Finance Minister Ionuţ Mişa (photo) seems to have already gone at war against banks: according to the draft Ordinance to amend the Tax Code, the banks may not deduct the sold receivables except for a maximum of 30% (down from 100% currently).
Thus, e.g. when calculating the tax result for a debt that was sold at a value of RON 1,500 against the face value of RON 10,000, the expense representing this claim will be deductible within the limit of RON 4,500, the ordinance’s substantiation note to amend the Tax Code reads. The draft bill has been launched for public debate by the Ministry of Public Finance, capital.ro informs.
Finance Minister Ionuţ Mişa said last week that 27 banks have avoided paying the profit tax over the past five years and warned them that the tax administration “knows about these operations and does not tolerate them any more” because “Romania is not a third hand country.”
“70% of the banks do not pay profit tax. Last year, out of 46 banking units, 31 of them reported losses amounting to RON 9.8 billion. In the past five years, only 15 banks have paid corporate tax, and we have included here also the banks that paid only in one year of the five. The amount thus collected was RON 1.7 billion,” Ionut Mişa told Antena 3 TV private broadcaster.
The Finance Minister said that tax inspectors are well aware of the mechanism used by banks to avoid taxing profits, and briefly described this mechanism. “For example, the bank in Romania borrows from a parent bank with interests ranging from 14.6% to 19%, then it grants loans in the country with much lower interest rates, thus leading to an artificial loss. But we intervened and sanctioned such practices, used through transfer pricing, we did not recognize these losses and issued taxing decisions. We also included late payment penalties for these payments and told them that it is not ok to conduct such operations,” Ionut Mişa said.
According to the ‘Banking capital in Romania” report, conducted by Florin Georgescu, first deputy Governor of the central bank, most of the non-performing loans (NPL) was generated, as value, by legal persons, not by natural persons, even though the latter were more visible in the public space . At the level of 2008, out of a total of EUR 900 million in overdue loans, EUR 300 million were from the population and EUR 600 million in companies. In 2012, the peak year of the arrears, the companies were responsible for NPL worth EUR 4.8 billion and the population for EUR 1.5 billion, so in 2016 the value fell to EUR 2.3 billion in companies and to EUR 600 million to the population.