Back

AMCHAM ROMANIA: ANNOUNCED CHANGES IN THE FISCAL POLICY HINDER ECONOMIC GROWTH AND DRIVE INVESTORS AWAY

Date: 06/30/2017
AmCham Romania expresses its concern with regard to the changes in the fiscal policy announced in the new Government Program, as they generate turmoil in business climate and severely affect the stability and confidence in the Romanian economy, which already pays the price of political instability.

Both the announced haste adoption, without consultations and impact assessments, and the potential economic impact of the proposed measures, reverse the country’s macroeconomic performance, and isolate Romanian from an investment perspective.
Of the novelties in the new Government Program, preliminary observations regarding several taxation related changes follow below:

With regard to the replacement of the profit tax with the turnover tax beginning with January 1, 2018, we consider such measure inappropriate, making Romania the only EU member country to apply such taxation system for all taxpayers ‘categories. Such mechanism is generally used as a tax simplification procedure for startups and small businesses. Moreover, the proposed measure conflicts with the new EU Directive currently under public debate, Common Consolidated Corporate Tax Base – CCCTB, thus placing Romania outside the mainstream EU countries.

With regard to introducing the global income tax for individuals, we maintain our previous position and reiterate the fact that such mechanism is not feasible at all. The poor IT infrastructure of ANAF, both in terms of hardware and software makes its implementation and application impossible. Any change of such magnitude calls for longtime preparations in advance and massive investments in the IT infrastructure, training for specialists and taxpayers at large. Furthermore, all existing ANAF processes and IT systems are programmed for the flat tax, in accordance with the ANAF modernization program financed by the World Bank. Any change will waste the projects implemented so far and will call for new investments that need major budgetary allocations.

With regard to the transfer of the payment obligations of social security contributions from the employer to the employee, we consider that at this moment, such measure will generate a lack of transparency and clarity for both categories of taxpayers. Correlated with the need to increase salaries, this measures will have a financial impact difficult to assess for the employer and employee.

With regard to the solidarity tax, the fact that it is in place in several EU countries only without bringing forth the expected results, speaks for itself about the efficiency of such tax that will eventually lead to difficulties in the financial management of individuals. Some of the effects that can be expected include the migration of affected taxpayers towards more favorable tax systems.

With regards to the royalties for additional profits for the oil industry, given the strategic role of the energy sector for Romania, any such change should be preceded by broad consultations with all stakeholders and must be aligned with the sectorial strategies Romania committed to, including the tax implications that have been under public debate for many years.

With regards to the removal of the pensions II pillar, even if it remains a statement, is a dangerous precedent of Government interference in the private sector, which triggers economic, financial, confidence and reputation damages for Romania, especially at the level of the capital market in a very important moment for its development. Last but not least, in our view, this is a practice that does not belong in a free market economy, as it breaches the fundamental private property right.

This debut of the new Cabinet that, before effectively taking over its mandate, announces a series of the additional measures with a major economic impact, sends a wave of negative signals to the business community and potential investors.

AmCham Romania hereby expresses its openness for dialogue and public-private consultations which are a prerequisite for adopting the best public policies for Romania’s sustainable growth.

                                                                                           ***


Files
COMUNICAT RO

Members & Partners about AmCham

Members 2 members

See all
Member of the AmChams in Europe Network Member of the AmChams in Europe Network
Coalitia pentru Dezvoltarea Romaniei Coalitia pentru Dezvoltarea Romaniei
U.S. Business Visa Facilitation Program for AmCham Romania Members U.S. Business Visa Facilitation Program for AmCham Romania Members
U.S. Commercial Service U.S. Commercial Service