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First set of measures proposed to the Government by the MEF Management Board

News 17/03/2020
First set of measures proposed to the Government by the MEF Management Board

At its session held on March 17th 2020, MEF’s Management Board adopted a Proposal of support measures for companies to be sent to the GIovernment with an aim to mitigate the effects of COVID-19.

The Government of Montenegro is thereby suggested to undertake the following:

A – Institutional framework measures

• Form a special national body/board to support the economy/companies which will deal with preserving the economic activity and liquidity of enterprises along with preserving jobs (labor relations, social protection, economic and financial issues) whereby it shall be consisted of: on behalf of the state – representatives of Ministry of Finance, Central Bank, Tax Administration, Ministry of Economy, Ministry of Health, Ministry of Sustainable Development and Tourism, Ministry of Labor and Social Affairs, Investment Development Fund, Banks Association; on behalf of companies – Montenegrin Employers Federation and Montenegrin Chamber of Economy;

• Establish a special cash fund to support companies (with and aim to preserve economic activities and companies’ liquidity along with preserving jobs), with a precise methodology for allocating resources under these grounds;

B – Financial and credit support measures

• Central Bank of Montenegro to order commercial banks to implement measures involving adjusting of interest rates, prolongation of loan repayment periods and reduction of payment operations fees;

• IDF to reduce interest rates on current loans to 0.5 -1.2% depending on the level of risk a concrete company is exposed to;

• IDF and commercial banks to ensure moratorium on loan repayment for companies in accordance with crisis duration;

• IDF and commercial banks to ensure favorable credit terms for financing current assets including a grace period of one year;

C – Tax-related measures

• Ensure postponement of deadlines for due tax liabilities payment as well as for tax application submission and payment of all other taxes including contributions of wages (from the day of entrance into force of Temporary Measures) and depending on the crisis duration;

• Ensure temporary reduction of general VAT rate on all kinds of products and services;

• Reduce the VAT rate on services provided in tourism and hospitality to 7%;

  • Ensure temporary reduction of the rate of taxes and contributions on wages;

• Temporary suspend the obligation of paying taxes and contributions on wages for employers operating in the affected sectors;

• Release companies from tourism and hospitality sector from the duty of paying local utilities taxes and fees for 2020 i.e. depending on the crisis duration;

• Enable reprogramming/postponement of duties towards public enterprises and local administrations;

• Based on consultations between representatives of local administration and companies, make a model of multilateral compensation calling for off-setting liabilities and receivables between companies as well as between companies and state/local authorities;

D – Labor–legal relations measures

• Ensure the suspension of the General Collective Agreement provision on the obligation of employer to pay 70% of wage compensation to employee applying instead the Labor Law provision on employers’ obligation to pay 60% of wage compensation in circumstances of termination of business operations without employee’s (or employer’s) fault;

• Ensure wage subsidies in the amount of 80% especially with those employers who partially or entirely suspended their business activity in accordance with the Government Order as well as with those employers who ensure the absence of work for one parent of children under the age of 11

• Enable employers to introduce shorter working hours reducing wages proportionately during the extraordinary circumstances;

• Regulate more precisely the procedures for exercising the right to absence from work and the issue of wage compensation payment to those employees in “self-isolation” due to existence of symptoms and doctor’s recommendation, ensuring the reimbursement of costs from the first day of leave.

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