2013 in review – Tax and Law

Romania has enforced a new civil procedure code this year and has continued to amend the fiscal legislation in a bid to expand the taxable base. Key bills concerning the mining sector and the insolvency procedure have faltered.

Authorities have announced that the new penal procedure code will be enforced starting February 2014, one year after the implementation of a newcivil procedure code, as part of the country’s ongoing effort to modernize the judiciary.

The government passed a bill regulating the gold and silver mining project at Rosia Montana. The project is now stuck in Parliament, after amendments to the mining law, which MPs said were necessary for approving the project, failed due to insufficient votes.

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The new insolvency code was turned down by the Constitutional Court, and the business environment will have to manage with the old framework, which leaves room for abusive practices.

According to media reports, the government passed 34 fiscal changes and 35 new taxes this year, some of which will be enforced from January 2014. Authorities have expanded the taxable base in the agricultural sector, requiring small farmers to pay the 16 percent flat corporate rate and their social contributions

The government has also approved a special tax on natural monopolies, impacting the electricity and natural gas sectors, along with a 60 percent tax on additional income that utilities got from the deregulation of the gas market.

In healthcare, authorities approved the co-payment mechanism meaning that each patient receiving treatment will have to pay RON 10 for each day spent in hospital.

People renting their homes will pay social security contributions for income generated from this activity.

The government increased excises for luxury products and certain alcoholic beverages, including beer. Excises for gas and diesel have also gone up.

VAT for bakery products has gone down from 24 to 9 percent, with the government hinting similar cuts could be made for other products, provided that the tax evasion starts to go down.

Starting 2014, the government will roll out a 1.5 percent tax for special constructions, applying mainly for the telecom and energy sectors.

Royalties are set to go up by 25 percent for all mineral resources, except oil and gas deposits.

Starting next month, all excises will be pegged to the annual inflation rate. They are set to grow by 4.7 percent in 2014.  

The lobby and amnesty bills will be debated by MPs in February 2014. Amendments to the penal code, which limited the scope of anti-corruption investigation on MPs and the president will be rediscussed, after foreign embassies and the European Commission claimed such measures dent Romania’s capability to prosecute high-ranking officials.

Ovidiu Posirca