FIC also criticised the rushed introduction of the tax amnesty, as its implementation allowed for less than 24 hours for stakeholder feedback, hindering transparent consultation and undermining the investment climate, it said in a press release.
“Failure to comply with proper timelines for public consultation in the legislative process is a negative signal that increases the degree of uncertainty for the future of investments in Romania,” FIC said.
According to the emergency ordinance published in the official gazette on September 6, individuals, companies and state institutions with outstanding fiscal debts as of August 31 will benefit from an interest and penalty waiver provided they pay the principal amount by November 25.
The interest and penalty waiver could benefit 330,735 companies and state institutions, the finance ministry said in a press release last week. Companies with no outstanding debt in the 2024 fiscal year receive a reduction on their future fiscal obligations equal to 3% of their profit tax for 2024. For microenterprises, the reduction will amount to 3% of their 2024 annual revenue tax.
In addition to the cancellation of interest and penalties, individual debtors can receive partial amnesty on the principal of their debt, reducing it by 25% to 50% based on the owed amount. Debtors with outstanding tax liabilities of up to 5,000 lei as of August 31, 2024, may have 50% of their liabilities cancelled if they pay 50% by November 25, 2024. Debtors with liabilities exceeding 5,000 lei may have 25% annulled if they pay 75%. The measure could benefit up to 848,705 taxpayers, according to the finance ministry.
FIC recommends that Romanian fiscal policies should foster fiscal stability and predictability, rewarding good-faith timely taxpayers rather than those who fail to meet their obligations. Over the past year, the government has shifted from harsh penalties for minor administrative errors, even without revenue loss, to cancelling penalties for late tax returns and payments.
According to FIC, a tax amnesty’s applicability should be conditional on the evolution of the conduct of taxpayers who have accessed the latest similar measures and have benefited from the cancellation of auxiliary tax liabilities or be revocable if the taxpayers who benefit from this measure do not demonstrate an improved conduct over a period of at least 3 to 5 years.
The fiscal amnesty is aimed at boosting tax revenue collection as the state budget is currently facing 71.8 billion lei ($16.027 billion/14.443 billion euro) in overdue receivables, equivalent to 4.06% of the country’s gross domestic product (GDP), the finance ministry explained last week.
Romania, under the EU’s excessive deficit procedure since 2020, proposed to the European Commission last month a seven-year plan to reduce the budget deficit below 3% of GDP. Prime minister Marcel Ciolacu cited the need to co-finance the National Recovery and Resilience Plan as the reason to seek this extended timeline.
Source: Seenews
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