Romanian finance minister Alexandru Nazare (Liberal Party, PNL) announced several reforms aimed at boosting tax revenues and tightening fiscal discipline on Wednesday, August 13. However, he later deferred publishing the document promised during the press conference, perhaps in response to criticism regarding loopholes and inaccuracies in his package.
Minister Nazare expressed hopes that the ministries in the ruling coalition, which have previously inked measures for a second package of reforms (including the ministers of development, health, and education), will resume negotiations so as to put together the entire second package of reforms by the end of August.
The first measure and perhaps the most likely to remain in the final document, regards the profit shifting done by multinational companies. Similar to the Base Erosion and Anti-abuse Tax (BEAT) in the United States, Romania will levy a 16% tax on the companies’ expenditures with foreign affiliates in four risk areas (management fee, consultancy, interest on loans, and intellectual property) in excess of 3% of the deductibilities. In 2024, these four categories of expenses accounted for a total of RON 15 billion (EUR 3 billion). The 16% tax would be levied on this amount, after the subtraction of the 3% of total deductibles.
This new tax will replace the 1% minimum income tax (IMCA) currently charged to companies with revenues over EUR 50 million, which failed to generate the expected income, minister Nazare explained.
“We should not target the economic activity of multinationals. They should invest in Romania, we should encourage other multinationals to come to Romania, to create jobs, to create added value. But when it comes to expenses with affiliates, when it comes to transfer prices, they must pay corporate tax in Romania, and this is the message we want to convey through this new formula that we are introducing today – it is a new approach, a new paradigm for treating multinationals,” said Nazare.
The new tax is expected to generate RON 1.7-2.0 billion (EUR 340-400 million), compared to RON 1.2 billion (versus RON 5-7 billion expected) generated by IMCA. This is consistent with a taxable base of EUR 2.3-2.5 billion, out of the EUR 3 billion total expenditures under the four categories.
Romania will also levy a RON 25 (EUR 5) tax on parcels with a declared value of under EUR 150 delivered to local customers by extra-EU online platforms (such as Temu or Shein). These parcels have grown strongly and reached 225,000 units per day, minister Nazare argued. He said the new tax could generate RON 1.3 billion (EUR 260 million) per year in revenues to the budget.
However, the extra-EU platforms can avoid this new tax by setting up firms in neighbouring countries such as Hungary (currently used as a logistics hub by the Chinese platforms).
Minister Nazare said that Romania will seek to levy this tax on all parcels originating from outside the EU, including those that enter the EU through another country. This should be done in cooperation with the courier companies, he explained.
Still, charging such a tax on goods delivered by an EU company (such as Temu Hungary) would be problematic. In turn, minister Nazare encouraged the extra-EU platforms to set up logistic hubs in Romania, where they will not have to pay the RON 5 per parcel tax in case the parcels are further shipped to another EU country.
The VAT rate for HoReCa could be doubled from 11% to 21%, the finance minister said, answering a question. But this would not be done without proper evaluation.
Nazare announced that the government will conduct an analysis for the HoReCa sector, in the context in which the European Commission has requested that the sector switch to a 21% VAT rate from the reduced rate of 11%.
“We will present the Commission’s analysis, and then we will make a decision,” he said.
A separate category of measure is related to the tax authority (ANAF), which will come under stricter supervision of the Finance Ministry. The integrity of ANAF personnel and the transparency of its activities will be enhanced.
The restructuring of companies’ debts to the budget will be carried out under tighter regulations, including tighter deadlines. The government has to recover RON 3 billion (EUR 600 million) from companies that have appealed to the “simplified restructuring” scheme that requires no guarantees.
Furthermore, passing the ownership in a company with overdue debts to the budget will be criminalised.
Nearly half of the active firms, namely 698,000, have no bank accounts and consequently no card, Minister Nazare claimed, implying a lack of transparency. However, the figure is questioned by Ziarul Financiar, which counts some 700,000 companies in total in Romania, based on data published by the Trade Registry.
All Romanian limited liability companies (SRLs) will have to increase their capital from RON 200 (EUR 40) currently to RON 8,000 (EUR 1,600). The companies can use this money, which is not blocked, minister Nazare explained, adding that this would help the state in recovering its claims. However, it remains unclear how the higher capital could help the state in recovering its claims since the companies are entitled to use it during current activity.
All B2C companies will have to accept both cash and cards, under the new regulations, the minister announced.
The status of the 462,000 “inactive taxpayers” will be settled. They owe some RON 3.5 billion (EUR 700 million) to the state. Within a given period of time, they will even return to active status or declared insolvency/bankruptcy.
iulian@romania-insider.com
(Photo source: Gov.ro)
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