentioned recommendations
• Company registration process
• Bankruptcy procedures
• Property rights
• Cadastre
• Urban planning, construction land etc. (new laws)
• Municipal fees and taxes (new law)