Tax games: Computer equipment vs. VAT

You are buying or selling computer equipment, but do you know what tax you are paying for it?

The Law on VAT stipulates that VAT at the rate of 7% is charged for the import or trade of computer equipment.

Rulebook on determining the products and services that are taxed at a reduced VAT rate stipulates that computer equipment includes a personal computer (both laptops and tablets), including computer hardware, which consists of a computer case with all its elements – monitor, keyboard and mouse. Computer equipment also includes printer.

Elements of the case, according to this Rulebook are the following: power supply, motherboard, central processor, memory, magnetic and optical storage device, hard drive, adapters, controllers, and other items installed in the case.

Therefore, the computer equipment listed above is taxed at a rate of 7% (regardless of whether it is sold as a whole or by parts: monitor, case, keyboard, mouse).

However, speakers, scanners, multifunction devices, as well as all other equipment that is not covered by the provisions of the Rulebook, are taxed at the rate of 19%.

Also, the tax at the general rate of 19% is paid for software, servers and their components.

It is believed that the lower rate of VAT may affect the development of Montenegrin ICT companies through increased workload due to greater competitiveness. Representatives of the ICT sector in Montenegro earlier sought to change the fiscal policy, which was one of the most important problems in their business.

By reducing the VAT rate to 7%, the state has practically proved that it believes that the ICT sector can become an export-oriented sector and it can be very interesting, because Montenegro is a small market where many solutions can be tested.