Corporate Tax step by step: How it works and who pays it?

What is corporate tax?

Corporate tax is a tax that companies pay on their earnings, specifically on the profit that remains after covering all operating expenses. In other words, it is the a part of earnings that is set aside for the government as a contribution to public finances.

How does corporate tax work in Montenegro?

Calculating profit: To calculate corporate tax, a company must take its total revenues (all the money it has earned) and subtract all expenses (such as material costs, employee salaries, rent, etc.). The resulting amount represents the taxable profit.

Progressive tax rates:
In Montenegro, corporate tax is calculated according to progressive rates, which means that the rate depends on the amount of realized profit:

• For profit up to 100,000€ the tax rate is 9% on that amount.
• If the profit is between 100,000.01€ and 1,500,000€ the company pays 9,000€ + 12% on the amount over 100,000€.
• If the profit exceeds 1,500,000.01€, the tax is 177,000€ + 15% on the amount over 1,500,000€.

Who pays corporate tax?
All companies that operate with profit in Montenegro must pay corporate tax. This includes small and medium-sized businesses as well as large corporations. Regular filing and payment of this tax is a legal obligation.

Why is it important to understand corporate tax?
Understanding how corporate tax works, helps companies better plan their finances, optimize costs, and avoid potential fines due to incorrect reporting..

How to optimize corporate tax?

• Take advantage of tax benefits: Many companies can reduce their tax liability by using available benefits, such as investments in research and development, employee training, or environmental initiatives.
• Consult with the experts: By engaging tax and accounting experts, such as the team at Perfectum, you can ensure that you take advantage of all available benefits and report your taxes correctly.

Why Perfectum?

Perfectum can help you to:

• Avoid mistakes and fines when signing up.
• Utilize all legal benefits that can reduce your tax liability.
• Focus on the growth of your business while we handle the paperwork and numbers.

Contact Perfectum today and make your business operations easier with professional assistance!

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