The Romanian Chamber of Tax Consultants (CCF), in a message published on August 21, addressed to the Finance Ministry, warned that the reforms under the draft law published for consultations on August 14 not only have a negative economic impact but some of them are ambiguous and breach the existing international agreements.
CCF also argued that radical provisions in the tax reforms proposed by the ministry, aimed at targeting the shifted profit and the fraud carried out through companies under financial strains (negative net worth or equity under 50% of share equity), could have been tackled via the existing instruments.
The message includes detailed recommendations to improve the draft law.
The bill is supposed to be part of the second package of reforms planned by the government of Romania to be legislated by the end of August. Other important chapters of the second package regard the reforms in the public administration and in state-owned enterprises.
If the issues spotted by CCF are real, particularly in regard to breaching international treaties, addressing them may defer the endorsement of the second package of reforms that has already been deferred twice after being initially announced for the end of July.
The provisions particularly touched by CCF in its message to the Finance Ministry regard the limited deductibility of four categories of intra-group expenditures (for multinational but also national groups), the ban on financing companies under financial strains (negative net worth or equity under 50% of share equity) through loans from shareholders.
The limited deductibility of four categories of intra-group expenditures “make impossible the normal functioning of the most used business model in the world, and contradicts not only the established and well-known rules and principles of the EU and OECD, but also other international treaties to which Romania is a party, including the EU Accession Treaty,” according to Doru Dudaș, president of The Chamber of Tax Consultants’ (CCF) fiscal committee.
Separately, the financing through loans from shareholders is in many cases the best, if not the sole, solution for companies in financial difficulty.
In addition to the issues spotted, CCF also argues that the reforms proposed by the Finance Ministry do not reflect the doctrine of any of the four political parties in the ruling coalition: they do not follow the liberal principles since they hinder economic development, breach the Social Democrats’ support for local businesses and the Hungarian party’s preference for balanced economic developments.
Finally, the reforms do not achieve the social justice doctrine of the reformist Save Romania Union (USR), the tax experts’ organisation concludes indirectly, wondering who is at the origin of the proposed reforms.
iulian@romania-insider.com
(Photo source: Bacho12345/Dreamstime.com)
Leave a Reply