Head of the Tax Administration, Mr Miomir M. Mugoša, plans to stay in office until the end of his second term despite the government’s announcements that they are going to dismiss heads of all state bodies. Mr Mugoša says that they faced some major challenges due to the coronavirus pandemic this year, announcing the adoption of tax planning for 2021.
Here are the highlights of the interview with Mr Mugoša…
When does your term expire and do you think you’re going to be the director of the Tax Administration until the end of it, having in mind the fact that the new government has announced dismissals in all state bodies?
Mugoša: Taking into account that I was appointed as the head of the Tax Administration on 21 November 2019 following the public vacancy procedure carried out in line with the Law on Civil Servants and State Employees, my term is due to expire on 21 November 2024.
I plan to stay in office until the end of my term regardless of political events in our country.
How did this year affect the tax revenue system, i.e. tax revenue collection and how much it’s lower compared to 2019?
Mugoša: After a record-breaking tax collection in 2019, the Tax Administration stepped into 2020 with an ambitious collection plan, especially having in mind the indicators of significant fiscal potential of the Montenegrin economy.
However, the industry has faced great challenges due to the coronavirus outbreak, which endangered the survival of numerous entities in the market, led to job cuts and affected the scope of economy trends in general. Of course, this all affected the activities of the Tax Administration and efficiency in tax collection.
The Tax Administration had good results when it comes to tax collection in 2020, both in terms of the prepared plan following the budget revision in the end of June and compared to 2019.
Which types of taxes you least collected, and which exceeded expectations this year?
Mugoša: In 2020, due to the pandemic, the Tax Administration faced the biggest challenges in collecting value added tax that is levied on products and services, and as such is the most sensitive to market trends.
The drop in VAT collection is a direct consequence of the economic crisis caused by the pandemic, which consequently led to a massive drop in turnover in all industries, especially in the hospitality and hotel industry, and that is why even the summer tourism season did not meet the expectations.
Therefore, since the beginning of the year, the total collection of value added tax amounted to €244.15 million, which is 16 million euro (six percent) below the plan, or 44 million euro, i.e. 15 percent less compared to last year.
On the other hand, I have to mention the corporate income tax, as a shining example in collection and an indicator that, despite the challenges imposed by the pandemic, the corporate sector has maintained a high level of tax culture. Based on this type of income, we collected €79.3 million, that is, four million euro (six percent) more than last year, and exceeded the plan by 11 million euro (17 percent).
What are the estimations for next year in terms of tax collection? Do you expect growth in tax collection compared to 2020?
Mugoša: Having in mind that tax planning is done based on the state budget, that is, the definition of revenues in the budget, the Tax Administration will adopt the 2021 tax planning in collaboration with the Ministry of Finance, in line with the decisions on further public finances management.
