New legislation introduces a 15% minimum effective tax rate and a domestic top-up tax while opting out of IIR and UTPR rules due to limited in-scope parent entities.
Montenegro’s parliament has adopted the Law on Global Minimum Corporate Income Tax, aligning the country’s tax framework with international standards under the Organisation for Economic Co-operation and Development (OECD) Pillar Two initiative. The law was published in the Official Gazette of Montenegro No. 33/2026 on 10 March 2026 and entered into force on the same date.
The legislation is based on the provisions of EU Council Directive 2022/2523/EC and incorporates key elements of the Pillar Two model rules.
A central feature of the law is the introduction of a 15% minimum effective tax rate, applicable to constituent entities of multinational enterprise groups with annual consolidated revenues of at least EUR 750 million in at least two of the previous four fiscal years.
The law also provides detailed guidance on the computation of the top-up tax. This includes rules for determining global minimum tax income or loss, identifying covered taxes, calculating the effective tax rate on a jurisdictional basis, and applying top-up tax adjustments. It further incorporates substance-based income exclusions tied to eligible payroll costs and tangible assets.
To safeguard domestic tax revenues, the legislation introduces a Qualified Domestic Minimum Top-up Tax (QDMTT), ensuring that low-taxed profits generated within Montenegro are subject to an appropriate level of taxation domestically.
However, Montenegro has opted not to implement the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR), citing the absence of ultimate parent entities within its jurisdiction that meet the applicable revenue threshold.
In terms of compliance, affected entities are required to submit their tax returns electronically within 18 months following the end of the relevant fiscal year.
Earlier, the Parliament approved the Global Minimum Corporate Tax Law on 27 February 2026.
