Romanian government ready to ease the “greed tax” in order to avoid junk rating: the tax will be calculated twice a year and will not be linked to ROBOR

The Romanian government plans to ease the tax on bank assets – the so-called “greed tax” – imposed since the beginning of this year, as it faces the perspective of losing the investment grade rating from at least one major rating agency this year.

Running out of revenue sources, the government has introduced a tax on bank assets of 1.2 percent per annum since January 1st, 2019. The tax is calculated on the basis of 3-month/6-month money market rates (ROBOR) – and by doing this, the government reduces the powers of the central bank, according to the experts.

The tax is due quarterly (0.3 percent of assets per quarter) – and at the asset value registered at end-2018, the quarterly tax would amount RON 1.35 billion per quarter and RON 5.4 billion (EUR 1.14 billion) per annum.

But the government is now planning to ease the tax as Standard & Poor’s (S&P) – one of the 3 major global rating agencies – prepares to cut the country’s perspective from ‘stable’ to ‘negative’.

“Will be calculated twice a year, will be paid once in a year. Not (linked to ROBOR). The discussions continue, because we had a joint group with the banks’ association to see the final form of each proposal,” the Finance minister Eugen Teodorovici said on Monday, cited by Mediafax.

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Romania has the lowest “investment grade” rating at the major three rating companies in the world – Fitch, Moody’s and S&P.

The emergency ordinance 114/2018, that introduced new taxes for banks and energy and telecom firms, has been adopted by the Romanian Senate without any debate as the two ruling parties delayed all discussions until the ordinance was officially considered tacitly adopted.