Worldwide transfer pricing reference guide 2014

Montenegro
Taxing authority and tax law
Tax authority: Montenegrin Ministry of Finance
Applicable tax legislation: Corporate Income Tax Law (CIT Law)
Relevant regulations and rulings
Article 38 of the CIT Law defines “arm’s length” principle and transfer pricing methods allowed.
At the moment, there is no obligation to prepare transfer pricing documentation in Montenegro.
OECD Guidelines treatment
Montenegrin transfer pricing provisions are generally based on the OECD Guidelines.
Montenegrin transfer pricing rules do not contain any specific provisions in relation to business restructurings.
Priorities/pricing methods
The CUP method has priority in the selection of the transfer pricing method. If CUP cannot be applied, the CIT Law also allows other two
traditional transaction methods, Cost Plus and Resale Minus. Montenegrin transfer pricing regulations do not recognize transactional
profit based methods (i.e., TNMM and Profit Split method).
Transfer pricing penalties
There are no explicit penalties if a taxpayer fails to disclose related party transactions in the annual CIT return.
Penalty relief
Not applicable.
Documentation requirements
Montenegrin CIT Law does not prescribe any transfer pricing documentation requirements.
Documentation deadlines
Not applicable.
Statute of limitations on transfer pricing assessments
The general statute of limitation period of five years for taxes in Montenegro would also apply for transfer pricing assessments. Five year
period is counted from the beginning of the year following the year in which respective tax liability was to be assessed.
Return disclosures/related party disclosures
According to article 38 of the CIT Law, taxpayers are obliged to disclose in their annual CIT return the revenues and expenses resulting
from the transactions with related parties, as well as to present and compare these with revenues and expenses which would have
been realized in the same transactions, if conducted with unrelated parties. Any difference between the two should be included in the
taxable basis.
Transfer pricing-specific returns
There is no specific transfer pricing return in Montenegro.
Frequency of tax audit and transfer pricing scrutiny by the tax authority
Audits by the Montenegrin tax authorities are not conducted on a regular basis and audited periods are not considered irrevocably
closed.
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