Special tax to bring more money to state budget than profit tax

The newly-introduced special tax is projected to bring to the state budget RON 300 million per year, 15 times more than the profit tax, the Hotel and Restaurant Employers Organization in Romania (HORA) argues.

According to HORA, currently only 5 percent of bars and restaurants in Romania are paying the profit tax, resulting in a RON 20 million per year contribution to the state budget (2013). After the special tax is introduced, HORA representatives argue, requiring all operators to pay a tax, regardless of whether they have profit or not, boosting revenues by 15 times.

HORA argues that the tax, estimated at RON 1,000 per year, will not have an impact on the revenues of small businesses located in rural areas. The tax, which was calculated based on a market analysis, amounts to RON 1,078 per year (RON 90/month) for the smallest businesses and can go up to RON 38,439 ( RON 3,202/month) for the large restaurants based in the capital.

“It is not fair for only 5 percent of players to declare that they are recording profit at the end of the year, because that does not reflect the reality. From our estimates, more than half the restaurants and bars in Romania are profitable, meaning ten times more than declared. This could explain why, daily, we pass by restaurants and bars that have been running for a long time? Had they recorded losses every year, they would have closed their doors a long time ago,” HORA president Dragos Petrescu said in a press release.

In June the Parliament passed the special tax law, requiring bars and restaurants to pay tax, starting 2017, regarding of whether they record profits or not. The special tax is calculated taking into account the number of beds, for hotels, and the size of the space designed for activities, in the case of restaurants. The law needs to be promulgated by President Iohannis to take effect.

“Certainly, it is not a perfect law and it could certainly be improved, however, it is a step forward for a loyal competition and for making the restaurant market more transparent,” Petrescu added.

HORA was established in 2013 and gathers 53 Bucharest establishments. The goals of the organization include the creation of local chapters in Constanta, Timisoara and Cluj.