The new governing programme significantly changes the tax policies, it complements, modifies or prolongs the implementation of many previous measures, includes decisions for SMEs, but also increases the pressure on the business environment, the representatives of the National Council of Private Small and Medium Enterprises in Romania (CNIPMMR) say.
The replacement, as of January 1, 2018, of the profit tax by the tax on turnover, would have many harmful effects on the economy. CNIPMMR claims it will generate major difficulties for new companies and for those who invest, by blocking the establishment and development of trading companies, capital.ro reports.
“By applying a differentiated tax rate on turnover, it will be found in the prices of the final product and can create important competitive discrepancies against other EU Member States, directly affecting the volume of exports. In addition, Romania risks an infringement procedure in the case of the establishment of tax on turnover on the basis of the provisions of Directive 77/388 /EEC on the harmonization of the laws of the Member States related to turnover taxes – the common system of value added tax: uniform basis of assessment, and the tax on turnover, not being deductible, hinder the free movement of goods and services,” a Council press release reads.
In addition, with regard to natural persons, the global income tax and property declarations will represent a huge additional administrative burden for taxpayers, but also a significant increase in bureaucratic and administrative costs (material expenses and personnel costs resulting from the registration of declarations, tax assessment, registers, cash payment/compensation, control, etc.). The impact of this measure on the budget is not clear.
CNIPMMR also claims that the application of the flat tax was a good chance for the economy, being “one of the reasons for attracting the investors in Romania.”
The Council also draws attention to the effects of the measures in the new programme. It provides for the increase of taxation, by increasing the contributions for part-time employees, the establishment of the solidarity tax for Romanians with incomes over RON 14,500 and the additional tax on products whose consumption has a major negative impact on the population’s health (without specifying the categories of products), changes in the pension contribution, the additional specific tax on profits from the extraction of natural resources that are not processed in Romania.
The Council also draws attention to the fact that the measures could not be applied as of January 1, 2018 as the Tax Code has to be amended and this process must be completed at least by 6 months before the measures come into force.